UNTIL recently, Vietnam battled Covid-19 with no fatalities. And the country, which won praise for its swift and full lockdown, went 100 days before detecting its first locally transmitted case of the coronavirus in April.
Communist authorities were quick to lock down the country after the virus emerged in China, with a rigorous state quarantine and contact-tracing system put in place. Analysts say that the tough response to the pandemic will help the country’s economy and provide a boost to consumer confidence.
Vietnam’s Ambassador to Malaysia Dr Le Quy Quynh speaks to Starbiz on the action taken by his government to protect jobs and spur economic growth in a country which was once one of the poorest in the world. VIETNAM has quite been successful in dealing with the Covid-19 pandemic with no fatalities and new infections, until recently. How did you manage this?
It has been months since Vietnam got into the fight against the Covid-19 pandemic, and there were no new cases of local infections for more than two months. The success story of Vietnam may seem questionable by those who are sceptical of our data and our ability to control the pandemic with such limited resources and the long land border with China.
It was not an overnight success but a hard-earned victory of our rigorous and disciplined political system and the people’s unanimity and apperception.
When the first virus case was confirmed in January 2020, Vietnam chose early prevention on a massive scale and other measures that were considered “extreme” and an “overreaction” by some countries at that time. Travel restrictions, close monitoring and closing borders were among the strict action taken. The drastic action then proved to be sensible as had they not been applied so early, the medical system of Vietnam would have been overwhelmed and torn apart by even a mild spread of the virus.
We managed to keep the novel coronavirus at bay by relying on relatively cost-effective solutions, including strategic testing, contact tracing programme, effective public communication campaigns, swift development of testing kits and a national lockdown between April 1 and 22.
Your contact-tracing programme is said to have been one of the pillars of your anti-pandemic measures. What is different about your programme?
The contact-tracing programme of Vietnam is unique because of its comprehensiveness. The infected person is called “F0”, and we trace through F0 to F1 (those who have had close contact with F0 or are suspected of being infected), F2 (close contact with F1), and all the way up to F5. Once a person is infected with the virus, it only takes up to two days for them to start spreading it within society. Therefore, it is critical to move fast, mobilise the contract-tracing apparatus, and locate the contacts.
What makes our contract-tracing programme stand out is that we identified and quarantined suspected cases based on their epidemiological risk of infection (if they had contact with a confirmed case or travelled to a Covid-19 affected country), not whether they exhibited symptoms. Researches showed that about 43% of infected cases never developed symptoms, and that’s why this approach may have been a key contributor to limiting the infectiousness in society at an early stage.
The Ministry of Health of Vietnam also cooperated with telecom companies to launch an app called “NCOVI”, which helps create a watch system that complements official contact-tracing efforts and may have helped to slow transmission of the disease. Another app called “Bluezone” was also released which notifies users if they have been within approximately six feet (two meters) of a confirmed case within 14 days. When users are notified of exposure, they are encouraged to contact public health officials immediately. Using technology in the fight against Covid-19 is a new and effective way as most people now have a smartphone.
How much did your experience in dealing with outbreaks in the past, help you deal with the Covid-19 pandemic?
With a population of over 97 million, Vietnam has a history of successfully managing pandemics including SARS (2003), Zika, MERS, Ebola, measles and dengue. Our experience with epidemic preparedness and response measures may have led to greater willingness among people in the country to comply with a central public health response.
After winning the battle against the SARS epidemic, Vietnam increased investments in its public health infrastructure, including developing a national public health emergency operations centre and a national public health surveillance system. Recognising the fact that except for an index patient, all others who were infected or died from SARS in Vietnam were healthcare workers, Vietnam invested greatly in improving hospital infection control, including building physical facilities, buying equipment and supplies, and training health workers. These were to protect the frontliners and prevent any chance of them getting infected and transmitting the virus back into the community.
Vietnam has also been developing and maintaining a nearly real-time, web-based system that collects and aggregates data from the public. Since 2016, hospitals are required to report notifiable diseases within 24 hours to a central database, ensuring that the Ministry of Health can track epidemiological developments across the country in real time. An “event-based” surveillance programme was implemented nationally in 2018 based on positive results.
With the experience of combating pandemics in the past, this time, Vietnam further strengthened hospital procedures to prevent infections in healthcare settings. On Feb 19,2020, the Ministry of Health issued national Guidelines for Infection Prevention and Control for Covid-19 Acute Respiratory Disease in Healthcare Establishments. This document provides comprehensive guidance to hospitals on all aspects including screening, admission and isolation of confirmed or suspected Covid-19 cases.
Vietnam reported a 1.81% GDP growth in the first half of 2020, its lowest since 2011. What is being done to stimulate growth?
Since Vietnam ended the three-week lockdown in April and successfully controlled the pandemic at the start of May, our economy witnessed some positive changes, considered much better and faster than many other countries. Vietnam is predicted by the World Bank and International Monetary Fund to grow by 2.7% this year, while the world economy is forecast to suffer negative growth in 2020.
To stimulate economic growth, the government introduced a series of support policies which ranged from monetary, tax and fees, investment, interest rate reduction and social welfare to assist businesses. In June, more than 13,700 new businesses were established and 100,000 workers registered, a rise of nearly 28% in the number of enterprises and 9.4% in the number of workers compared with the previous month.
However, it is still difficult for us to meet the target of 4% growth this year. It is hard to predict the outcome of the global fight against Covid-19 at this moment, and this leads to constant changes in the policies of all countries.
The Ministry of Planning and Investment has proposed the establishment of a national steering committee to fight the economic recession, headed by the Prime Minister, to unite the political system to support and restore economic growth. Also, new stimulus packages for investment and consumption and support for enterprises, including large ones are being considered.
We also may suffer a larger budget deficit at some stages or may revise the debt ceiling to have more room to restore the economy. In an online meeting with provinces recently.
PM Nguyen Xuân Phúc said the government was considering asking the National Assembly to increase the debt ceiling by 2%-3% of GDP to 59% in 2020.
Vietnam has targeted to attract international producers when the Free Trade Agreement between the European Union and Vietnam (EVFTA) comes into effect. Once in effect, EVFTA is expected to bring great benefit to Vietnamese trade. According to projection, the EVFTA Agreement will create conditions for 71% of Vietnamese goods to be exempt from duty in the European market, and 65% of goods from the EU to the Vietnamese market without any tax rates.
About 7.8 million workers in Vietnam lost their jobs or were furloughed due to the pandemic. How did your government address this issue?
PM Phúc stressed on the need to provide support for workers with heavily diminished incomes and those who lost their jobs, and not being able to meet the minimum living standards due to the impact of the Covid-19 pandemic. That being said, the Vietnamese government issued Resolution No 42/NQ-CP dated April 9 2020, approving financial relief package worth US$2.6bil (VND61.58 trillion) for pandemic victims. The package targets six categories of individuals and businesses, including impacted employees; impacted employers; household businesses with revenues below VND100 million a year; people with meritorious service to the nation; poor and near-poor households; and social protection beneficiaries.
The PM also ordered measures be put in place to ensure the transparency of the implementation, make sure that there would be no fraud and that support goes to the right people.
The financial assistance that the employees and employers received from Resolution 42 include the following cases – workers who were furloughed or put on leave without pay due to the direct impact of the pandemic will be provided VND1.8 million (US$76) a person a month. A monthly payment of VND1million (US$43) lasting for three months will be given to workers who either lost their jobs, without a labour contract or had their contracts terminated when the social insurance contribution period is not sufficient for unemployment benefit payout.
More than 18,000 household businesses were forced to shut down in Hoh Chi Minh city in the first four months of 2020 as per the City’s Tax Department. What were remedies to help them?
The Covid-19 pandemic continues to be complicated, unpredictable, has spread uncontrollably in many countries and regions around the world, greatly affecting many aspects of the economy and society. Vietnam is no exception. In order to prevent the spread of the disease, many businesses, business households and cooperatives were ordered to halt their operations, narrow their production scale or produce in moderation. Obviously, this leads to increasing unemployment and losing jobs and lives would be way harder if the pandemic lasted long.
Regarding solutions to support business households and individuals, the Ho Chi Minh City Department of Taxation proposed to conduct a reality survey of household business’ revenues to get accurate assessment, and then make the adjustment for tax reduction. The amount of tax exempted (reduced) is calculated for the months affected by Covid-19.
Apart from tax reduction, Vietnam approved the financial support package of VND62,000 billion (about US$2.7bil) for poor people and businesses affected by the pandemic from April. The package will be provided over at least three months until June and there are six categories of individuals and businesses including impacted employees; impacted employers; household businesses with revenue under US$4,265 (100 million VND) a year; those with meritorious service to the country; poor and near-poor households; and social protection beneficiaries. Accordingly, household businesses with revenues below VND100 million ($4,300) a year who have had to suspend operations due to the pandemic would also be supported with VND1 million per month.
The PM has allowed the reopening of nightclubs and karaoke parlours, though the specific reopening date will be decided by each locality. Hoh Chi Minh is known for its bustling nightlife. How are things shaping up?
In late March, Vietnam closed all non-essential business services to contain the pandemic. After a social distancing campaign was lifted in late April, most non-essential services were allowed to resume operations but karaoke parlours and disco bars were not allowed to reopen. On June 10, the Prime Minister has allowed the reopening of night clubs and karaoke parlors, but no specific date for the reopening was mentioned. Each locality itself decides the date instead. Ho Chi Minh City authorities subsequently lifted the ban on these establishments from June 11, though business owners must follow preventive measures, such as clean and disinfect surfaces and provide hand sanitisers. Since then, there were no local transmissions recorded from these establishments.
Vietnam is planning a US$679mil cut in corporate income tax for small and medium sized businesses to combat Covid-19. What can you tell us about this?
On June 11, the Vietnamese government submitted a proposal to the National Assembly to cut corporate income tax for small businesses by 30% in 2020.
The proposed regulation is to help SMEs overcome financial difficulties caused by the pandemic, while also improving cashflow for business development and enhancing their competitive position. This proposal is expected to provide SMEs with a considerable tax break, allowing them to expand their business scale, resulting in a more substantial contribution to the State Budget. The tax reduction is primarily based on the principle of self-assessment. Businesses are expected to review their actual business circumstances and self-assess their eligibility for such tax breaks.
The reduction will be applicable for companies, public enterprises and other organisations including SMEs. If the proposal is approved, this will reduce the government’s tax revenue by VND15.8 trillion ($680mil).
On June 19, Vietnam’s National Assembly ratified the government’s proposal to cut corporate income tax (CIT) by 30%. Of note, the most important factor is that the CIT reduction will apply to all businesses if their total revenue does not exceed the VND200 billion (US$8.8mil) threshold in 2020. This means that most SMEs will be eligible for such tax break regardless of the number of employees and the actual financial loss due to the pandemic.
Vietnam could miss its target of having one million businesses, due to the pandemic?
According to the General Statistics Office, in the first four months of 2020, the number of newly-established enterprises decreased compared to the same period last year. For the first four months, the number of enterprises temporarily suspending their business with time, dissolution or waiting for dissolution increased to 42,000. So the target of one million businesses by 2020 could be hard to hit.
However, there is still a potential to complete the goal. Vietnam now has five to seven million household businesses which have a scale and effectiveness similar to SMEs. In addition, the National Assembly approved new policies to give financial support and CIT reductions or exemptions for SMEs as well as new firms established from household businesses. With such good policies, such household businesses are expected to turn into SMEs in the near future. Probably we can’t reach the target in 2020 but the breakthrough can be made in 2021.
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