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Vietnam Economy's Virus Recovery Touted as 'Pho-nomenal'

The sun sets in Phu Quoc, Vietnam, where resorts are trying to get tourists to travel again. (VOA News)
The sun sets in Phu Quoc, Vietnam, where resorts are trying to get tourists to travel again. (VOA News)

Vietnam Prime Minister Nguyen Xuan Phuc was all smiles Sunday on a trip to an industrial park, where he inquired about workers’ health, patted their children on home visits and admired the speakers being made in factories. The trip was part of reopening the economy after curbing COVID-19, across much of the nation where there is little sign of the pandemic that is raging around the world.

Bad news elsewhere is good news in some cases for Vietnam, whose 46 days without local infections let it reopen and gain an advantage over other economies. HSBC bank dubbed it “Pho'nomenal Vietnam,” a reference to the iconic noodle soup, in a report last week that said it is the only economy in the region that will grow in 2020.

“We think the headwinds created by COVID-19 and the trade tensions, which are hurting so many other economies, are turning into tailwinds for Vietnam,” said Devendra Joshi and Herald van der Linde, equity strategists at HSBC, in the report.

The trade tensions between China and the United States is only one example of news that has been bad for some, such as the consumers who are paying higher prices because of tariffs, but has worked out for Vietnam on balance. The Southeast Asian nation has been called the main winner in the trade war because companies moved there from China.

COVID-19 is another example of the bright side for Vietnam. It was not immune to the virus, which forced schools and companies to close for weeks or months and led to the economy growing only 3.8% annualized in the first quarter, the lowest rate in a decade.

However the pandemic is one more reason for companies to move to Vietnam, analysts say. The emergency led to canceled flights and closed borders, which disrupted global supply chains. That got companies worried that they were too reliant on single suppliers, so the push to diversify has meant more foreign investment moving into Vietnam.

Social distance

“COVID-19 and increasing U.S.-China trade tensions should accelerate the process of companies rejigging their supply chains,” Joshi and van der Linde said.

The economy has had a patchy reopening since Vietnam lifted the national lockdown order for most areas in mid-April. People have returned to work and school with new measures, from the coffee shops that seat customers farther apart, to the grocery stores that place tape on the ground to separate people in line.

Companies that have adjusted include Ford Vietnam. It has added steps to disinfect cars when being sold or repaired, transitioned to cashless payments and offered sales consulting remotely.

“The COVID-19 pandemic brings a challenging and volatile time to individuals, businesses and countries across the globe," said Pham Van Dung, general director of Ford Vietnam, adding that the company is committed to “keeping the safety of our employees, agents, customers and partners first.”

Startup opportunity

Just as COVID-19 has been a boon for video conferencing apps and home workout gear, some startup companies in Vietnam spy an opportunity.

Vibeji, based in Ho Chi Minh City, is a platform where people earn money by offering a service, usually via video, from reading Tarot cards to teaching others how to make a book cover. This is a good time to social distance and work remotely, the company said.

“We all should play a part during this difficult time,” Tri Lecao, chief executive officer of Vibeji, said. “Moving work and services online are parts of the solution.”

Companies in the communist nation are also alert to the chance that the virus could come back. Herbert Laubichler-Pichler, the general manager of the Alma Resort, said in the hospitality industry for instance, companies should not be content just to put out hand gel for customers. He urged people to take more precautions and be aware of ongoing risky behavior, such as eateries leaving out condiments for all to share.

“We cannot go back to acting like we did before, as if nothing has happened,” he said, adding, “We don’t want to undo all of the fantastic work that has been achieved in Vietnam so far.”