Two opportunities for Vietnam's economy from Covid-19

Firstly, the outbreak of the Covid-19 epidemic, with the epicenter in Wuhan city of China, has contributed to promoting global corporations to invest and do business in Vietnam as a destination besides the Chinese market, or more specifically, the opportunity from the "China + 1 Strategy" of global corporations.

Second, it is an opportunity for us to promote economic restructuring, including promoting the technology economy and digital economy instead of relying too much on export processing and agriculture.

In the first aspect, the Covid-19 pandemic once again shows the risks of over-dependence of the global production chain on China, and after the pandemic, large enterprises may accelerate the "China + 1" strategy.

In fact, “China + 1” is not a new thing. Major global enterprises have talked a lot about this strategy over the past decade, but it was only when the US-China trade war broke out that the pressure to find a location other than China increased, causing global enterprises with production facilities in China, especially US enterprises, to be more active in their strategy of looking for other countries to expand their production facilities.

Businesses prepare plans to minimize the impact of the epidemic.

This pandemic is a new push, certainly forcing businesses to act more quickly because they are aware that the risk of disease threatening the production chain cannot be underestimated. Looking closely, pandemics such as SARS, H5N1, African swine fever (although this disease does not spread to humans) - all originated in China.

But unlike SARS nearly two decades ago, with the Covid-19 epidemic this time, China's "sneeze" has made the whole world "catch a cold": the epidemic leads to the blockade of cities, workers cannot go to factories to work, causing all production activities to stagnate and affecting the whole world. And with such an "epidemic record", minimizing the risk of dependence on China as soon as possible is something that businesses must definitely consider.

However, whether Vietnam can take advantage of the “China + 1” opportunity or not, there are still many challenges, the biggest of which is infrastructure serving the economy. Weak infrastructure, specifically transportation and energy infrastructure, continues to be an unresolved bottleneck for many years. The Investment Law with the form of public-private partnership (PPP) and its good implementation is an important solution that the National Assembly and the Government need to focus their efforts on.

On the other hand, the Covid-19 pandemic has also shown the fragility of the industrial sector, which is essentially a manufacturing sector and heavily dependent on imported raw materials from China. Meanwhile, the economic potential of information technology and Internet activities, or more specifically the digital economy, has been demonstrated over the past decade.

This is a suitable strength for Vietnam - a country with a young population, sensitive to technology, relatively good quality of information technology personnel; and does not require costly investment in finance and capital as in the manufacturing sector.

Another point that the Covid-19 pandemic shows is that production can be disrupted due to labor issues during the pandemic. However, with the digital economy, the service economy - working remotely, working from home - still "runs well" when the natural environment, the physical environment is in trouble.

The Government, therefore, in parallel with the short-term solutions that have been implemented (such as damage assessment, debt forgiveness, credit support, etc.), needs to discuss long-term issues to take advantage of the opportunities as mentioned. In fact, these are not necessarily new issues - but the new context and risks of the Covid-19 pandemic show that it needs to be seen as a driving force for the Government to devote more resources and attention to these important strategic issues.