Epidemic only a short-term dampener, Vietnam story remains intact: survey
Updated : 2/29/2020 11:22:13 AM (GMT+0700)

Though Vietnam’s economy will suffer in the shortterm from the novel coronavirus epidemic, the country’s drive tointegrate into the global economy will continue to create plenty of newopportunities for trade and investment in the long run, experts have said.  

Noi Bai International Airport is not as crowded as usual due to the outbreak - Photo: VNA

The recent Annual Vietnam Business Community SentimentIndex showed a huge drop in overall business confidence in Vietnam for2020 compared to last year due to the epidemic originating in China. 

Ralf Matthaes, managing director of Infocus MekongResearch, said: “I have been living in Vietnam for over 26 years and have neverseen such a huge plummet in overall confidence, not even during the 2010-2011real estate bubble burst.” 

Frederick Burke, managing partner of Baker Mckenzie lawfirm and a veteran of WTO Accession and Bilateral Trade inVietnam, said however that the country’s integration into the globaleconomy through free trade agreements would continue to create newopportunities for trade and investment over the years.

This year, there would be challenges for many businesses thatmight not be strong enough to withstand the shocks to the supply chain andcredit availability, he warned.

“The tourism industry was the first to feel it, but evenmanufacturing for export is starting to feel the pain as imported componentsfrom China are getting held up in China’s shutdown”.

“Resiliency in supply chains has already become a theme andnow it’s front and centre”.

Matthaes said: “This year will certainly dampenshort-term gains for Vietnam, especially in the consumer-based sectors, asconsumers proceed with caution. 

“However, as one of the most optimistic, resourceful andresilient peoples in Asia, this should only be a blip on Vietnam’s overalleconomic trajectory.

“Coronavirus will not derail Vietnam’s amazing rise tothe top of the Asian economic food chain”.

Last year was a positive one in Vietnam for business with 6.5percent GDP growth, record growth in exports and foreign direct investment andinflation being controlled at 3.5 percent, he said. 

Chris Hunt, manager director of HCM City SecuritiesCorporation (HSC), said: “It is still early days living with the newstrain of COVID-19 virus. 

“As this is a new virus, timings are hard to forecast, butbased on SARS and available information on both new cases and actual severity,we would be hopeful that much economic activity will be returning to normal bythe end of 2020”.

It’s important to note not every sector will be impactedequally, some more so than others. 

Stephen Wyatt, country head of property consultancy JLLVietnam, said: “Early indications suggest the hotel and hospitality, retail andF&B sectors are among the hardest hit.

“It remains to be seen how severe and how long the virussituation will last, and this means that some real estate developers may needto find additional funding or consider joint-venture partners. 

“History suggests that after similar events businessconfidence rebounds quickly, so we believe this will result in a positiveimpact on the market in the longer term”.

Businesses with heavy reliance on China will obviously feelthe impact, many severely.  

The daily virus warnings from the Ministry of Health have madeVietnamese consumers apprehensive, deadening demand. 

The big winners in 2020 will be online shopping, deliveryservices, the automotive industry, packaged foods and, possibly, homecareproducts, as consumers spend more time at home and less time in publicplaces. 

Though online shopping was only worth around 5 percent ofretail sales last year, 76 percent of all consumers have bought online in thelast three months and it is growing at above 20 percent annually. 

With the epidemic impacting shopping behaviour -- for instance, consumers wantto avoid crowds -- online services are expected to continue growing and drawnew customers. 

In terms of investor sentiment and the stock market, theepidemic actually provides ample opportunity. 

Andy Ho, managing director and chief investment officer ofVinaCapital, said: “Investors are looking for a reason to be ‘risk-on’. Thoughthere is a sense of over caution, the Vietnam stock markets have not had toendure a significant decline. 

As soon as the epidemic is under control, “we expect capitalmarkets around the world including Vietnam to recover and possibly surpasslevels seen at year-end 2019”.

Bao Nguyen, president of the Canadian Chamber ofCommerce in Vietnam, said the country remains a fantastic business destinationthat deserves all the growing attention it is getting around the globe. 

The report, which surveyed 242 CEOs, managing directors andbusiness owners, among others, was compiled by Infocus MekongResearch, a market research service provider based in Vietnam.

Source: VNA

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