Vietnam News

As Vietnam’s coronavirus surge continues, lockdowns take their toll on factory output, small businesses

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Vietnam’s Covid-19 hotspot Ho Chi Minh City has twice extended its lockdown, hitting manufacturers trying to export items such as clothing. An economist said the fourth wave is more devastating for labour migrants, informal workers and those in service industries who cannot work from home

University student Tran Thanh Nha has been working 14-hour shifts almost every day for the past two months, delivering food to locked-down residents and assisting medical workers in conducting Covid-19 tests in Vietnam’s southern commercial hub of Ho Chi Minh City.

Dressed in a protective suit in the sweltering summer heat, volunteers like her constantly sanitise themselves as they help take up to 250 nasal samples a day. She fears they too may get infected with the Covid-19 Delta variant that has upended Vietnam’s earlier success at managing the coronavirus.

“This time around the situation is very serious,” 22-year-old Nha said. “Everyone is trying so that the outbreak in Saigon could soon come to an end.”

Ho Chi Minh City has emerged as Vietnam’s virus hotspot as the country battles a steep rise in cases – from less than 3,000 infections on April 27 to 114,260 as of Tuesday. By comparison, neighbouring China, where the virus was first detected, has reported 92,065 cases.

The city has twice extended a lockdown that until August 1 only allows residents to leave home for necessities such as food or to go to work at businesses that have been granted permission to remain open. A curfew has also been imposed with people forbidden to leave home between 6pm and 6am. At least one-third of Vietnam’s 63 localities have imposed restrictions on movements.

Residents have also faced unprecedented police checkpoints set up to monitor and curb their movements as the government ramps up testing. The authorities are also trying to relieve pressure on the overwhelmed hospital system by running a pilot programme that allows asymptomatic patients who have tested negative at least twice and have a low viral load to quarantine and be monitored at home instead of in a state-sanctioned facility. The pilot also includes close contacts of identified cases.

While Vietnam’s caseload and 524 fatalities are below those of its Southeast Asian neighbours, Covid-19 has weighed heavily on its manufacturing and export-dependent economy, with factories that churn out products for global giants reporting work suspensions because of movement restrictions.

Factory output

In response, the government has allowed factories in industrial zones to continue operating if they can provide on-site accommodation or transport to ensure employees go straight home after work. Those that cannot fulfil the conditions – including companies in the labour-intensive garment industry – have to temporarily close.

Such shutdowns come as assembly lines gear up for the busy holiday shopping season in the US and Europe. Michael Laskau, founder of Ho Chi Minh City-based Paradigm Shift, which works as an intermediary between manufacturers and overseas customers, told Bloomberg that such delays could mean shoes, suits, sweatshirts and other clothes will not be on department store racks by Thanksgiving Day in November.

An employee of a food exporting company which has factories in southern Vietnam said responding to the government’s requirements has been challenging, such as ensuring sufficient toilet and shower facilities and food supplies for employees who are willing to stay in.

“We are a food factory so they cannot sleep in production areas like say an electronics manufacturer. We need to continue to adhere to all food safety standards,” said the employee, who declined to be named as he was not authorised to speak to the media.

‘’We have been stretched, [our] capacity is down to 60 per cent but it hasn’t reached breaking point,” he said.

400 businesses close each day

In the first six months of 2021, 70,209 businesses shut down – a 24.9 per cent increase year on year, according to the Ministry of Planning and Investment. This equates to about 400 businesses closing each day. Most of these enterprises were small-scale, less than five years old and in the commercial and services industries which “were continuously affected by recent [Covid-19] outbreaks”, a ministry report published earlier this month said.

In comparison, more than 67,000 new businesses were registered, up 8.1 per cent in the same period, mostly in the manufacturing, car and motorbike retail and repair, and construction fields.

Almost 1.2 million people of working age lost their jobs in the second quarter, the same period the fourth wave hit Vietnam, with those between the ages of 15 and 24 comprising one-third of this group, potentially affecting their long-term employment prospects.

The government needs to hand cash directly and regularly to these affected groups : Economist Phung Duc Tung

Dr Phung Duc Tung, an economist and the director of Vietnam’s Mekong Development Research Institute, said the impact of the fourth wave was “tremendously more significant” than that of previous waves, with the most vulnerable including labour migrants, informal workers and those in service industries who could not work from home, such as delivery drivers.

“They are the most impacted in terms of livelihood and they don’t have an alternative one,” he said.

“The government needs to hand cash directly and regularly to these affected groups, while also providing more financial support for the health care workforce.”

There have been numerous concerns about job losses, suspensions and uncertainty among many Vietnamese, said Ngo Bao Linh, a coordinator at Ngay Mai hotline, a Hanoi-based non-profit initiative offering help for callers dealing with mental health issues.

“These accounts have an effect on couples’ relationships because of the impact on family finances, tension between family members when they have to interact with each other more [under lockdown], generational conflicts, and so on,” she said.

Vaccine roll-out

Vietnam, which has heavily relied on the AstraZeneca vaccine, is trying to accelerate its slow vaccination roll-out. Only around 0.3 per cent of the 97 million population has been fully vaccinated, the second-lowest rate in Southeast Asia.

The government has announced a list of priority groups, although there have been scandals about some beneficiaries. For instance, local media reported over the weekend that Vingroup, Vietnam’s largest conglomerate, managed to secure 5,000 Moderna doses for its staff, as part of the US government’s recent donation to Vietnam. This caused a fierce debate among netizens about the fairness of the vaccine roll-out programme and opaque definitions of priority groups.

Vietnam has so far received more than 10.7 million vaccine doses, according to data from the health ministry, and is expecting millions more through the international Covax Facility and commercial contracts. It is also in talks with different foreign manufacturers to produce their vaccines locally, and has so far produced a test batch of Russia’s Sputnik V.

One of the reasons the country’s inoculation rate is so low is because “Vietnam was waiting to see how the [foreign] vaccines work”, said Bich Tran, adjunct fellow at the Washington-based Centre for Strategic and International Studies’ Southeast Asia Programme. This bumped its orders far back in the queue when it finally placed them, she added.

“But one bright spot is Vietnam’s foreign policy,” she said, referring to the country’s donations of masks and equipment to other countries at the beginning of the pandemic. “In return, when it is too late for Vietnam to secure vaccine deals by itself, several countries, including the United States, Japan, the United Kingdom and Germany, have either provided Vietnam with millions of Covid-19 vaccine doses or promised to do so.”

Nha, the frontline volunteer, has received one dose of the AstraZeneca vaccine.

The migrant from the coastal province of Ninh Thuan, where movement restrictions are also in place, said her parents at first threatened to disown her when they learned of her intention to volunteer on the Covid-19 front lines in Ho Chi Minh City, fearing for her safety. But they later came around.

“I will come home when the outbreak is over,’’ she said.

By Sen Nguyen – The South China Morning Post – July 28, 2021

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