Foreign companies warn of moving production

Surveys that some associations have conducted show that at least 20 per cent of their manufacturing members already have shifted some production to another country, with more discussions underway.

It was revealed in a proposed strategy on localized pandemic prevention and control sent to Vietnam’s prime minister by four associations of foreign enterprises, including AmCham Vietnam, the US – ASEAN Business Council, EuroCham, and KoCham.

“Many of our members have calls every night with regional and global headquarters deciding what customers to honor, which to turn away, and what production to shift. Once production shifts, it is difficult to return, especially once production lines have been expanded elsewhere,” they said.

Therefore, businesses need a clear roadmap and date certain for reopening now.

In addition, the manufacturing bubble models created in Ho Chi Minh City and in other provinces to allow continuity of operations during Covid-19 have been extremely useful as an interim measure. But the models don’t work well for large, labor-intensive factories, such as in the footwear and apparel sector.

And they are not sustainable long-term, from a cost, logistical and worker health, safety, and morale perspective.

It is recommendation that manufacturing needs to reopen to a “new normal” now. Businesses with proven track records and clear plans need to be enabled to take on more responsibility for their operations and worker safety and reopen as they are able, with post-implementation monitoring.

Overtime caps need to be lifted to allow for the unique requirements of the manufacturing bubble models, and the need to meet pent-up demand when more normal manufacturing operations resumes.

Represenntatives of foreign enterprises stressed that investment will not increase without a clear plan for reopening and recovery, and even existing businesses have most investment plans on hold, given current uncertainties.

Potential new investors cannot visit without streamlined policies for entry of foreigners.

The results is that Vietnam will miss out on a huge opportunity to capitalize on diversification of supply chains away from China if it cannot demonstrate it is a reliable alternative, they warned. “Vietnam is missing out on investment opportunities that may not return.”

To living with the virus safely, vaccines are the key to enable a safe reopening and economic recovery. Four business associations recommended that these priority groups can focus on frontline healthcare workers, elderly and those with pre-existing conditions, shippers and frontline sellers of essential food and medical products. 

It also includes workers in industrial parks, ports, and logistics, particularly in Ho Chi Minh city and the Southern region, both for the first and second doses.

The proposed vaccine passports and “Green and Yellow Card” system may be useful parts of a reopening strategy, but raise lots of questions, they stated.

Chief among them are questions about what the app or tracking system is, and how it will be coordinated among departments or ministries and provinces to allow consistent recognition, access, and travel.

There also needs to be a mechanism for recording vaccinations and granting “Green Cards” for foreigners, many of whom were fully-vaccinated abroad.

In addition, the private healthcare system in Vietnam needs to be fully empowered as a partner in the battle against Covid-19, both to administer vaccines, and provide care to patients with Covid-19, including telemedicine home care.

“We hope that customs procedures can be expedited both to facilitate manufacturing inputs and exports, and to ensure timely arrival of lifesaving pharmaceutical products and medical devices,” four associations said in their letter.

They also stressed that food security is paramount. The recent lockdown measures disrupted many of the remaining supply chains and made it difficult for even those with means to find food.

Shippers, wet markets, and food supply chains need to be prioritized for vaccine access and reopening immediately, with assistance provided for those in need.

Restaurants are an important partner for ensuring food security as well as employment. Delivery should be allowed immediately, and takeaway and socially-distanced outdoor and indoor dining should be allowed soon, based on square meters and capacity versus arbitrary numbers.

As Vietnam move toward a new normal, in addition to more vaccinations, it will be important to have country-wide coordination of policies, including for transportation of goods and people, availability of rapid tests, and policies to isolate and remove F0s rapidly to ensure worker safety and minimize the impact on operations.

Moreover, it is time for Vietnam to plan a safe reopening for tourism. Vietnam again will be a top destination for tourism, both domestic and international.

“We welcome the Phu Quoc sandbox and Ba Ria-Vung Tau green corridor proposals and look forward to working with Vietnam to reopen tourism safely, and sustainably,” they said.