Economic recovery may require non-traditional solutions

21/10/2021| 16:58

In the context of an unfeasible zero COVID-19 strategy, living with the virus is considered to be the long-term future, meaning there must be a recovery scheme with higher, stronger, and even non-traditional solutions to bring the national economy out of the current tough situation.

The fourth outbreak of the COVID-19 pandemic has adversely affected production and business activities of most local businesses.

Resilience of business community becoming increasingly exhausted

According to the PROFIT500 Ranking - Top 500, a list of the most profitable enterprises in the country this year as announced by Vietnam Assessment Report Joint Stock Company (Vietnam Report), profits of local enterprises in the third quarter of are forecast to endure a sharp fall due. This is largely due to widespread social distancing measures caused by the lasting and challenging impact of the fourth wave of the pandemic that has disrupted recovery momentum.

Growth prospects of many sectors moving forward face great challenges when at least 70% of manufacturing factories based in the southern region have been forced to halt operations during the lockdown period. For operational factories, they must follow the "3 on-site" model, production, isolation, and on-site accommodation, and test for COVID-19 every three days, thereby resulting in high operating costs and forcing many sites to reduce capacity by up to 50%.

Talking to the media, Nguyen Minh Thao, head of the Business Environment and Competitiveness Research Department under the Central Institute for Economic Management (CIEM), stated that the resilience of the business community is becoming increasingly exhausted, especially for small and medium enterprises.

Local firms therefore face plenty of difficulties, especially relating to the disruption of the supply chain, both input and output supply, along with strong countermeasures which have driven them in an exhausted state, she added.

Sharing this viewpoint, Pham Thi Ngoc Thuy, director of the Office of the Private Economic Development Research Board (Board IV), stated that financial health represents the most difficult thing for domestic businesses at present.

“Fiscal and monetary policies are the "lifesavers" of enterprise, however, there is still a certain gap between the expectation and the actual implementation of these policies. Finance and money are like the blood of businesses, all support, despite being very valuable, is not enough to be able to revive it due to limited resources," said Thuy.

A recovery programme needed to accelerate economic growth

According to a number of economic experts, amid the unfeasible zero COVID-19 strategy, living with the pandemic must be considered the best long-term plan, meaning businesses must continue to adapt themselves to the latest context.

In order to ensure smooth production, the internal organisational process of firms, especially human resource-related activities, must undergo changes aimed at ensuring improvement to meet new requirements.

According to Thao the pandemic has recorded a number of unpredictable developments, without precedent, thereby leading to confusion in management at various levels. Upon facing up to the current difficulties of enterprises, the Government must show a unified direction on a number of principles and solutions.

First of all, all goods, except prohibited goods which have been specified in specialised laws, must be circulated. Only when goods are circulated can this help enterprises to maintain production. In addition, the Government should issue unified guidelines relating to disease control plans and travel plans for people between localities, with easy-to-understand and easy-to-implement criteria.

“Empowerment should be given to businesses in choosing an appropriate operating model and production organization as well as in pandemic prevention. Business activities should not be stopped if the infection level is in a narrow range of a separate line/workshop. Notable businesses can stay active in conducting COVID-19 testing as because many of them have on-site medical facilities capable of doing this. Accordingly, they will be responsible for their own results," Thao suggested.

Dr. Nguyen Dinh Cung, an economic expert, underlined the necessity of continuing to re-organise production activities, social life, and state management in a bid to ensure the safe and flexible adaptation to the pandemic. Indeed, livelihoods and lives can be viewed as two sides of the same coin as they both complement each other.

Moreover, it can be considered necessary to quickly recover and firmly consolidate the growth drivers of the national economy because many of them have been weakened. Additionally, resources must be utilised for the right purposes, right objects, and in an effective manner, he said.

“Solution needs to be specific, feasible and immediately and swiftly implemented within the set time limit. In a special context, non-traditional solutions can be considered," Dr. Cung stated.

He stressed the necessity of quickly developing a recovery programme and accelerating growth over the coming years, with a particular focus on assessing the internal context frankly to warn about an uncertain outlook in the future.

“Compared to the 1999 and 2011 period, our policies are much better. At this time, we must spend heavily to support people, businesses and the whole economy. Regarding monetary policy, in addition to interest rate lowering policies, we can open the money supply, increase credit and provide special credit packages," Dr. Cung recommended.