The worst impacts of COVID-19 can be felt in such sectors as garment-textiles, footwear and leather, electronics, computer, optics, motor vehicle manufacturing and metal production that heavily rely on materials imported from China. (Photo: VNA)Hanoi (VNA) – Vietnam will optimise external resources to spur nationaleconomy as the impact of the outbreak of the acute respiratory disease caused by anew coronavirus (COVID-19) on foreign investment flows into the country isvisible, according to the Ministry of Planning and Investment (MPI).
TheGeneral Statistics Office (GSO) estimated that Vietnam would attract 39.6billion USD in foreign investment in 2020 if the virus had not come. The amountwould reach 12.1 billion USD in the first quarter, 8.4 billion USD in thesecond and third quarters, and 10.7 billion USD in the last three months.
However,the complex developments of the outbreak have prompted China -Vietnam’s biggesttrade partner- to tighten its control of border gates and restrict exports andimports, thus greatly affecting production and foreign direct investment (IDI)in Vietnam this year.
China’sinvestment in Vietnam is forecast to halve during the January-March period anddrop 30 percent in the next three months, which will exert impacts oninvestment flows from other countries, with decreases of 10 percent and 5percent projected for the periods.
Inthe first quarter, the accumulative registered and additional capital and thatfor share purchase of foreign investors is expected to stand at only 10.3billion USD, down 1.8 billion USD or 16.6 percentage points from the initialscenario.
Meanwhile,the sum is expected to reach 7.7 billion USD in the April-June period, down0.66 billion USD, equivalent to 8.7 percentage points.
Forthe whole year, foreign investment in Vietnam is forecast to fall 2.46 billionUSD, or a decrease of 6.8 percentage points from the initial scenario, of whichcapital from China will drop 1.01 billion USD, or 2.8 percentage points andthat from other countries will slump 1.44 billion USD, or 4 percentage points.
GSOhead Nguyen Bich Lam said coronavirus effects ripple through agriculture,industry, construction, trade and services. Therefore, the fragile productionwill hinder investment activities in both short and long terms, especiallyforeign-invested and non-State sectors.
TheMPI said the worst impacts can be felt in such sectors as garment-textiles,footwear and leather, electronics, computer, optics, motor vehiclemanufacturing and metal production that heavily rely on materials imported fromChina.
Dueto the outbreak, potential foreign investors, including those from China, have canceledtheir trips to Vietnam to seek investment opportunities.
Theproduction sector takes a hit as coronavirus leads to the lower demand fornon-essential goods, and large stockpiles have made investors hesitant toimplement their new business plans or increase capital for existing projects.
Anotherproblem is personnel reduction in FDI projects as many Chinese officials,engineers and experts cannot enter Vietnam due to restrictions of flights, theMPI said.
FormosaHa Tinh Steel Corporation, for example, has 7,500 labourers, of whom 700 hailfrom Taiwan (China). However, 500 labourers have yet to come back after theirLunar New Year (Tet) holiday due to Vietnam’s entry ban.
Besides,the company is facing a shortage of materials imported from China.
LikeFormosa, LG Corporation of the Republic of Korea (RoK) said it will have nomaterials in service of production if COVID-19 is not curbed in the next twoweeks.
SamsungGroup, another conglomerate from the RoK, would have its business revenuehalved as hundreds of its material containers have been stuck at the Lang Sonborder gate.
Inthe circumstances, the MPI has suggested stepping up the communication work toraise public awareness of COVID-19 and drastically fighting false informationabout the epidemic, Lam said.
Ministries,agencies and localities need to swiftly complete procedures for majormulti-purpose public projects and deal with adverse impacts of climate changeto support production and help people stabilise their lives.
Headsof ministries, agencies and localities should be more aware of theirresponsibility in order to soon kick-start important national projects like theNorth-South Expressway, Long Thanh International Airport, the coastal routefrom the northern province of Quang Ninh to the central province of Nghe An,and other transport and irrigation projects in the Mekong Delta region, hesaid.
Lamalso proposed transforming the investment model of some build-operate-transfer(BOT) projects to promote healthy public investment.
NguyenMai, President of the Vietnam’s Association of Foreign Invested Enterprises,proposed Vietnam make greater efforts to improve the domestic investmentenvironment and help enterprises surmount COVID-19 impacts.
Accordingto the MPI, Vietnam will work harder to lure multi-national groups andprestigious companies and brands, especially those from the areas that havestrength in technology, capital and management skills like the US, the EU andJapan.
TheVietnamese Government has allowed customs clearance at border gates with tightenedcontrol of the disease, the ministry said.
DoNhat Hoang, head of the MPI’s Foreign Investment Agency, said his agency willfocus on high-tech sectors that may create breakthroughs and high added valuessuch as new technology, pharmaceuticals, finance-banking, tourism, greentechnology and food processing.
Thestrategic target is to maximise external resources to boost national economicgrowth and speed up the process of industrialisation and modernisation, he said./.
VNA
