Vietnam has reported a relatively small number of 288 cases and no deaths, putting the Southeast Asian country on track to revive its economy much sooner than most, according to public health experts interviewed by Reuters .
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“Given its rapid response to the virus, we expect foreign investment to flow into Vietnam after the pandemic,” Kizuna Joint Development Corp, which builds ready-to-use factories in Vietnam, told Reuters.
The company, which has a client base primarily of Japanese and Korean investors, said it is accelerating plans to complete a 100,000 square meter (1 million square foot) factory in southern Vietnam in anticipation of an increase of post-pandemic demand.
“The factory space will be ready in July,” said Kizuna.
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Advisers who help foreign companies to relocate internationally said that Vietnam’s success in fighting the pandemic has already boosted the confidence of foreign investors in the country.
“There is a feeling in many of my discussions that Vietnam, compared to many countries in the world, will appear even higher on the investor radar,” said Michael Sieburg, partner of the consulting firm focused on Asia YCP Solidiance.
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The Vietnamese Ministry of Planning and Investment said the country was well placed to help manufacturers find new production bases.
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“These opportunities will include the shifting of investments, particularly by large multinational groups seeking to diversify their supply chains to other regions, including Southeast Asia,” said Deputy Minister Tran Quoc Phuong in a press release posted on a government website.
“Vietnam is among the first of these destinations. “
The change was already happening.
Before the pandemic, many Chinese companies seeking to escape rising labor costs and the fallout from the China-US trade war had considered Vietnam.
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Hanoi’s growing portfolio of trade deals, such as the European Union – Vietnam Free Trade Agreement (EVFTA), also encouraged investment.
Part of Vietnam’s success in warding off the pandemic is due to a targeted testing program and the mass centralized quarantine of tens of thousands of people.
Hanoi has made exceptions to the quarantine program, including for nearly 200 engineers at the Samsung Electronics display unit and for foreign experts in the petroleum sector.
But the measures have hit businesses hard and mean it won’t be easy for businesses to grow quickly.
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“The government is cautiously understandable, so despite a lot of smoke, there is not much fire because it remains difficult for people to enter and sign agreements or visit facilities,” said Samuel Pursch from Vriens & Partners, a consulting firm that advises foreign companies in Vietnam. .
According to a government survey, 85.7% of the 126,565 companies surveyed in Vietnam declared that they had been negatively affected by the pandemic, those operating in the aviation, tourism, food and education sectors being the most affected.
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After five years of growth, foreign investment in Vietnam fell 15.5% in the first four months of the year to $ 12.3 billion, according to data from the General Statistics Office (GSO) .
The Vietnamese foreign ministry did not immediately respond to a request for comment on foreign investment in the aftermath of the pandemic.
However, Vietnam is targeting annual GDP growth of more than 5% this year, a rare pocket of growth in a global economy facing a deep recession.
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Fred Burke, managing partner of the international law firm Baker McKenzie, said the response to the pandemic has reassured businesses based in the country, which will help the economy to rebound.
“Vietnam has generated substantial goodwill,” said Burke.
“There was a time when, faced with such an epidemic, expatriates would have returned to their homes in North America or Europe, and even in Northeast Asia, but this time, with the high death rates in these regions, people feel safe or even safer here. “
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