On Tuesday the 5th of May, EuroCham held a webinar with the Asian Development Bank (ADB) and almost 50 attendees to discuss how international financial packages can help businesses to resume, recover and grow. EuroCham Chairman Nicolas Audier hosted the event, which also featured as special guest speaker the ADB’s Country Director for Vietnam Mr Eric Sidgwick.
Introducing the event, Nicolas Audier described how COVID-19 is a global problem and one which touches all corners of the world. From the direct impact on health to its economic, social and political consequences, the pandemic has the potential to reshape countries and economies across the globe. In response, the ADB has stated that it is prepared to provide financial assistance and advice to help countries in the region contain the spread of COVID-19. Last month, the ADB tripled the size of its response to the pandemic to US$20 billion and approved measures to streamline its operations.
This package builds on the initial US$6.5 billion response announced in March, and is designed to help ADB’s developing member countries to counter the severe macroeconomic and health impacts of COVID-19. The capital will be used to fund grants and technical assistance, with a particular focus on the poor and the vulnerable. Some of the funding will also go to the private sector, where around US$2 billion of loans and guarantees has been allocated to financial institutions to help trade and supply chains recover. Meanwhile, a micro-finance package should help to support SMEs.
In his presentation, Mr Sidgwick remarked that Vietnam is a standout in international terms regarding its swift action to combat the spread of COVID-19, introducing measures such as social isolation, travel restrictions and contact tracing. He also congratulated the government on its effective communication of the steps being taken. Despite these measures, he said that the economic consequences of the pandemic have been sharp, with a particular impact on industries such as tourism, agriculture, retail, transport and finance. As a result, GDP growth has fallen to its lowest rate in a decade.
Mr Sidgwick’s presentation focused on four specific areas: the impact of COVID-19 on Vietnam; the response of the government including its health and economic measures; the long-term impacts of the global crisis and what it means for Vietnam; and how ADB is supporting member countries during the pandemic.
He described in detail the government’s economic response such as temporary tax reductions and social assistance for poor and vulnerable people which, taken together, amount to around 10 per cent of GDP. Mr Sidgwick also discussed the impacts on supply and demand from Vietnam’s large international trade partners such as the EU and US, and how the government might deal with and finance its response. He suggested that the state should encourage consumer spending while also doing so itself through fiscal stimulus and disbursement, not least since the debt-to-GDP ratio is lower than in previous years and the private sector is no longer driving growth. Turning to the ADB’s own response to COVID-19, Mr Sidgwick provided a breakdown of how the bank’s package of support would be spent, and the terms on which it would be offered.
Later, in the Q&A session, participants discussed issues including Vietnam’s draft new law on public-private partnerships; the recent fall in oil prices; prospects for economic recovery in Vietnam and other major international markets; and what a “new normal”, post-pandemic economy might look like.
During these times of COVID-19, EuroCham will continue to keep our members updated on new developments in the business environment here in Vietnam through webinars such as this one. However, due to technical restrictions, the number of guests is limited to 100. So, please follow us on social media and check our e-bulletin each week to be first-in-line to register for future webinars.
