Experts believe Hanoi should stop the organisation of Formula 1 race in the long-term to focus on economic recovery.
Prioritise all resources for economic recovery
The economic benefits and the opportunity to promote the national image from holding a "billion dollar tournament", the F1 race, have been lost because of the devastation of COVID-19. But that is not all.
Nobody really knows the answer to the question when the pandemic will end. Even when a vaccine is found, most economies around the world say that it will take at least five years to fully recover from the damage caused by the pandemic, according to Mr. Carmen Reinhart - chief economist of World Bank. In particular, although Vietnam is considered a "bright spot" for disease control, it could take years to recover from the global recession.
This is also the findings of a draft document submitted to the 13th Congress of the Party at the end of October, stating that: “The impact of the COVID-19 pandemic is likely to have a negative effect to the 5-year plan from 2021 to 2025”. Therefore, one of the priority targets during this period is focusing on recovering the economy. All resources should be concentrated on this mission.
In just the first eight months of the year, 68,900 businesses closed because of COVID-19. Meanwhile, according to the survey results of the Private Economic Development Research Board (under the Advisory Council for Administrative Procedure Reform of the Prime Minister), 2 per cent of the businesses had dissolved; 20 per cent of the businesses had stopped operating and 76 per cent of the businesses were still operating but cannot balance revenues and expenditures.
According to experts, it is not possible to estimate the economic impact of the COVID-19 because the pandemic was so unpredictable. These losses are "a very deep cut that can not stop bleeding and does not know when to heal". The economy is a seriously wounded body that is slowly exhausted from the loss of a life source, and it is necessary to immediately have powerful drugs to rescue.
A corner of Formula 1 racetrack in Hanoi
Continuing to hold the billion-dollar race will be wasteful and offensive
Experts believe that any resources saved at this time are extremely valuable. This resource will be a life jacket helping many businesses and the economy overcome the COVID-19 "storm" and for the economy. As a result, the tremendous expenditure on short-term entertainment events such as the F1 with the investment can reach hundreds of millions of dollars – only in line with stable economic conditions before COVID-19. Organising the event this year or in the following years is not only too wasteful, but also offensive.
"There is no reason for Vietnam to continue to organise F1 race to cause further damage to the resources of the business. If businesses do this, they will not only weaken their financial capacity, but also reduce the ability to contribute to the economy" said National Assembly Member Le Thanh Van.
Meanwhile, from an economic perspective, Prof. Tran Dinh Thien, member of the Prime Minister's advisory group, said that stopping F1 is compared to 'cutting losses' in securities which requires actions immediately and not only 1-2 years, but at least 7-10 years for the economy to recover.
"The main focus right now is concentrating on a new objective: blocking the loss trend to reduce losses. Furthermore, it is to devote resources to other priority objectives, solving the problem for survival," explained the former Director of the Vietnam Economic Institute.
Also one of the first experts to voice support for the cancellation of F1, Prof. Ts. Dinh Trong Thinh (Institute of Finance) believes that investing in the F1 race will need a huge amount of investment while the effects are difficult to measure because of COVID-19.
"Stopping the F1 race is not about losing the opportunity but taking a step back to preserve the force, especially in preparation for the decisive period to revive the economy when Covid-19 officially passes," Prof. Dinh Trong Thinh emphasised.
Further analysing the impact of stopping the F1 race, the expert of the Institute of Finance said that Hanoi and the event participants suffered when they spent large investment costs. However, if you look at it more broadly, in the long run, this is a decision that can't be made differently.
"When businesses are exhausted, they have to spend tightly to overcome losses and maintain operations, Vietnam needs to use resources carefully, avoid wasting money and create policies to motivate enterprises to develop, especially large enterprises which have widespread effects to the economy," the financial expert advised.
From the above analysis, experts agreed, Hanoi should stop the organisation of Formula 1 race in the long-term to focus on economic recovery, avoiding continuing to cause unforeseen losses.