Experts seek ways for Việt Nam to have healthier supply chain

October 16, 2021 - 08:40

Though the pandemic has seriously impacted the world and Viet Nam, it has accelerated the supply chain shift by diversifying, regionalising the production chain and scaling up global value chains.


A Samsung Vietnam production line. — Photo

HÀ NỘI – Though the pandemic has seriously impacted the world and Việt Nam, it has accelerated the supply chain shift by diversifying, regionalising the production chain and scaling up global value chains, said an expert in Hà Nội on October 14.

Trần Toàn Thắng, director of the Department of Industrial Forecast and Enterprise Development (DIFED), National Center for Economic Forecast and Information (NCIF), told a seminar hosted by the University of Social Sciences and Humanities (USSH) in collaboration with the Konrad-Adenauer-Stiftung Foundation (KAS) of Germany on the pandemic influence on the global supply chain and local logistics sector and business operations: “Though there is global prospects for production, the impact from the pandemic will affect enterprises at least until 2023.”

Thắng said most of the production chains that Việt Nam can access or have the potential to move to are suitable with the import and export trend of Việt Nam, saying: “In the long term, Việt Nam's import-export activities will grow well.”

While Thắng saw a better future for import-export activities, Trần Đình Thiên, former Director of the Vietnam Institute of Economics, said the pandemic has revealed the limitations of the current global supply chain, specifically when the global economic dependence on “one locality" production, mentioning logistics was among issues for the activities.

Thiên said the pandemic has dealt a heavy blow to business production, disrupting global supply chains and leading to high freight rates and a shortage of workforce for production.

In addition, social distancing measures and travel restrictions, along with COVID-19 testing fees, have disrupted production lines and put additional financial burdens on businesses.

At the seminar, Prof. Dr. Heribert Dieter, Institute of International and Security Affairs, Germany, said that the main obstacle to the recovery of the supply chain was transportation costs, adding the cost of shipping containers from East Asia to Europe had increased by nearly 10 times.

The German expert said the shift of the supply chain would create opportunities for some economies like Việt Nam or India but the negative impacts on the supply chain would continue to linger, adding it would be difficult for transportation costs to return to normal levels before 2023 or 2024.

In this case, Nguyễn Anh Tuấn, Deputy Director of the Institute for Diplomatic Strategy Studies, Vietnam Diplomatic Academy, suggested local anti-pandemic work must pay attention to the economic stability, saying: “The COVID-19 prevention strategy must be accompanied by a unified logistics service strategy to avoid sudden and unexpected social distancing that affects transport activities."

Tuấn also recommended renewing the approach and thinking on supply chain issues, making plans and scenarios for options suitable to the pandemic situation as well as quickly and widely implement measures to support post-pandemic recovery.

He also suggested promoting local production to replace imports and at the same time to diversify sources of importing intermediate goods, avoiding dependence on a few single sources of goods.

Việt Nam should also increase the production of essential commodities such as food and healthcare, support small and medium-sized enterprises, and prioritise the development of qualified labour resources to keep pace with the transformation of the digital economy.  

As the leader of DIFED, Thắng said Việt Nam needed to better implement the support policies and packages for people and businesses to deal with the pandemic, adding the government was designing a policy package to restore local growth, aiming to improve the economy in the longer term.

Thiên, former director of the Vietnam Institute of Economics, said as China, Europe and the US were gradually turning to high-tech economies, it explained the strong recovery in the second pandemic year while the digital economy helped to solve some physical problems such as supply chains and logistics.

Therefore, he proposed to apply high technology for economic activities and to restructure the economy sustainably at the global level with good forecasts to avoid unusual risks.

At the seminar, Florian Feyerabend, Chief Representative of KAS, said: "Việt Nam is a major trading partner among ASEAN and also the top choice of investment destinations in this region.”

After social distancing measures are lifted and the vaccination campaign ramped up, a new normal will begin with economic dynamics restarting, he said: “Việt Nam will always be an attractive destination for foreign investors, especially Germany.”

According to the Việt Nam Chamber of Commerce and Industry (VCCI), thanks to new-generation FTAs and the EVFTA, most of the tariff barriers and non-tariff barriers between Việt Nam and Germany would be reduced and eliminated.

The chamber said the bilateral trade between the two countries was expected to see breakthrough growth in the future when the EVFTA would remove 99.2 per of tariff lines for Vietnamese goods exported to Germany after seven years of the deal taking effect. About 98.3 per cent of tariff lines for German products imported to Việt Nam would be eliminated after 10 years of the deal taking effect. — VNS