|Matthew Lourey, managing partner at Domicile Corporate Services, advises early adoption and support for businesses to deal with COVID-19|
International travel is grinding to a halt, with borders closing and quarantine conditions being imposed.
In Vietnam, the government has taken a very aggressive response, with early prohibitions on travel from affected countries and enforced border quarantine. Entertainment and similar activities are being compulsorily cancelled in places, and social distancing is being encouraged.
Virus cases have been detected, significant tracing is undertaken with contacts and areas placed in quarantine. This is both distressing and comforting to the community. The hope is that significant infections in the community can be avoided, delaying the need for further restrictive measures.
Notwithstanding, these times represent something that even the best contingency planning could not have anticipated – and for many, the most difficult times still lay ahead.
For businesses in Vietnam, what does this mean?
The impacts of the virus will not be short term; the initial social impacts alone are to be felt over a long period. The recovery phase will also be slow and long and the world will effectively need to “restart”.
Almost all sectors will be impacted, but certain sectors – hospitality, travel, entertainment, to name a few are – suffering more than others – and will continue to suffer. There will be many jobs lost, and some businesses in these sectors may never recover.
Be proactive with protecting your business. Negotiate early with landlords, suppliers, and staff. Plan and protect in order to survive. This may need to happen a few times over the impact period. Conserving cash needs to be a focus.
Move towards and embrace the limitations with the movement of staff and experts. Conference calls, online meetings, and staff working from home will become the norm. Look at the technology options available, and embrace these. Empower your staff to embrace these.
The virus will be overcome, and businesses need to look to the future (even if they are struggling to understand how they can react with their operations today).
There will be a seismic shift in Vietnam to the “online” and “delivery” worlds. We have seen some Vietnamese government agencies move swiftly to online only (as part of social distancing), which they were previously slow to embrace.
Opportunities will arise, and Vietnam provides a significant platform to take advantage of these opportunities. Many (potentially all) developed economies will fall into recession as a result of the virus, however, Vietnam’s higher underlying growth rate is likely to withstand the worldwide slowdown better than most and will hopefully give a stronger foundation to grow from.
Key actions right now
It is time for company owners to look after their staff and protect them as best they can – many of their staff are stressed and worried right now, and companies will need them to get through these challenges and to succeed when they get to the other side, and batten down the hatches. We are in for a bumpy ride.
What can the government do to support FDI companies
Like other economies, Vietnam will be looking to the government to provide support and help ensure the country is protected at this time. However, the big challenge is when to do this, as timing will be crucial.
Too early or too late may have limited impact. For the travel and tourism sectors, support with promotion, tax, and other assistance needs to be timed to coincide with safety and the ability of inpiduals to travel.
For other sectors, corporate tax reductions or deferrals may be beneficial, but may also be too late for many companies.
Thus, I believe that a proactive but well-timed package of support and incentives for inpiduals (to encourage them to spend), companies (to support employment), and industry-specific (for instance, tourism) solutions will be needed.
There will be difficulties in funding support packages, but the risk of not supporting companies (local or foreign) and the economy right now is greater than the cost of the support.
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