Vietnam’s Anti-Virus Rules Rile Exporters as Supply Chains Hit
(Bloomberg) -- Vietnam’s tough anti-virus policies, which have shuttered factories and stunted output, are drawing fire from both overseas industries and within the government as a threat to the nation’s exports and future investments.
The growing concerns come as the export-dependent economy, which was successful at curbing infections during the early stage of the pandemic, battles its worst outbreak. The nation’s commercial hub of Ho Chi Minh City has implemented tough lockdown restrictions, including ordering factories in pandemic-hit areas to shut if they can’t provide sleeping accommodations for workers.
The European Chamber of Commerce in Vietnam estimates 18% of its members have relocated some production to other countries to protect their supply chains, Vice Chairman Nguyen Hai Minh said during a briefing Thursday evening. Another 16% are considering similar moves, he said.
“There is no disguising the fact that this fourth wave outbreak is having a dire impact on business,” EuroCham Chairman Alain Cany said in a statement. “If lockdowns, social distancing, and travel restrictions continue for much longer, new investment projects could be put at risk and companies could consider relocating elsewhere in the region.”
Even the trade ministry earlier this week warned Vietnam is at risk of losing export customers and needs to revise some anti-virus measures to ensure production at factories while containing the pandemic. Exporters will face difficulties restoring lost international business after pandemic is contained, it said.
Eighty percent of shoe factories in the south have halted operations after failing to meet government’s directives for on-site sleeping accommodations and designated transportation routes to shuttle workers to plants, the trade ministry said. Shoe factories in central and northern regions have cut production by 30% to 50% due to Covid-19 social distancing curbs and a shortage of workers.
Vietnam has been the second-largest supplier of apparel and footwear to the U.S. for many years, according to the American Apparel & Footwear Association, which represents more than 1,000 brands, including Gap Inc., J Crew Group Inc. and Levi Strauss & Co.
EuroCham in Vietnam urged the government to accelerate the vaccination process, especially for workers in order to ensure production, and refine some of its anti-virus measures.
More than 571,000 domestic virus patients have been reported since the latest outbreak began in late April with over 14,400 fatalities, according to the health ministry. Most infections and deaths have been recorded in the south. The nation of 98 million has administered nearly 25 million Covid-19 vaccine doses with 4.3% of the population fully vaccinated, the health ministry said in a report on Friday.
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