Despite the negativities, Stephen Wyatt, Director in the Vietnamese market of Jones Lang Lasalle believes that the coronavirus can create several economic opportunities in Vietnam.
Business Insider has interviewed several commercial companies with usual materials import from China. They said that they could not import their materials from the old source anymore as the borders were partly closed. Similarly, companies whose products are exported to China are struggling to make the sale.
The number of Chinese tourists, who usually account for one-third of the number of tourists coming to Vietnam, has never been this scarce, partly because of the Chinese travel ban, and partly because of businesses rejecting Chinese customers for fear of the coronavirus.
On 14th February, the Government announced that they would not lower the economic growth goal in 2020. By 24th February, there have been 16 confirmed cases of Covid-19 in Vietnam, 15 of which have been successfully cured (at the moment, all 16 have been cured).
Globally, there have been 76,000 cases with 2,200 deaths. Dr. Le Dang Doanh said that the Vietnamese economy has been negatively affected in many fields, including exports and imports from China, tourism and transportation services such as aviation and railway.
“The Government still does not adjust the development goal”, said Doanh, an ex-member of the UN Development Policy Committee from 2016 to 2018, in an email. “However, I think the GDP growth rate of the Vietnamese economy in 2020 may decline by 1% from the 6.9% goal to around 6.0-5.9%. Stephen Wyatt, Director in the Vietnamese Market of Jones Lang LaSalle, said that at the moment, this real estate company has witnessed relatively little long-term impacts from their business points of view.
However, he also said that the virus had had clear and immediate effects on several specific fields. Yearly conferences and large-scale events had been canceled. According to Wyatt, the number of customers entering shopping centers has also decreased, as people avoid gathering in public locations, where they could be highly-vulnerable to infection. “We have talked to groups of hotels and their revenues have also significantly dropped by 30%, 40%, 50%, and 60% compared to the statistics from previous years,” he said.
The Ministry of Culture, Sports and Tourism of Vietnam has prepared for the loss of billions of USD as people cancel their travel plans. “In 3 months, the estimated direct impacts on the tourism of Vietnam may reach 3 to 4 billion USD”, a representative of this agency said. Chinese tourists normally account for one-third of the total international guests in Vietnam.
Recently, that number has dropped to nearly 0, as China bans travel and Vietnam prohibits the entry of customers living in areas affected by the epidemic. Potential tourists from other nations are also avoiding coming to places that are too close to China. Analyst Oliver Chen of Cowen forecasted that the coronavirus would have easily visible influences on important Chinese retailers in the first quarter of the year, and neighboring countries might also be affected.
“We believe that the coronavirus will dramatically reduce the number of customers entering Chinese and neighboring countries’ shops, which might negatively affect future Chinese tourism and possibly break the supply chain.” Chen wrote.
Despite all the negativities, Wyatt believes that the coronavirus can create some economic opportunities in Vietnam, which is a blessing in disguise. Issues related to the supply chain in China can help manufacturers decide to shift their production to Vietnam, promoting the previous trend which occurred due to companies’ wishes to diversify their operation to Vietnam, which has a low-cost labor market, in the context of the America-China commercial conflict showing no sign of ending.
“The positive thing for Vietnam may be the consecutive shifts of businesses aiming to leave China,” Wyatt said.
>> Corona virus targets debts, causing a crisis for Asian banks