Viet Nam’s management of the COVID-19 pandemic is a global success story. Early action and robust testing has helped the country to avoid a major outbreak, resulting in a very low per capita death rate.
Domestic travel and retail businesses have reopened. Danang City has eased its social distancing measures, while Ho Chi Minh City authority has allowed the reopening of bars and clubs, and the Government is considering a plan to resume international air routes with China, Korea, Japan, Taiwan, Cambodia and Laos with certain quarantine conditions.
Viet Nam reported 1.81% GDP growth in the first half of 2020 – its lowest since 2011, according to the country's General Statistics Office. The International Monetary Fund (IMF) has also revised its 2020 GDP growth forecast for Viet Nam downwards to 1.6%, from a previous estimate of 2.7% in June. However, this would still see Viet Nam remain the only one of ASEAN's five major economies to grow at all during 2020, and growth is predicted to further rebound to 6.7% in 2021.
Viet Nam was already a favoured location for foreign investors looking for an alternative manufacturing hub to China following escalating trade tensions between it and the United State, and the Vietnamese Government is already looking to continue building on that momentum. Under a scheme in which the Japanese government will fund a production shift from China, 15 Japanese firms have registered to move to Viet Nam.
New Zealand and Viet Nam bilateral relationship elevated
New Zealand’s bilateral relationship with Viet Nam was formally elevated in July 2020 with the strengthening of the 2009 Comprehensive Partnership to that of a Strategic Partnership; focussing on trade, agriculture, education, and development.
New Zealand and Viet Nam have committed to individual and joint actions to open markets and reduce barriers to bilateral trade, especially for agricultural, seafood, and timber products through enhancing market access, trade facilitation, information exchange, and collaboration between customs, and agriculture, food safety, and animal health agencies.
New Zealand and Viet Nam have also committed to promoting investment in both directions and encouraging inclusive growth, including cooperation in the development of micro, small and medium enterprises (MSMEs), indigenous or ethnic minorities businesses, women entrepreneurs and other important areas.
There have been other trade negotiation developments that may affect exporters. The European Union Viet Nam Free Trade Agreement (EVFTA) came into force on 1 August 2020, while the Government of Viet Nam has also recently adjusted its Most Favoured Nation (MFN) tariff rate for a wide range of products imported into Viet Nam. These changes will increase competition in the market, including for agricultural products and other sectors traditionally of interest to New Zealand exporters. Read more about these in a report prepared by the NZ Embassy in Ha Noi here.
In order to take the full advantage of opportunities, it is crucial for New Zealand businesses to invest in market research now to understand market insights and consumer insights, especially when we are seeing changes in consumer lifestyles and behaviours in adapting to the new normal during and post-pandemic.