ASEAN illustrates united mindset

10:00 | 18/09/2020

Vietnam has urged ASEAN member states to extend support to the regional business community seriously hit by the global health crisis in a bid to spur on the bloc’s economy.

asean illustrates united mindset
PM Phuc urged the entire ASEAN to take drastic action to fight against COVID-19, photo: Tuan Anh

Prime Minister Nguyen Xuan Phuc told the 53rd ASEAN Foreign Ministers’ Meeting and related meetings held online last week that the COVID-19 pandemic continues to unfold in complex manner, and the region’s people and businesses are still outstretched by its repercussions.

“One of the priorities for ASEAN now is to control COVID-19 and promote sustained recovery. I propose that the COVID-19 Response Fund should be well utilised and the Regional Reserve of Medical Supplies should be put into operation so as to raise ASEAN’s response capacity,” he stressed. “We need to promptly help our people and firms restore production and return their life to normal so as to boost economic recovery. Efforts are also to be made to facilitate trade and investment, fix disrupted supply chains, enhance connectivity, and provide mutual support to bridge the development gaps between the sub-regions in ASEAN, including the Mekong.”

Global data analysts FocusEconomics told VIR that except for Vietnam, almost all regional economies are expected to suffer from negative growth this year, including ASEAN as a whole (-3.2 per cent), Brunei (0.2 per cent), Cambodia (-0.7 per cent), Indonesia (-1.3 per cent), Malaysia (-4.2 per cent), Myanmar (1.7 per cent), the Philippines (-6.1 per cent), Singapore (-5.9 per cent), and Thailand (-7.1 per cent). Vietnam is projected to reach 2.7 per cent.

A recent McKinsey study shows that several emerging ASEAN countries could see a more drastic slowdown this year, including Thailand (-13 per cent), Malaysia (-13.5 per cent), and the Philippines (-13.6 per cent). Meanwhile, Indonesia’s economy could see a decline of -10.3 per cent, roughly on par with the global average. All of these countries are estimated to record annual GDP growth below that of the 2008 global financial crisis, at -11.5 per cent to -5.3 per cent forecasted for 2020, compared with -2.2 per cent to 4.5 per cent in 2009.

The grey forecasts would also mean big unemployment across the region. In Malaysia, for example, it was reported that unemployment climbed 42 per cent on-year for the first quarter of 2020. The nation’s Social Security Organisation stated that COVID-19 has hurt all enterprises there, with businesses suffering from a 37 per cent fall in demand and a 42 per cent decline due to being unable to operate as per usual. The unemployment rate in Malaysia is predicted to hit 4 per cent in 2020 against 3.2 per cent during the 1997 Asian financial crisis.

In another case, Indonesia reported that its unemployment rate due to COVID-19 could hit its highest in over a decade increasing to 9.2 per cent, or almost 13 million people, later this year.

Meanwhile in Vietnam, the General Statistics Office reported that in the first eight months of 2020, the number of firms halting operations hit 34,300, up 70.8 per cent on-year. Some 24,200 enterprises were waiting to be dissolved, down 5.9 per cent on-year. About 10,400 businesses completed dissolution procedures, down 1.9 per cent on-year. Also, 30,600 firms did not operate at registered addresses, up 39.3 per cent on-year.

“We have had to halt operations since July as we cannot find any markets for our products and do not have sufficient capital to maintain operations,” said Nguyen Tat Thang, director of Hai Minh Trading and Investment Co. Ltd., in Hanoi’s Quang Minh Industrial Zone. Last year, the company borrowed VND3 billion ($130,000) from banks to expand its production of home appliances and wooden products. All of the company’s 100 people have been laid off.

Nguyen Duc Manh, 40, one of those prevented from working at Hai Minh, said, “I’m quite anxious about our family’s future as my wife, a worker from a nearby company, has also been laid off. No job means no money, while our two kids have just entered the new school year.”

According to Deputy Prime Minister, Minister of Foreign Affairs Pham Binh Minh, to lift people and enterprises in the region out of difficulties, much remains to be done.

“Aware that the threat of the COVID-19 pandemic is still looming, we will proactively contain it via prevention measures and development of accessible vaccines and medications, while undertaking early and effective action to support people and businesses to overcome the consequences, thereby step-by-step recovering the economy and returning their lives to normal,” he stressed. “The ASEAN Coordinating Council will discuss thoroughly ways and means to effectively push forward ASEAN’s efforts and initiatives to respond to COVID-19.”

Thanh Thu

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