Australia supports Economic Reform in Vietnam (Aus4Reform)

18/8/2020

Australia supports Vietnam in responding to COVID-19 and economic reform through the Aus4Reform program

Australia supports Vietnam in responding to COVID-19 and economic reform through the Aus4Reform program

Australia supports Vietnam in responding to COVID-19 and economic reform through the Aus4Reform program

In addition to efforts to repel the Covid-19 epidemic, Vietnam also needs to focus on promoting measures to support businesses and restore the economy. Vietnam and Australia are both developed countries relying on exports and imports, so under the framework of a Strategic Partnership, Australia and Vietnam are working together to prevent the impact of the pandemic on lives and livelihoods. . Through the Australia supports Vietnam's economic reform program (Aus4Reform Program), what is Australia doing to help Vietnam respond to COVID-19 and enhance economic reform effectiveness?

Take a look at the opinion of Mr. David Gottlieb, Counsellor Economic & Development Cooperation.

Reporter: In Australia, the first case of COVID-19 was discovered in late January of 2020 and began to implement a social distancing in March. Along with that, the Australian Government has a number of policies to support businesses to recover from the pandemic. Could you share some of these policies of Australia so that Vietnam can learn, thereby minimizing the effects of COVID-19?

COVID-19 is a fast evolving challenge to economies around the world. Australia, like Vietnam, is a trading nation, deeply connected to global supply chains. Australia applies measures to contain the virus immediately affected some of our major exports, including education, tourism and commodities.  These containment measures have proven effective, as they have been here in Vietnam  but they undoubtedly come with a heavy cost to business and livelihoods.

In response, the Australian Government announced an economic package back in March of $260 billion, equivalent to 13.3 per cent of GDP provides support to workers, households and businesses; positions the economy to recover strongly once the health challenge has been overcome; ensures financial system stability.

 One of the key lessons we’ve learned over the past few months is to continue to adapt and evolve our economic support. For example, Australia is currently dealing with a new outbreak in the state of Victoria, which is expected to hit the economy by between $10 and $12 billion in the September quarter   we could see as many as 400,000 employees stood down or lose their jobs, so this is a really difficult time for families and businesses in that region.

 But our Government has adapted business support programs to help keep more businesses operating and workers in jobs, easing the eligibility criteria to make it simpler for organisations to qualify. This is under our “JobKeeper” program, which is one of the Government’s signature economic policy responses. It helps businesses significantly impacted by COVID-19 cover the costs of their employees’ wages. Employers are eligible for the subsidy if turnover has fallen or is likely to fall by 30 per cent or more as compared to the same period last year. The payment is expected to support approximately 4 million employees in around 1 million businesses.

Australia and Vietnam are both facing a situation that is constantly changing. By remaining nimble, our economic policies can help set the foundation for a strong economic recovery once the COVID-19 crisis passes.

Counselor for Australia's Economic and Development Cooperation in Vietnam, Mr. David Gottlieb
Mr. David Gottlieb, Counsellor Economic & Development Cooperation

Vietnam should be very proud of its health response to the first wave of COVID-19. Despite the recent Da Nang outbreak, Vietnam’s success has been rightly praised, including by the World Health Organisation.Reporter: To maintain positive growth momentum like the first months of the year, besides the policies to support businesses, what solutions does Vietnam need?

 Vietnam should also be proud of being one of the few economies to achieve positive economic growth in the first half of 2020. The ongoing challenge for Vietnam will be to replicate the success of its health responses in its economic responses and manage the balance between re-opening the national economy whilst dealing with the potential for future outbreaks.

This will be difficult given the impact of COVID-19 on the Vietnamese economy has been and will continue to be severe  and the global economic outlook remains very uncertain.  I encourage the Government to continue to examine where it can best use fiscal policy to support Vietnamese businesses and vulnerable groups to best manage the impacts of the pandemic.

 I would also encourage the Government to continue to implement an ambitious reform agenda. Now more than ever it will be important to maintain momentum in tackling structural impediments to economic growth.

In particular, Vietnam should focus on reforms that: increase the dynamism and productivity of domestic firms; improve the efficiency of Vietnam’s infrastructure; upgrade labour skills and wages to boost domestic consumption; and  improve the sustainability of Vietnam’s economic recovery and future growth.  Finally, I encourage Vietnam to do everything possible to keep supply chains open and trade in goods flowing, including by improving in the resilience of Vietnam’s manufacturing sector; fully implementing  Vietnam’s trade commitments, such as the CPTPP; and showing flexibility in customs procedures as traders struggle with reduced transport networks.

Restoration of global trade flows will be a critical component of Vietnam and Australia’s economic recovery and I know Australia and Vietnam will continue to work closely together to ensure our strong trade relationship can recover its pre-COVID momentum.

Reporter: As part of the Strategic Partnership, Australia and Vietnam are working together to prevent the impact of pandemics on livelihoods. Could you tell us, through the Australia support Vietnam's economic reform (Aus4Reform Program), what support areas Australia has been planning to help Vietnam cope with COVID-19?

Recently, our Prime Ministers, Foreign Ministers and Trade Ministers have all reaffirmed the importance of Australia and Vietnam working closely together on economic recovery from COVID-19.  In May, Australia’s Foreign Minister announced the Australian Government’s Partnerships for Recovery strategy, setting out how Australia’s development program will respond to COVID-19  and placing a strong focus on Southeast Asia, including Vietnam.

Under the strategy, Australia will help Vietnam respond to COVID-19 by promoting economic recovery through world class analysis and advice, including through the Aus4Reform Program with also help with Vietnam’s economic recovery.  Aus4Reform is the latest iteration of Australia’s decade-long support for Vietnam’s economic reform agenda. At its core, the program helps Vietnam shift towards a more market-based economy and supports the Government to enact productivity and competition enhancing reforms.

 We were really pleased that from a very early point in the COVID-19 crisis, the Aus4Reform program was able to provide support for Vietnam’s economic response and recovery. Aus4Reform support now includes: supporting the capacity of business associations to assist enterprises affected by COVID-19.  For example, by providing an easy to access database of all Government support for micro and small enterprise so they can easily find where to access support; undertaking impact assessments on key exports affected by COVID-19;  including textiles, agriculture, leather and electronics; and examining the specific bottlenecks in Vietnam’s policy settings slowing economic recovery  and will make specific recommendations to Government on institutional reforms to remove these bottlenecks.

 As strategic partners, Australia and Vietnam are well-positioned to support one another recover from COVID-19. The Australian Embassy will continue to work closely with our Vietnamese Government and private sector counterparts to ensure both countries recover from COVID-19 as strongly and as quickly as possible.