Presentation: COVID-19 Impact on Vietnamese Firms and Policy Support

This presentation analyzes the impact of the COVID-19 pandemic on Vietnamese firms, examining various mechanisms of impact such as operational status, demand and product market changes, supply and input market disruptions, and access to finance and liquidity. It explores firms' adjustments, including employment changes, digital transformation, and investments in health protocols. The presentation also discusses future scenarios for Vietnamese firms, considering both optimistic and pessimistic outlooks, and highlights the role of government policy support. It provides insights into the challenges faced by export firms and the anticipated decreases in sales and employment, particularly for medium-sized enterprises. The presentation concludes by discussing how the government can intervene and help with the situation with suitable policy.

Slide Mechanisms of Impact
After hearing about the detrimental impacts of covid 19, I bet you all wonder what is
1. Mechanisms of Impact
a. Operational status
Firms are closed permanently or temporarily by government mandate, reduction in
demand and supply or the decrease in the labor workforce.
This is because countries with the high mortality rate experience labor reduction.
However, in Vietnam, the mortality rate is low, and most of the victims are retired.
Therefore, this does not sharply affect Vietnamese firms
b. Demand and Product market
The falling in demand is causes by 3 main issues: payment delay, cancellation
of existing orders and the decrease in the number of new orders.
However, in some specific retail categories such as facemasks and hand sanitizers,
there’s an increase in demand.
(Tang & Tran, 2020)
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c. Supply and Input market
Not only does the input cost raise but companies also face a critical material
shortage. One reason for this is that suppliers are also affected by COVID 19 so their
production and logistic operation can be disrupted.
(As you can see, most firms (38%) …)

(Tang & Tran, 2020)
d. Access to finance and liquidity
Many companies face liquidity issue such as cash flow shortage and reluctant to invest
because of uncertainty and fear of interest rate and repayment risk.
(Rio-Chanona, et al., 2020) (Shira & Associates, 2020)
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II. Solutions chance for Vn to show the world their strength
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1. Firms’ adjustments
Multiple economic shocks from the COVID pandemic heavily influenced enterprises’
implications for employment and operating models. They are forced to down-size as well as
incorporate more digital platforms and solutions into their business models:
Regarding adjustments in employment: From Jan 5 to April 15, approximately 1
million job losses in operating firms (both permanent and temporary) However, true

employment losses are likely larger due to the bankruptcy and closure of small and informal
businesses
Despite these, firms have taken temporary measures to retain their employees. As
depicted in figure 5, in June: 15% firms lay off workers, 23% reduce working hours and
employees’ salary 26% granted leaves (only under half with pay). A small proportion of
enterprises (8%) still manage to recruit more employees
(Tang & Tran, 2020)
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Regarding increase in digital transformation: Almost half of the firms increase the use
of digital platforms. others choose to invest in digital solutions or repackage their product mix
 SMEs prefer front-end business functions (sales and payment methods) easier and less
costly to implement
 Large companies utilize complex functions (production planning and supply chain
management)
Investments in Health Protocols: Almost every firm >< low effectiveness

(Tang & Tran, 2020)
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2. Looking ahead = discuss predictions of future scenario for
VNese firms under covid19
(Wave 1)
Demand decreased, liquidity shortages will be a pressure
on Average, firms are expecting highly negative growth with possible scenarios:
Sales Employment
Regular ↓25% 19%
Optimistic ↓4% ↓4%
Pessimistic ↓55% ↓46%
 All 3: negative growth rate
Typical firms: Export firms
It was foreseeable that the lockdown will make goods difficult to circulate to key export
markets.
The 2020 consumption of phones is projected to drop by 13%. (the lowest year for
sales since 2010)

(PwC Teams, 2020)
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(Wave 2)
Most enterprises anticipate the decrease in sales and employment in the next 6 months.
a. Sales:
Expectations of sales growth range from -51% to -11% determined by firms’
expectation in the future situation.
(Tang & Tran, 2020)
b. Employment:
The overall expected employment in the next 6 months decreased 27% compared to
last year.
(Tang & Tran, 2020)
Compared with small and large firms, the median medium firms are expected to experience
more negative sales and employment growth:

(Tang & Tran, 2020)
 Move on : how gov intervene to help with the situation with suitable policy
Chuyển slide (Policy support)