Macro Analysis /
Vietnam

Vietnam: Comparing government intervention policies

  • In this special report, we focus on government intervention policies implemented by Vietnam in response to Covid-19...

  • ...and compare it to policies during the global financial crisis as well current polices in neighbouring countries

  • Vietnam’s current policies are supportive of a remarkable rebound in H2 20

Rong Viet
12 May 2020
Published byRong Viet

In this special report, we focus on government intervention policies implemented by Vietnam in response to the Covid-19 outbreak and compare it to policies during the global financial crisis as well as to current polices in place in other regional Asian countries. 

We examine the Vietnamese government’s point of view, the benefit-takers and the room for more upcoming intervention. In our opinion, the government has played an active role in flattening the curve and has meticulously designed its intervention policies. At end-April, the scale of the fiscal stimulus is estimated at VND266tn, equivalent to 4.1% of GDP, and tax deferral at 2.8% of GDP. Currently, the government has also delivered indirect support to corporates such as contribution to social security and pension funds in order to minimise unemployment. The government does not prefer to offer direct support to corporates. 

Meanwhile, low-income households or informal labour that have been hit by the pandemic, are qualified to receive cash aids, which should boost aggregate demand. In addition, the government is keen to accelerate public investment disbursement via transforming the PPP parts of the North-South expressway into public investment projects and extending the timeline of 2019 disbursements. We believe that those stimulus policies will significantly cover the losses of FDI and exports. 

In general, the size and approach of the intervention policies are parallel to Vietnam’s economic and coronavirus outbreak conditions. In the base case scenario that Western countries start reopening in May, Vietnam’s current policies are supportive of a remarkable rebound in H2 20.