January 8, 2019

In the face of the Covid-19 crisis, businesses must adapt to survive / Prof. Nguyen Duc Khuong

In the face of the Covid-19 crisis, businesses must adapt to survive / Prof. Dr. Nguyen Duc Khuong

Date: 23 JUL, 2021

Title: The Covid-19 Pandemic as a Test for Future Adaptation

The Covid-19 pandemic is a trial, as the future may bring more significant disruptions with larger impacts, and now is the time for businesses to slow down, change, and find business models that adapt to the new conditions.

Caution Regarding Monetary Policies Is Appropriate at This Stage

According to Prof. Dr. Nguyen Duc Khuong, Chairman of the Association of Vietnamese Scientists and Experts Global (AVSE Global), while many countries are grappling with choosing solutions to cope with the Covid-19 pandemic, the Vietnamese Government has implemented timely measures.

Since the outbreak in Wuhan, Vietnam has clearly prioritized ensuring health and safety for its people, even at the expense of sacrificing economic growth. Vietnam has also smoothly coordinated fiscal and monetary policies, with emphasis on issuing Directive 11/2020/CT-TTg by the Prime Minister addressing urgent tasks and solutions to overcome difficulties for production and business, ensuring social security in response to the Covid-19 pandemic.

According to Khuong, Vietnam’s monetary policy at this stage can be described as cautious, utilizing and mobilizing existing capital in the economy without issuing new money, and not implementing stimulus packages as seen in the global financial crisis over 10 years ago. This has instilled confidence in the market, businesses, and the public. The government continues to play an active role in shaping the macroeconomic environment and regulating the economy.

“With the complex developments of the Covid-19 pandemic globally, coupled with the highly interconnected and interdependent structure between countries, caution is necessary at this time because we do not know when the pandemic will end. Even when it does, there will still be many negative impacts to address,” said Khuong.

Covid-19 has slowed down and disrupted economic activities, leading to stagnation. However, the economy itself before the pandemic did not have inherent difficulties that could not be overcome, such as supply-demand reduction.

Therefore, Khuong believes that using stimulus packages, as many countries did during the global economic crisis in 2008, will not be effective. Mobilizing available resources in the economy through support packages proposed by the government will not create inflationary pressures, state budget issues, and public debt. At the same time, it enhances the effectiveness of support packages by channeling funds to prioritized sectors or those heavily affected.

Slowing Down to Change and Adapt

According to the Chairman of AVSE Global, accompanying and supporting businesses and entities in the economy is the common landscape of current economies, not to mention rescue efforts, because businesses still have a period to withstand the government’s support packages, at least in the next 1-2 months.

During this time, businesses will have a calm period to slow down and find the most suitable solutions, propose initiatives related to operational processes, and think about adapting their business models to the new conditions.

“Covid-19 is considered a trial because the future may bring more significant disruptions in the context of increasingly connected, constrained, and interdependent world economies,” Khuong noted.

Compared to the SARS outbreak in 2003 and the global financial crisis in 2007-2008, Khuong evaluates that the resistance and resilience of Vietnam’s economy at this time are much better, thanks to significant breakthroughs in both the scale and quality of growth in recent years. Many sectors and industries have developed the necessary coping capacity and adaptability to technological changes.

The new technological foundation will help businesses promote and refine their existing models, using open platforms to conduct business in the current context of the Covid-19 pandemic.

However, Khuong emphasizes that as an open economy, belonging to the top group in the region and globally, Vietnam also needs to be prepared to accept shocks and negative impacts from outside.

“The game has completely changed; this is an integration game. The appearance of Covid-19 is also a new opportunity, helping businesses improve their business models, increase their ability to cope with changes in the context of international business that may have many unforeseen changes,” Khuong affirmed.

With implementable measures, effectively using the support channels of state agencies and business management agencies is mandatory. Simultaneously, businesses also need to implement a strategy to reduce unnecessary costs to the maximum, build a safe working and digital system to minimize the risk of disease spread and impact on the health of workers.

According to Khuong, in any case, Covid-19 cannot reduce the fighting spirit of businesses. This means that businesses must rise up to survive the crisis on their own.

This expert believes that through the current situation, where some types of businesses still show good growth during the pandemic in Vietnam, it can be seen that these businesses have high resistance and the ability to seek, exploit, and seize new opportunities very well in a crisis.

“In practice, implementing the recommendations of health authorities and the government to ensure the safety of workers may not lead to high growth, but it can still ensure the normal operation of production and business activities,” Khuong emphasized.

Small and Micro Businesses, Household Economies Not Mentioned Much

Speaking about possible research and implementation solutions, Khuong emphasized that they need to be based on two immediate issues: preventing and controlling the pandemic while accurately identifying the priority subjects. In recent times, the government’s support measures have reached many entities in economically challenging sectors. However, there are still some measures that can be considered and reconsidered.

Firstly, support policies for businesses and workers. According to Khuong’s observation, many solutions have been proposed, but the most vulnerable subjects, small and medium-sized enterprises (SMEs), and individual business households are not mentioned much and are not sure how to access the support.

Many businesses and households that currently constitute a large proportion in Vietnam do not have the conditions to directly participate in relief packages or have unemployment support funds like other businesses. Therefore, the government needs to consider reducing business rent, supporting electricity and water costs for these subjects.

In recent times, the French government has implemented these measures, providing support for wages and employment in the hardest-hit sectors such as tourism, aviation, and transportation. Similarly, the Singapore government has implemented capital support policies, salaries, relocation, and created new jobs in the labor market to support affected industries. At the same time, guiding businesses to operate safely during the pandemic.

Khuong recommends that, in addition to strong, decisive measures to prevent the spread of the disease, it is necessary to create the necessary mechanisms and conditions for the smooth operation of the economy, at least ensuring normal operation because without specific actions, the risk of entering into a crisis is very high.

The unpredictable changes in the world demand increasingly high adaptability from both businesses and individuals. According to Khuong, Covid-19 is the embodiment of a factor that can promote further improvement in human imagination, creativity, and the coping capacity of organizations. Businesses and organizations need to continuously create an environment for businesses and workers to innovate and adapt to new circumstances.

Referring to the post-Covid-19 situation, the Chairman of AVSE Global mentioned three major development trends globally and in Vietnam in particular. Firstly, the trend of developing areas closely related to innovation and technology, especially platforms for remote work.

The second is the trend related to the development of sources connected to production. Accordingly, the scope will narrow towards sources and businesses in production and processing being very close to each other. This makes countries more concerned about the domestic market, rather than relying too much on imports when efficiency increases, ensuring consumer benefits while reducing costs.

The third trend is the development of new technology application areas to cope with climate change. Accordingly, industries with high adaptability to climate change will become forward-looking industries. The growing demand will help the economy become increasingly green and sustainable. It is a trend in developing an economic model that aims for a balance between the environment, the economy, and society – a sustainable model that all economic entities can benefit from.

In conclusion, the Covid-19 pandemic has presented challenges, but it has also provided opportunities for businesses to innovate and adapt to the changing global landscape. The cautious approach of the Vietnamese government in managing monetary policies and implementing targeted support measures has been recognized as effective. Businesses are encouraged to take advantage of available resources, collaborate, and embrace technology to navigate the uncertainties of the post-pandemic world.

The pandemic has accelerated the need for businesses to reevaluate their models, reduce unnecessary costs, and build resilient systems. Small and micro businesses, as well as individual business households, deserve special attention in relief efforts to ensure a more inclusive recovery. The future holds both challenges and prospects, and the ability to adapt will be crucial for sustained growth and success. As the world evolves, businesses and individuals alike must continue to foster innovation, creativity, and a mindset of adaptability to thrive in the dynamic and unpredictable landscape of the post-Covid era.

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