Intel and foreign companies in Vietnam fear harsh COVID measures

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HANOI – Major U.S. chipmaker Intel and other foreign companies operating in Vietnam have expressed concern that prolonged strict COVID-19 countermeasures in Ho Chi Minh City could discourage investment, so that Hanoi is preparing to deploy troops to the South Mall to enforce the restrictions.

Representatives of foreign companies met with authorities in Ho Chi Minh City, the country’s largest city that has become the epicenter of the country’s worst epidemic. In response to the spiraling case, the central government announced strict measures in the city that will begin on Monday and run until at least September 15.

Details of the trade are not known.

The purpose of Friday’s meeting was to share the challenges that manufacturing companies like Intel face in maintaining their operations, Ho Thi Thu Uyen, Intel’s public affairs manager in Vietnam and Malaysia, told Nikkei Asia on Saturday.

“The financial burden of housing our employees is one of the main challenges,” Uyen said. “We not only raised concerns, but we also offered solutions to city leaders in the form of practical recommendations instead of keeping [the existing measures] longer after September 15, “Uyen told Nikkei.

The local unit Intel Products Vietnam operates a test and assembly plant in the Saigon High Tech Park. Under anti-virus rules, “1,870 workers must stay in hotels near the facility. This has incurred 140 billion dong ($ 6.1 million) in a month since July. If we continue this au- beyond September 15, it will affect the budget but also the production plan, ”Uyen told city officials at the meeting, according to local reports.

Uyen told authorities the company is fully committed to working with the government, according to local media. But she called for flexibility for workers who have been fully vaccinated to return home.

Jabil Vietnam, the local unit of a US-based manufacturing services company, echoed Intel’s concerns. The company said many business partners have shifted orders to other countries such as China and Singapore due to the costs of implementing the restrictions, local media said.

Meanwhile, Italian computer maker Datalogic said the company saw sales plummet in one month, from $ 18.5 million in June to $ 11 million in July. It also lost around 40% of its workforce with 502 people remaining in August, Zing News reported. Many highly skilled workers have struggled to strictly follow the rules and stay away from their families.

Furusawa Yasuyuki, managing director of Aeon Vietnam, said the Japanese retailer was having difficulty maintaining operations in the country due to the costs of the COVID-19 tests required for its employees to be in the workplace, Tuoitre reported. in line.

Furusawa proposed to city authorities to extend the payment deadline for social insurance, value-added tax and health insurance so that companies can buy time to support their employees.

Concerns have been raised as the foreign business community prepares for a possible extension of restrictions beyond the September 15 deadline, as confirmed cases continue to soar.

Vietnam recorded 13,417 new cases of COVID-19 on Saturday, the highest daily tally since late April, when the current wave hit the country previously praised for its relatively effective handling of the pandemic. Ho Chi Minh City alone has detected 4,084 cases while in Binh Duong province 6,623 cases have been detected.

“Ho Chi Minh City wants workers to be safe and businesses to be safe, but the pandemic is caused by the very rapid spread of the delta variant. It has a strong impact on business activities, ”said Nguyen Thanh Phong, chairman of the town’s People’s Committee. , at the Friday meeting with foreign companies.

The highly contagious delta variant is becoming even more deadly in Vietnam as the death rate, the ratio of confirmed deaths to confirmed cases, continues to rise. On August 20, Vietnam reached 4.19%, overtaking Indonesia with a rate of 4%, according to Our World in Data. Thailand and Singapore registered 1.18% and 0.58% on the same day.

Vietnam remains behind in the region’s vaccination campaign against COVID-19. The percentage of people vaccinated in Vietnam is 15%.

To cope with the growing death toll in Ho Chi Minh City, which averages around 240 deaths per day, the military has taken over cremation of the bodies. Some believe the death toll is actually higher, as overwhelmed facilities struggle to keep an accurate count.

The pandemic continues to ravage the south of the country, its economic engine, clouding investment prospects. Ho Chi Minh City alone accounts for 22.3% of the country’s gross domestic product and contributed 27.5% to the state budget over the period 2011-2019.

Troops and forces will be deployed in Ho Chi Minh City and the adjacent provinces of Dong Nai and Binh Duong. They are home to key factories operated by multinationals from the United States, Europe, Japan, South Korea, Singapore and Taiwan.

Ho Chi Minh City’s regional gross domestic product is expected to be negative, unlike a year ago, the General Statistics Office said this month.

“Tens of thousands of companies have suspended their activities. Hundreds of thousands of workers have to lose their jobs. The risk of a break in the production chain is very great, if there is no quick solution,” Vo Van Hoan, vice-chairman of the town’s People’s Committee. notified at Friday meeting.

Phong, the chairman of the committee, called on foreign companies to be patient and trust the city’s policies to tackle the pandemic. “The city wants to have the cooperation of companies to overcome the difficulties together,” he told the participants.

On Friday evening, the Politburo of the Communist Party of Vietnam sacked Phong. “Sad to see the abrupt resignation and assignment to Hanoi of HCMC chairman Nguyen Thanh Phong, friend and partner of the United States, AmCham and the American business community,” the American Chamber of Commerce told the Vietnam on Facebook.

“In his final hours as president on Friday morning August 20, he listened intently to concerns from AmCham and the foreign community about the challenges of exploitation during COVID. He was clearly trying to do his best to protect the health and safety of the people of HCMC, while maintaining business operations and livelihoods to the greatest extent possible, ”AmCham said in his Facebook post.

Since the end of the Vietnam War, the central government of Hanoi, home of the Communist Party, and Ho Chi Minh City, the country’s economic engine, have maintained a delicate balance of power.

The fight to control the pandemic and the dismissal of the Ho Chi Minh City chief preceded US Vice President Kamala Harris’s first visit to the country on Tuesday, as part of a tour of Asia that includes a pre-stop in Singapore .

Preparing for possible COVID-induced turbulence in the south, Vietnam’s National Assembly approved a resolution in July that gives Prime Minister Pham Minh Chinh and the government the power to make swift decisions during the pandemic, in the goal of bringing the coronavirus epidemic under control.

“The prime minister has effectively declared a state of emergency in Ho Chi Minh City and the provinces, using the broad powers approved by the National Assembly,” said a local political analyst.

Additional reporting by Kim Dung Tong in Ho Chi Minh City

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