In the early stages of the COVID-19 pandemic in 2020, Vietnam imposed strict restrictions on movement and succeeded in containing the spread of infection. Even so, case numbers have continued to rise and fall. To prevent further spread, the country has restricted people from going out and isolated factories, among other measures. These steps have begun to affect Vietnam’s previously steady economic growth. This article explains the current situation for the Vietnamese people through the impact of lockdowns.

How Has Vietnam Been Affected by Lockdowns?

From early on, Vietnam thoroughly enforced entry restrictions on foreign nationals, closures of schools and workplaces, and limits on nonessential outings in order to contain the spread of COVID-19.

COVID-19 Infection Situation in Vietnam

Vietnam was once praised worldwide for completely containing the coronavirus through lockdown policies stricter than Japan’s. In reality, however, case numbers have continued to fluctuate. As of August 2021, cumulative cases stood at 348,059, of whom about 2.4% had died. The south, including Ho Chi Minh City and Binh Duong, has seen especially severe spread, and lockdowns have been extended mainly in southern cities.

GDP Fell Sharply Compared With the Same Period of the Previous Year

According to Vietnam’s General Statistics Office, GDP for the July–September 2021 quarter fell 6.17% compared with the same period of the previous year. After steady growth since 2000, this was the first decline, driven by the impact of COVID-19. Prolonged lockdowns in Ho Chi Minh City, Vietnam’s largest commercial hub, appear to have been a major factor behind the drop in GDP.

Impact of Vietnam’s Lockdowns ①: Manufacturing

Vietnam has seen remarkable growth in manufacturing, including foreign-invested firms. As a result, the impact on the manufacturing sector has been substantial.

Factories Under Lockdown Were Also Subject to Isolation

The Vietnamese government asked manufacturing companies to have employees stay overnight at factories in order to limit worker movement. As a result, more Vietnamese people have been forced to live apart from their families. Except for those with specialized skills, factory workers’ wages are generally not high. In Vietnam, finding a new job after quitting is usually not difficult, but with limited job openings now, many people have little choice but to continue factory work.

Some Businesses Closed Because They Could Not Meet Isolation Standards

Factories cannot operate unless they meet various conditions, including factory isolation. As a result, a considerable number of factories have been forced to close. Among foreign-invested factories, many have chosen to suspend operations because cross-border travel by headquarters staff has become difficult. Suspensions include Korean, Chinese, U.S., and European firms, as well as Japanese companies. As more plants shut down, the incomes of low-wage factory workers have also been affected.

Impact of Vietnam’s Lockdowns ②: Restaurants

In Vietnam, restaurants were among the first to feel the impact once the pandemic began, partly due to restrictions on going out.

Dine-In Service Banned From May 2021

In urban areas of Vietnam, where community transmission has been notable, dine-in service has been banned periodically. Takeout and delivery are allowed, but the measures are far stricter than in Japan in that they are bans rather than voluntary restraint. In addition to restaurants, beauty salons and barbershops have likewise been ordered to suspend operations. Vietnamese people often hold large parties at home, but such gatherings have also been prohibited.

Hygiene Remains a Challenge for Vietnamese Restaurants

Vietnamese restaurants have long faced hygiene challenges—flies indoors, reused side dishes, and washing plates in standing water, among other issues. Even eating alone quietly can feel like a risk of infection. Combined with a national character that is not always strong on rule-following, smaller shops may find it difficult to thoroughly implement ventilation, disinfection, and partitions the way Japan does. These factors likely contributed to the strict order to suspend operations.

Impact of Vietnam’s Lockdowns ③: Supermarkets and Shopping Malls

When COVID-19 cases were first confirmed, many Vietnamese people refrained from going out, and major supermarkets and shopping malls became deserted.

Previously Rising Sales Have Declined

Subsequent lockdowns and operating restrictions have also reduced sales. The impact grew further this year, with sales down 4.1% in May and 2.0% in June compared with the previous year. Vietnam’s expanding middle class had been driving consumption growth, and many Japanese companies had entered the market. Local governments and others had also provided various support for expansion into Vietnam. However, many such plans appear to have been scrapped due to the pandemic.

Major Supermarkets Have Also Introduced Mobile Sales

Supermarkets and convenience stores are everywhere in urban Vietnam, and they continue to operate with various adaptations. At AEON Mall, for example, social distancing is promoted just as in Japan. Rest benches and dining areas have been thinned out to avoid crowding. Supermarkets that sell goods from mobile units around the city have also appeared to ease the burden of outing restrictions. During lockdowns, people can buy daily necessities at temporary sales points.

Conclusion

Vietnam has imposed stricter restrictions on movement and isolation of factories and other facilities than Japan. As a result, many Vietnamese people have lost their jobs due to suspended operations, bankruptcies, and downsizing, and quite a few households have seen their incomes fall. That said, expectations for economic recovery after COVID-19 ends are high, and investment is reportedly increasing. Although the economy has stalled, this period can also be viewed as a time to prepare for new businesses and other initiatives.