Hybrid Covid-19 strain fuels new outbreak that threatens Samsung, Apple, Foxconn and other tech giant production facilities
Vietnam’s Health Minister Nguyen Thanh Long said over the weekend that authorities had detected a new variant of Covid-19, a hybrid of the strains first found in India and Britain and which could be more contagious than other known variants.
Genetic sequencing by Vietnam’s National Institute of Hygiene and Epidemiology has reportedly detected four people infected with the new variant. The new strain may explain why infections are spiking so quickly in Vietnam, the minister said.
At the time of reporting, infections have been recorded in at least half of Vietnam’s 63 municipalities and provinces. That’s ringing alarm bells not just locally but worldwide in sight of Vietnam’s growing role in industrial supply chains.
Vietnam recorded only 1,465 cases in all of 2020 and was one of few countries worldwide to record positive economic growth of 2.9%. But a spike since early April has seen case numbers rise above 7,100. Some 325 new infections were recorded on May 31, above the seven-day average of 290. So far, 47 deaths have been confirmed.
However, according to Nguyen Khac Giang, a PhD candidate at Victoria University of Wellington, the new Vietnamese government that took the reins earlier this year is less willing to impose tough restrictions than the previous administration.
Pham Minh Chinh, who was picked to be prime minister at January’s Communist Party Congress, raised eyebrows given his relative lack of experience in government administration compared with former prime ministers — although he came with strong economic credentials at a provincial level.
According to the Oxford Covid-19 Government Response Tracker and its Stringency Index, in which 0 represents no restrictions and 100 is the strictest, Vietnam was home to some of the most stringent restrictions in Southeast Asia in 2020.
However, at the latest date studied, May 24, Vietnam’s stringency rating was lower than Malaysia and Laos. Moreover, current restrictions are indexed as less stringent than they were in early February and in the summer of 2020, during a second wave of the pandemic in Vietnam.
“Economic concerns are the obvious reason, not least because the economy has been weak after a year of Covid and the pressure to keep industrial zones open amidst worries about production disruptions,” said Giang.
While Vietnam is forecast to grow by 6.6% in 2021, the World Bank says the government has been fixated in recent weeks on keeping supply chains running.
The Health Ministry has raised concerns that infection rates are growing rapidly in the industrial zones in northern Bac Ninh and Bac Giang provinces, near the capital Hanoi, where major foreign brands including Samsung and Foxconn have factories.
On Saturday, the ministry announced that it would prioritize vaccinations for the 240,000 workers in the area, sending at least 200,000 vaccines to each of the two provinces in the hope that they can all be administered within a week.
The Vietnamese government also appealed to the likes of Samsung and Apple to help procure vaccines for their own workforce, according to an official statement released on Monday.
Vietnamese factories produce an estimated half of Samsung’s global phone and tablet output, making Vietnam the second-largest exporter of smartphones in the world after China.
After a US$670 million investment in a mobile phone manufacturing plant in Bac Ninh province in 2008, Samsung’s country-wide investments rose to $17.3 billion within a decade.
Intel has also invested at least $1 billion in a semiconductor assembly and testing facility in Ho Chi Minh City. Tech giants LG, Apple, Panasonic and Foxconn are also heavily invested in Vietnam.
The global electronics industry now accounts for about 40% of Vietnam’s exports; by 2019 the country had become the fourth-largest exporter of electrical goods and components to the US.
Vietnam’s combined exported goods were worth $281.5 billion last year, up 6.5% from 2019, according to the Ministry of Industry and Trade.
Vietnam has been one of the chief beneficiaries of international decoupling from China, as Western, Japanese and Korean firms have sought to move their operations away from single-market production in recent years, a trend accelerated by the US-China trade war that began in 2018.
Any major disruption to these new supply chains will put Vietnam in a spotlight and under unaccustomed pressure, especially as industrial production in China has seemingly returned to pre-pandemic normalcy.
Bac Ninh province, home to most of Samsung’s factories in Vietnam, last week imposed curfews and other severe restrictions, while four industrial parks across the two provinces were temporarily closed last week. It is believed they will soon reopen as factories have been advised by the government to offer alternative arrangements for workers.
Reports indicate that factories within special economic zones (SEZs) in these provinces, as well as other industrial heartlands, are converting more warehouses into living quarters for workers to limit the impact on production.
Provincial authorities have suggested companies take such measures, as well as rotating staff in shift work to limit contact between employees.
Comments by the Korea Chamber of Business in Vietnam to the press in recent weeks suggest that the surge in infections has most strongly hit small and medium-sized factories in Vietnam, whereas the large production centers run by multinational firms have been better able to maintain production.
“The government is biding its time for the vaccinations – and given the possibility of domestic vaccine production from September onward – it is less likely to impose lockdown measure in critical industrial provinces such as Bac Ninh, Bac Giang, and Thai Nguyen,” said Giang.
“Chinh’s [provincial] government is surely taking a huge risk, but whether it has paid off or not, we need to wait and see in a few months,” he added.
On the whole, Vietnam has been the standout performer in Southeast Asia. The country of 96 million people has recorded just over 7,000 cases since the pandemic began. Neighboring Cambodia, of 16 million people, has had more than 30,000 cases.
However, it is falling behind in terms of vaccination. According to official data, around 1.04 million people in Vietnam (or 1% of the population) have had one dose but only 28,529 have received all their necessary doses.
Vaccination rates peaked in late April and early May, when around 0.06 per hundred people were being vaccinated, but it has since fallen to around 0.01 in recent weeks, according to Our World In Data.
Vietnam has signed a deal with Pfizer for 30 million doses to be delivered later this year and is currently in talks with Moderna that, if successful, would provide enough doses to fully vaccinate 80% of the population.
The government has also talked up claims that Vietnamese firms will be able to bring their own vaccine to market by September or October.
Last weekend, the authorities announced that they intend to test all nine million residents of Ho Chi Minh City, the country’s largest city and Vietnam’s business hub. Local news reports suggest that the testing capacity will be 100,000 people per day, a rate that would take months if the entire city is to undergo a test.
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