COVID-19 POLICY RESPONSE NOTE #5 Don’t let a crisis go to waste - reshaping the economy through ‘no-regret’ policies JUNE 2020 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Don’t let a crisis go to waste - reshaping the economy through ‘no-regret’ policies Key Messages Vietnam has the unique opportunity to take advantage of the COVID-19 crisis. While the future is hard to predict, most would agree that the world will look very different in the post coronavirus era. There will be a notable reshaping of global value chains. Similarly, the development of contact-free services, telemedicine, and e-commerce will accelerate requiring fast adaptation of existing digital systems. Lastly, the importance and value of human life will increase as more governments prioritize the inclusion of the wellbeing of future generation in policy making. The ongoing transformation of the global economy provides the opportunity for Vietnam to take important policy actions and move faster toward its goal of becoming a high-income economy. We recommend five concrete pathways on which Vietnam can build on: 1. Tapping into the new global trading system: Vietnam can consolidate its existing footprint on the global economy by developing strategic alliances with other COVID-19 safe countries to boost its bilateral movements of goods and people. It can also target industries that are considering diversifying their value chains away from neighboring countries by refocusing its promotion efforts. 2. Promoting digital payments for a new business model: COVID-19 has hastened the transition from a cash-based toward an electronic payment system. Such move can be accelerated by the entry of diverse providers into the digital financial services market. Concurrently, new regulations are needed to govern account opening and provision of low value transaction accounts as well as to secure a more evolved role for third party payment service providers to interact with payment systems. 3. Promoting telemedicine: With ongoing momentum and with support from the highest level of leadership, telemedicine can be progressively mainstreamed in Vietnam’s health service delivery system. Since telemedicine need not be ‘high-tech’, inexpensive and simple technologies should also be prioritized in the short-term such as telephone consultations which are a cost-effective way of connecting health professionals to patients. 4. Enhanced information sharing for increased resilience: The COVID-19 crisis has proved to be a game changer in the use of data and information-sharing in Vietnam. The recent issuance of a broad regulation on digital data sharing and open data should be followed by the rapid adjustments of sector-specific regulations and practices. The objective should be here to generate more efficient and more responsible behaviors in health, land, environment and natural resources, trade, as well as public finance. 5. Aiming for a low-carbon economy: The disruption in the global energy demand and supply presents a unique opportunity to implement climate-smart policies and investments which are not only good for environment but also promote energy security and financial viability. Implementing demand moderation, supply diversification, and promoting low- carbon investments should be prioritized. While these five opportunities are not exhaustive, they are worth pursuing as they will bring substantial gains to Vietnam, regardless of how the global economic recovery scenarios play-out. These policy actions should be pursued swiftly given that the window of opportunity for Vietnam will be relatively short as other countries emerge from the COVID-19 crisis in the coming months. 1 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Global context: As of end-May, Vietnam emerging mega-trends from the global is moving out of the COVID-19 health economy. By being ahead of the curve in crisis with extraordinary results: the the fight against the COVID-19, and number of infected people is just over building on its natural as well as 300, with nearly 80 percent of them comparative advantages, Vietnam has having recovered, and no registered the opportunity to consolidate its deaths. After focusing on immediate recovery, as well as to mitigate the risks health response, time has now come for associated with the emerging world Vietnam to ease the restrictions and to order. However, policymakers need to gradually reopen the economy. While move fast as the window of opportunity the trade-off between saving human would be relatively short. Several lives and economic costs is a cause of concrete and implementable ‘no-regret’ much debate worldwide, the policy actions are being recommended Government’s decision seems justified to reshape the economy. These actions by its success in controlling the are worth doing now regardless of how pandemic while also dealing with the the global economic recovery scenarios harsh realities associated with the play out. They will enhance development lockdown of the economy. By easing outcomes by improving the controls, the Government aims at competitiveness and resilience of alleviating the financial burden on both Vietnam’s economy and help improve businesses and people by jump-starting the 4 country’s resilience to possible the recovery of economic activities. future waves of pandemics by While a rapid (or V-shaped) recovery is encouraging the reallocation of possible, it is unlikely. The return to the resources toward sectors less prone to pre-COVID-19 growth trajectory might human contacts. 1 These actions focus on take some time and efforts because the areas such as: (i) repositioning Vietnam ‘new normal’ for people and businesses in new global value chains, (ii) will be different. The speed of the supporting the boom in e-commerce by recovery will also depend on what digital payments, (iii) expanding the happens with Vietnam’s main trading delivery of contact-free health services, partners. For all these reasons, the (iv) sharing information for improved Government should do all what it can resilience and for encouraging today, to stimulate the economy without responsible behavior, and (v) aiming for endangering the country’s fiscal and a low-carbon development pathway. debt sustainability in the longer-term. This policy note presents description of In line with the World Bank’s last policy some of the mega-trends and then note which identified several actions to explores how Vietnam can build on them accelerate the economic recovery, this not only to generate the much-needed note aims at supporting the Government economic gains during the recovery in its efforts by sharing new ideas on phase, but also to help implement a how Vietnam can leverage various successful reform agenda in the longer abcdes term. 1. What mega-trends are emerging from the COVID-19 pandemic? COVID-19 has tipped the world economy that: (i) the world trade system will look into its most severe crisis since the different in the years ahead, (ii) social Depression. While the full impact of the distancing will change the way we work pandemic would be hard to predict, and do business, and (iii) the value of there is a consensus amongst experts life will become an explicit element of abc abc 1. Discussion on the double causality between the (re)allocation of labor and probability of infection: D. Krueger, H. Uhlig, and T. Xie, Macroeconomic dynamics and Reallocation in Epidemic, NBER Working Paper, N. 27047, 04-2020. 2 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Government decisions. These factors transport.2 will influence how countries and individuals manage risks and resilience However, the impact of the pandemic on in the future. Below is a brief discussion globalization might not be as on these three mega-trends as they straightforward as suggested above. expect to influence Vietnam in both the Technology will continue to shrink short and longer terms. A word of physical distances and favor the caution would be useful as the intent is delocalization of production, in countries not to be exhaustive on complex and that will be offering the best conditions evolving issues but to suggest new to international businesses. directions to Vietnamese policymakers. Furthermore, ensuring a domestic capacity to produce what is needed, can 1.1. Revisiting globalization: The be prohibitively expensive for many COVID-19 pandemic is causing the firms and governments, at least in the worst contraction in global trade in the short term. There are also several post-war era and, so, has strengthened alternative to reshoring activities to the hand of those who have long address security and strategic concerns opposed economic openness between for essential goods. In this environment, countries. On the face of it, all our firms as well as countries have an current vulnerabilities seem rooted in incentive to reduce the risk exposure of globalization: disease transmission, supply chains over the medium-term by economic interdependence, and medical increasing the geographical diversity of procurement transcend boundaries. their suppliers. Rather than producing a Even before the pandemic, the balance full line of everything from food and fuel was tilting towards closed economies. to medical textiles to respirators at The reemergence of protectionism might home, the best bet for states is to group change the way multinationals and together with trustworthy partner governments do business in the years countries, in the expectation that ahead. The reshaping of global value whatever is produced in the larger bloc chains and trade is envisioned for those will always be accessible to all who argue that the world have become members. Sound government policies too interdependent (e.g. relying on a few with respect to infrastructure countries for medical equipment and investment, education, and public health being left helpless when supply chains could therefore encourage the efficient break down). Workplace closures or relocation of some production to a transportation difficulties have caused variety of countries and help firms interruptions to the delivery of manage the risks of transnational intermediate goods, severely affecting production. These trends may offer a production in manufacturing industries unique opportunity for Vietnam. that practice lean inventory management. Many governments have 1.2. The rise of a contact-free become concerned about shortages of economy: With the increasing adoption essential products from offshore of new technologies, it is becoming sources. Such trend against possible to imagine a world of business, globalization would reinforce the from the factory floor to the individual existing forces against international consumer, in which human contact is trade that have been linked to the minimized, but not eliminated. This automation of manufacturing and the move toward a contact free society is growing environmental concerns not new but has been accelerated by the associated to the excessive carbon combination of social distancing policies footprint linked to international and the rapid development of digital abcdddetg abcd 2. McKinsey Global Institute estimates that 60 percent of all jobs could see more than 30 percent of their key tasks automated, affecting 400 million to 800 million jobs around the world by 2030. 3 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies technologies during the pandemic. In future of work in action, with work from three areas in particular, digital home and social distancing policies commerce, the delivery of services and radically changing the way we work and home-based work, the pandemic could interact. But the impact on work is far prove to be a decisive turning point. more profound than just changing where While e-commerce was already people work, it is also fundamentally meaningfully and visibly eating into the altering what work is performed and how sales of brick-and-mortar stores, what we perform it. Companies have relied on the coronavirus has done is to automated services to allow workers to accelerate a change in shopping habits. operate, monitor, and control systems According to Salesforce Global remotely, thereby reducing the risk of Shopping Index, between Q1 2019 and human exposure to the virus and Q1 2020, retailers experienced a spike enabling operations to run smoothly of 16 percent in digital traffic growth. 3 without service disruptions. Additionally, the average amount spent per visit grew by 4 percent. Social 1.3. The value of life as a key element distancing and school closures (globally, of decision making: In times of high over 1.2 billion children are out of the uncertainty (war, natural catastrophes, classroom) have also encouraged the pandemics), the value of human life move toward e-learning whereby (current and future generations) teaching is undertaken remotely and on increase, rebalancing priorities of digital platforms.4 governments, people and businesses to incorporate resilience in their decisions The figures for telemedicine and virtual processes. We are all learning valuable health are just as striking. With a lessons in resilience and human vaccine or treatment at least months adaptability. We are learning how away, patients and healthcare providers quickly humans can respond when faced both have reason to expand virtual with a common enemy, be it a novel interactions. With this sudden shift away virus or the well-established physics of from the classrooms and doctor’s offices climate change. A good way to illustrate in many parts of the globe, some are how the pandemics has changed wondering whether the adoption of policymaking is to explain how social online learning and telemedicine will distancing policies have been justified continue to persist post-pandemic, and by using the concept of the statistical how such a shift would impact the value of life. This concept measures how worldwide education and heath markets. much an individual or a society is willing Research suggests that online learning to pay upfront to minimize the risk of has been shown to increase retention of death. According to a recent study, the information, and take less time, meaning statistical value of life is around the changes coronavirus have caused $400,000 in Vietnam. If we assume that might be here to stay. There are, in case of non-interventions, the however, challenges to overcome. Some coronavirus would have killed around students or patients without reliable 200,000 people, or a crude mortality rate internet access and/or technology of 0.2 percent, the total losses would struggle to participate in digital learning have been equivalent to $70 billion or and to access telehealth services; this almost 1/3 of current GDP. This simple gap is seen across countries and calculation provides some sense of how between income brackets within much the Government has saved by countries. The pandemic has forced taking early actions and savings life. By organizations into perhaps the most using this concept, economists have significant social experiment of the been able to calculate that the costs of abcde abc 3. The Index captures the activity of more than 1 billion shoppers worldwide. https://public.tableau.com 4. Even before COVID-19, there was already high growth and adoption in education technology, with global investments reaching 4 US$18.66 billion in 2019 and the overall market for online education projected to reach $350 Billion by 2025. Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies taking early social distancing measures they don’t cost more than $6.1 trillion or 20 were generally much lower than the percent of GDP. Such approach was already long-term costs associated to a situation utilized by environmental agencies but is with no government interventions 5 . In now expected to become a more popular the US, the use of social distancing tool in other areas such as health crisis measures has been justified as long as management and natural catastrophes. abc 2. How can Vietnam take advantage of these mega-trends? Vietnam can take advantage of the three how the three mega-trends could be mega-trends (described above) by immersed within the Government’s main undertaking swift and concrete policy priorities in shaping a strong policy reforms. However, the window of agenda. These priorities are: (i) opportunity will be short as many other accelerating the country’s economic countries would likely be planning on structural transformation by upgrading its engaging in these areas. The ongoing production structure through crisis has caused a swing in the political diversification, added-value and economy which can create favorable innovation, and (ii) responding to the conditions to undertake such reforms. evolving domestic demand from the There can be much support generated emerging middle-class and aging with a view of long-term benefits population that will be looking for new and associated with reforms will be greater sophisticated products and services such than the costs. However, this swing as: healthcare, quality post-secondary might only be temporary. education, and better housing. Using this framework, the World Bank team has To identify ‘no-regret’ policy actions identified a set of opportunities (presented which the Government could quickly and below). These are opportunities on which opportunistically implement, the World Vietnam can build on emerging mega- Bank is presenting a proposed trends to accelerate the priorities of its framework. This framework describes policy agenda (Table 1). Table 1. Summary of no-regret opportunities Structural transformation Emerging new demand Reshaping global value chains Promoting local production of imported (local/global) high value fruits and vegetables (e.g. $2 Revisiting Developing strategic partnerships with low- billion of fruits are imported per year) globalization COVID risk countries Encouraging Inward FDI for domestic Increasing exports of products in higher market (services, consumer goods) demand (rice, health equipment) Encouraging formalization of small Improving access to education by e- Contact-free businesses through ID4D programs learning economy Developing digital payments (particularly Providing healthcare through the G2P) and e-commerce development of telemedicine Greening production (e.g. carbon tax, Improving responsible behaviors by The value of domestic emission trading) information sharing through digital tools life Greening investment in energy and Developing risk sharing instruments transport (insurance) against shocks 5. The Macroeconomics of Epidemics by Martin S. Eichenbaum, Sergio Rebelo, and Mathias Trabandt, NBER Working Paper 26882. 5 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Vietnam can exploit the emerging global pandemics, most countries have closed mega-trends to push ahead its domestic their borders and prevent people agenda. Of course, this list is not movements. The global demand for exhaustive and should be illustrative of many products has also declined, a wider range of possibilities. The leading to an unprecedented fall in the proposed framework emphasizes the prices of most commodities on relationships between the mega trends international markets. As a result, the and the domestic agenda, but it fails to value of trade is predicted to plunge account for potential synergies across between 13 and 32 percent in 2020. 6 opportunities. For example, encouraging The role of global value chains (GVCs) the formalization of small businesses has also been increasingly questioned in can help the development of linkages view of their vulnerability to the with larger enterprises and so their combination of factory closures, border integration in global value chains. closures, and reduced demand. The high Similarly, improving e-learning, notably reliance on China in several strategic as part of upskilling and reskilling products (notably in food and medicine) programs for the existing labor force, has also been a concern for many would enhance the delivery of the skills governments. For these reasons, the that are necessary to sustain the shift reshaping of global value chains, toward the proposed greening of notably away from China, offers a production capacities. These synergies unique opportunity for Vietnam. would make the proposed opportunities even more valuable. We believe that the Why does it matter for Vietnam? Any above selection of priorities is change, even marginal, in the structure straightforward as it is based on the of world trade and investment is country’s existing advantages and the expected to impact heavily on the recent changes induced by the COVID- Vietnamese economy, which is one of 19 crisis. To be most useful, a higher the most open in the world. Vietnam degree of granularity is necessary such does not only report a merchandise that the recommendations can be trade to GDP ratio close to 200 percent, implemented quickly. Within this vision, but its economy is also highly dependent further analysis and recommended on international tourists and FDI. The policy actions are presented for five country has also succeeded to position selected focus areas of these identified itself in various GVCs, notably in opportunities. In each of these focus electronics and textile and clothing areas, the discussion is organized to where the import content of exports was respond to the following guiding almost three times higher than the rates questions: (i) what is the underlying reported in Indonesia and China. mega-trend, (ii) why would it matter to Similarly, many industries in Vietnam Vietnam, (iii) why would it matter now, are sourcing inputs that are then used (iv) what could be done about it, and (v) by export companies located in other what has been the international best countries. A large fraction of the practice in these areas? bilateral trade between Vietnam and China is explained by these intra- Area 1: Tapping into the new global sectorial relationships. trading system Why now? Vietnam can move fast Global context: As explained earlier, because it is further ahead of the COVID-19 has heightened negative COVID-19 curve compared to many of attitudes towards globalization. In a joint its competitors, including India and effort to reduce the propagation of the Indonesia. Factories are opening up abcd abcd 6. Source: World Trade Organization, press release, April 8, 2020. 6 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies again, and many workers are going groups of countries. To be effective, back to work, revamping supply this gradual opening should be mutual capacities in the tradable sectors and between these countries, especially for minimizing supply chain disruptions. key sectors such as high value Similarly, the successful containment agriculture exports, medical products of community infections has made the (including PPEs) and tourism (similar country relatively safe, opening the to the tourism bubble that New Zealand possibility for the gradual return of and Australia are considering). international visitors. The Government Second, Vietnam can target industries can build on these recent positive that are considering diversifying their developments to launch a trade and value chains (Vietnam is well placed investment strategy, which will as it was ranked at the second rank in complement the country’s traditional terms of attractiveness for companies advantages of cheap labor and that aim at relocating from China). stability. International investors appear Beyond its traditional assets and its to have already reacted positively to geographical proximity with China, it Vietnam’s attraction as the value of can also count on its successful registered FDI surged by 20 percent in management of the COVID crisis as a April 2020 compared to a year ago. prime foreign investment promotion Moving fast is also justified from a tool. Vietnam’s privileged access to business point of view as, many firms various markets due to its bilateral, will aim at increasing their own regional and multilateral trading resilience by increasing the arrangements (such with the US, geographical diversity of their Korea, ASEAN, CP-TPP and the EV- suppliers. By its relative economic and FTA) open up trade opportunities to political stability and its proximity to the largest markets in the world for China, Vietnam offers a credible companies relocating in the country. investment destination for firms that While a number of electronic aim to rapidly substitute their companies have already started to production. move some production to Vietnam, additional opportunities may emerge in What to do? Vietnam can consider two agro-processing and transformation strategic moves to strengthen its building on Vietnam’s massive footprint on both trade and investments agricultural capacities. That said, global markets. First, it can develop Vietnam’s absorptive capacity is alliances with country partners that limited by its skilled labor force size also appear COVID safe and so boost and its complex cross-borders bilateral movements of goods and administrative procedures (ranked 104 people. As illustrated in Figure 1 out of 190 economies in trading across below, several of Vietnam’s major borders, 2020 Doing Business report). trade partners are also highly ranked Improving these weaknesses will by the COVID safety index, including require an acceleration of current China, South Korea and Japan. Others reforms on post-secondary education (like Germany, Australia and New (e.g. vocational education and Zeeland) are safe but not trading training), tackling current gender- extensively with Vietnam. The strategy based skills and occupational for Vietnam, while prioritizing safety segregation, simplifying and for Vietnamese citizens, should be to streamlining further administrative gradually open borders with these two procedures faced by businesses. a 7 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Figure 1. COVID safety rankings can be used to select trade partners Source: WITS trade data and DKG COVID-19 safety ranking Note: (i) The COVID-19 Safety Ranking integrates four main parameters; quarantine efficiency, government management efficiency, emergency treatment readiness and monitoring and detection; (ii) the size of the bubble captures the amount of Vietnamese exports to the particular country (in billions of US dollars). Table 2. Recommended actions to enhance trade and FDI Objectives Key considerations Examples New Promote bilateral agreements with other safe countries. South Korea: the customs partnerships Facilitate trade including (inbound and outbound) by administration has implemented Increase Customs Clearance Support Center. several reforms to facilitate trade Vietnam’s Use ASEAN and other FTA’s such as CP-TPP as a including the implementation of footprint in global platform for trade promotion. measures to facilitate the trade Promote digital technology to reduce transaction costs, of critical supplies for both trade improve competitiveness, business continuity. inbound and outbound cargoes. Promote contact-free business platforms: e-procedures, Customs Clearance Support logistics, warehouse, promote digitally enabled tourism Center facilitates the movement ecosystem businesses of critical raw materials. This Promote quality and safety. This applies to tourism workers includes critical supplies needed and visitors. Also important for supplying safe and quality to restart factories. KCS food through development and enforcement of food safety temporarily implemented 24/7 regulations; and improve coordination between support teams for emergency government authorities and exporters/producers for clearance of raw materials at compliance with Sanitary and Phytosanitary (SPS) several customs offices. measures. Targeted information campaigns (including online) will be necessary. New investments Target companies that are interested in diversifying supply Singapore’s Economic Attract new chains Development Board (EDB) sources of quality Launch a campaign with companies that have already offers investors financial FDI expressed interest in locating in Vietnam. advantages through long term Establish a database for value chain mapping and regional shareholding to companies in specialization and establish high frequency information high-growth technology sectors. system to provide important policy making information. It also focuses towards Identify skills demanded by companies/industries targeted innovation-led industries such as for new investments and promote availability of in-demand biomedical cluster, information skills, especially through vocational training and improved and technology, smart and tertiary education that can also promote a gender diverse sustainable technology (Internet labor force. of Things, AI, software Promote greater use of services in the manufacturing automation and robotics) and sector (e.g. for research and development, design and selected industry clusters under embedded services, logistics that increasingly matter for Strategic Investment Program. manufacturing competitiveness and account for much of the value added in a product). 8 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Area 2: Promoting digital payments outreach and promoting the entry of for a new business model diverse providers into the digital financial services market and Global context: The closures and strengthening knowledge-sharing social distancing triggered by the surrounding financial inclusion COVID-19 crisis have highlighted the initiatives. potential of e-commerce and practical use of digital payments to instantly link Why now? The COVID-19 pandemic sellers with buyers, lower transaction hastens the need to transition away costs, and create new markets tailored from a cash-based economy toward a to consumer demand, while minimizing system that encourages the use of physical contact. The pandemic has electronic payment services, which are also highlighted how digital payments vital to increase efficiency, reduce facilitates the availability and smooth costs, facilitate financial inclusion and provision of cash and non-cash reduce poverty. The Government and payment services used by the most the SBV have been moving in that vulnerable individuals particularly for direction, notably under the necessity Government to Person (G2P) payments to deliver financial support to and remittances. Those trends have vulnerable people and businesses that proven advantageous in countries that do not owned a bank account or do not embraced digital financial services and use electronic payments. The recent has reduced the full economic impact development of e-commerce (as a of the pandemic on commerce and substitute to traditional shopping) has access to financial services. proved to be important for business resilience, including SMEs. Yet, many Why does it matter for Vietnam? The of them are restricted not by the lack Vietnamese economy continues to be of access to Internet but by the heavily cash-based, with only a absence of secure cashless payment fraction of transactions conducted systems. using electronic payments. According to the Global Findex survey, only 24 What to do? Facilitating enabling percent of adults in Vietnam had a regulation related to branchless debit card in 2017, compared with 43 banking initiatives will help Vietnam percent in East Asia and Pacific achieve greater levels of financial countries overall. The disparity inclusion by promoting the entry of between ownership of debit cards and diverse providers into the digital usage of those cards was also financial services market and substantial; only 5 percent of adults strengthening knowledge-sharing that owned a debit card had used it to around financial inclusion initiatives. make payments within the previous This would however require year as of 2017. There is significant enhancements to regulations governing scope for growth in digital banking account opening and provision of low since Vietnam has a high rate of value transaction accounts as well as a smartphone penetration and cost- more evolved role for third party effective internet and Wi-Fi access, but payment service providers to interact a remaining gap in existing with payment systems and to allow for regulations. Building an enabling a more effective use of innovative payments eco-system is essential to technologies and the growth of the help Vietnam promote digital payments retail access networks. These steps and reach greater levels of financial will be essential to expand outreach to inclusion by expanding coverage and the under- and un-served segments of abc abc 9 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies the population, including the majority and expedite the process of developing of micro-entrepreneurs who are the regulations to allow for non-bank women, and to improve the usage and agents to operate in the Vietnamese reduce the cost of payment services, payments landscape. The growth in including remittances. Most digital digital payments is an important payments require an e-wallet with a component of the expanding digital bank that in turn requires a bank economy, but it is also one of the account. Given the current enabling factors for growing other circumstances, it may be prudent to aspects of the digital economy like e- revisit the potential of digital payments commerce. acb Table 3. Recommended actions to promote digital payments Objectives Key considerations Examples Developing Strengthen digital ID to facilitate adoption of digital Interoperability with Mobile digital payments payments, to improve privacy, and to reduce fraud Network Operators is common ecosystem risks. and prevalent in many Strengthen consumer protection to build trust in digital countries. Increasingly QR payments. codes as a form of payment Adopt standards and guidelines to complement are also gaining in popularity innovations in disclosure and recourse. particularly in Asia. Regulatory Promote interoperability of services across service authorities in Asia are pushing providers and points of service. for standardization to support Expand the use and acceptance of e-payments; by interoperability of payments promoting electronic payments to and from government systems across financial and between businesses. service providers. QR codes Create a regulatory and institutional framework for are two-dimensional machine- participation of third-party payment service providers in readable barcodes, used to new payments infrastructure. facilitate mobile payments at the point-of-sale. Facilitating Enable e-KYC and tiered-KYC requirements for low Singapore’s Economic e-commerce and risk accounts. Development Board (EDB) financial Establish regulated third-party payment initiation offers investors financial inclusion services through open architecture to new national advantages through long term Automated Clearing House (ACH) payment schemes. shareholding to companies in Set up transparent and objective operational and high-growth technology organizational criteria for all potential companies. sectors. It also focuses Encourage small retailers and businesses to create an towards innovation-led on-line presence and accepting digital payments and industries such as biomedical roll-out rural e-commerce demonstration programs. cluster, information and Strengthen collaboration among ministries on data technology, smart and sharing with complementary cloud based digital sustainable technology services including (i) point of sale and sales (Internet of Things, AI, management, (ii) accounting, (iii) ERP, and (iv) delivery software automation and and logistics. robotics) and selected industry Develop Supply Chain Finance through digital clusters under Strategic financing platforms that will help create a transparent Investment Program. database on transactions among suppliers and buyers. Area 3: Promoting telemedicine digital, too. With rising incomes, people increasingly aspire to enjoy Global context: As societies grow in long, healthy, and productive lives. As wealth and go digital, people want in other countries, rising expectations better healthcare and expect it to go of a growing middle class in Vietnam abcd abcd 10 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies have contributed to higher demand for fragmented payment systems lead to better quality and more technologically conflicting incentives, and there is no sophisticated healthcare. Recent information sharing across providers advancements in information and for follow up care. Electronic sharing communication technology (ICT) have of medical records facilitates been the biggest drivers of coordination of care across providers. telemedicine over the past decade. Telemedicine also allows patients to The transition from analogue to digital seek care at home or at lower level forms of communication, increased use facilities with remote consultations with of the Internet, and advances in specialists at secondary or tertiary computing power have created new levels, which can improve quality of possibilities for health service delivery. care. There are also potential cost- Common forms of telemedicine include savings and economic benefits from telemonitoring of patients, sharing of telemedicine. Direct cost savings have information across providers, remote been shown from teleradiology consultations (provider-to-provider) (transmission of CT images), and virtual visits (patient-to-provider). avoidance of unnecessary patient A rapid drop in the cost of ICT has transfers to higher levels, and phone also led to increased availability and consultations. Opportunity costs from utilization, expanding the potential for time spent seeking care can also be telemedicine to be a game-changer in reduced: studies suggest that a typical healthcare. doctor’s visit takes 121 minutes, of which 37 are travel time, 84 at the Why does it matter for Vietnam? clinic, with just 20 minutes of face-to- Telemedicine presents an opportunity face physician time. Such cost-savings to increase access to good quality will also likely affect the existing health care. Examples from developing gender time use gap, as females spend countries have shown improvements in more time on unpaid care than male the quality and accessibility of medical household members. As in other care by allowing providers to evaluate, countries, women are also at risk of diagnose, treat, and provide follow-up being victims of gender-based violence care to patients from a distance, and (GBV). enable remote access to tertiary care advice in underserved areas. In East Why now? The COVID-19 pandemic Asia, for example, China extensively has accelerated several trends that uses ICT for remote consultations justify the uptake of telemedicine, between hospitals and primary care including the growing use of digital facilities, which a delegation from tools and the demand for more Vietnam viewed during a study tour in sophisticated services by the aging 2018. Telemedicine interventions and emerging middle class. The should take equity into consideration, mainstreaming of telemedicine also ensuring that it facilitates access to offers the opportunity to reach out to care for people and not only wealthy isolated population in mountainous and urbanites. Telemedicine also offers an lagging regions. implementation in the opportunity to address the systemic long term. In response to the COVID- challenge of lack of coordination and 19 pandemic, many countries have integration of care in Vietnam’s introduced or accelerated the use of fragmented health service delivery telemedicine. While robust system. Healthcare providers currently assessments of clinical-and cost- do not coordinate among one another effectiveness are not possible in real on patient transfers and discharge, time, promising use cases have abcd abcdedd 11 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Table 4. Recommended actions to promote telemedicine Objectives Key considerations Examples Technological Improve coverage of ICT infrastructure Thailand: Telemedicine program and ICT environment especially in hard-to-reach areas. investments in rural hospitals. Including reliable Introduce standards for interoperability of Estonia: Consolidated online e-health record ICT infrastructure, systems, consolidate existing data, and per citizen, accessible by providers and interoperable encourage a culture of data sharing. patients and interoperable with non-health databases. systems Euro region: Unique patient ID, shared electronic health records. India: Has established an e-health authority and national IT portal. Regulations and Review and revise regulations and policies, in Euro region, US: Legislation on data organizational particular on (i) data security, protection, and protection and use environment sharing, (ii) reimbursement, and (iii) China medical alliances, Germany Establish clear responsibility for patients to ensure clear Gesundes Kinzigtal, Singapore Regional regulations and medical liability and continuity of care. Health Systems: New governance Consider new governance and management structures or contracts for care networks; policies; structures for organizing health care clearly defined roles for providers within reorganize health providers, including specifying new roles of network, use of multidisciplinary teams and service delivery providers and health workers, and developing integrated care pathways. network tools for collaboration. UK: Remote patient monitoring platforms Encourage informal (and virtual) social coordinate care across different providers. support networks for GBV survivors and expand support to on-line counseling Financial and Revise payment policies to create conducive US (selected states): Payment parity economic financial arrangements for the adoption of between telemedicine and face-to-face incentives telemedicine, so that the reduction in face-to- services. Establish strong face service volume will not adversely affect UK: Selected e-health apps free of charge financial providers’ revenue and income. to patients, with negotiated reimbursement Establish measurement and evaluation rates to providers. incentives and methods to assess the effectiveness of the Systematic reviews of existing evidence clear evidence on different technologies, clinical interventions, suggest significant scope for better clinical and and improvements to patient outcomes from measurement and evaluation, especially in economic benefits long term, routine use of telemedicine. developing countries. Human element Use simple technology (e.g. phone Vietnam’s hospitals conduct patient Increase user consultations) to mitigate potential ‘digital satisfaction surveys via phone. Expand acceptance of and divide’ and offer services in relevant scope to include follow-up consultations level of comfort languages to ensure access to ethnic and case management. with ICT; Improve minorities and women, in particular. US: Telemedicine training components in Train providers and run public awareness some undergraduate medical curriculum providers’ and education campaigns to boost Australia: Telemedicine Awareness Week competence and acceptance and use. confidence in ICT emerged for both COVID and non- support continued health service COVID patients. “Forward triage” and delivery in this context where fewer nurse hotlines have enabled effective people are seeking care for essential screening while protecting patients, services (e.g. vaccination, antenatal clinicians, and the community from care) for fear of going to health exposure; virtual visits using simple facilities. Telemedicine, coupled with technology (phone or video calls) have care teams operating in shifts and enabled primary care physicians to designated spaces and protocols for continue seeing their patients. managing suspected COVID-19 cases, Telemedicine also has the potential to could maximize the number of ab abncsdfer 12 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies consultations (remote and face-to- several common factors for successful face) and reduce instances of foregone implementation of telemedicine. These care. Vietnam, too, has rapidly include having the appropriate adopted telemedicine and online technological environment (reliable ICT counseling to GBV survivors during infrastructure, interoperable systems); COVID-19. Bluezone by Viettel covers clear regulations and policies and a range of uses and supports contact organizational arrangements; a tracing and alerts for COVID-19. The conducive economic environment Government of Vietnam aims to extend (strong financial incentives and clear the application across the country, to evidence on clinical and economic bring high quality health services to benefits); and the “human element” of people regardless of their location, at telemedicine: user acceptance, a low cost. This rapid adoption of competence, and confidence. In telemedicine comes after almost a addition, when it comes to case- decade of attempts to develop and management and online service to GBV standardize the use of ICT in survivors, confidentiality and Vietnam’s health system. COVID-19 anonymity are important elements. thus presents a rare opportunity – with ongoing momentum and with support Area 4: Enhanced information from the highest level of leadership – sharing for increased resilience to roll out telemedicine more broadly and mainstreamed in the health service Global context: Over 90 percent of delivery system in the long term. data that exists today has been created over the last two years. This What to do? Of course, not all data has become a source of telemedicine needs to be “high-tech”: comparative advantage for firms Vietnam could use inexpensive and (seven out of the ten best-performing simple technology, especially in the companies in the world are data- short term. Phone consultations are a oriented) and for governments. cost-effective way of connecting health International experience demonstrates professionals to patients. Hospitals in that forward thinking governments are Vietnam already conduct patient those that have made innovation satisfaction surveys via phone after possible by opening their own data and discharge. This can be expanded to make them easier to share through the include questions on patients’ well- use of digital tools. These tools (data being, simple follow-up medical advice, collaboratives, big data and artificial and case management. There may be intelligence) have been increasingly inequities arising from a “digital divide” applied to solve today’s challenges, based on age, education, from addressing climate change to socioeconomic strata, and geography. public health and to job creation. User acceptance of and level of comfort with ICT may also limit the Why does it matter for Vietnam? adoption of telemedicine. Effort will be International experience has shown needed to ensure that the elderly, that more open, inclusive, and data- lower-income households, and those in sharing governments are not only more hard-to-reach areas can also benefit efficient but also more resilient and from telemedicine. Offering better able to adapt to shocks. Over telemedicine in relevant languages the years, the Government of Vietnam would also be important to making it has been quite effective in gathering accessible to ethnic minorities. Global data from different sources experience shows that there are (government operations, households abcdesg abc 13 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Table 5. Recommended actions to enhance information sharing Objectives Key considerations Examples Regulations Issue sector specific (for free) data sharing South Korea: national data warehouse Enhance regulations and guidelines of critical datasets China : Environment, pollution control, information including in foundational registries (land, natural assets accessibility for citizens, businesses), tax, public finance, health Brazil: greater transparency in timber opening up data insurance, land, environment and natural tracking is helping tackle illegal activities assets, and geospatial data. found in 70 percent of the timber operations. Government Assign data custodians at the central, sector, Canada: Standards, OpenMaps Information and agency levels Denmark: Datafordeler Develop Develop a whole of government common IT Switzerland: SwissTopo, whole-of- platform Indonesia: Geospatial Portal government data Develop standards for sector-specific data United States: O*NET collection and classification schemes with governance agreed data exchanges standards and structure and data exchange formats to enable updating, use integration and and reuse of data inter-operability Developing data exchange mechanisms - establishing APIs and portals for seamless data sharing Consumer rights Issue regulations on privacy protection Singapore: SingPass Mobile App with sign- Improve privacy including anonymization in security features and security Issue security standards and layer for access Thailand Personal Data Protection Act protection control and forgery prevention in digital Europe: General Data Protection transactions Regulations and firms’ surveys). The collected data proactively and boldly, including also covers a broad range of areas through digitization that largely reduce from health, labor markets, pollution, the transaction costs associated to this public finance, public investments, effort. contracting, corporate governance, or geospatial such as natural asset Why now? The COVID 19 crisis can management, flood and risk serve as a catalyst for Vietnam to take information. While these data have bolder actions to place the use of data been used with success by the and information sharing in the heart of authorities to design their policy its recovery strategy. The successful strategies, many are not shared with containment of the Coronavirus the public. As a matter of fact, Vietnam outbreak has demonstrated that data was ranked 106 out of 178 countries by sharing can be a powerful tool to the most recent Open data Index. 7 design, implement, monitor, and Limiting the widespread sharing of the evaluate the impact of policy actions data could be justified for security and on individual and collective behaviors. privacy motives, but it also contributes Vietnam has used a wide range of to the deterioration of the quality of the digital support to inform and track collected data and to weaker people during the crisis. Reliable and accountability as results cannot be transparent information from the properly monitored and evaluated over government on the outbreak not only time. The government can leave a helped citizens to make concerted strong legacy for the future now by actions to contain the virus, but also publishing an increasing share of enabled public authorities at different government information more levels to flatten the curve. The ábdfuyhergh hgsadfyy 7. Source: https://odin.opendatawatch.com/ReportCreator/ExportCountryReport/VNM/2018 14 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies government can certainly build on in the global energy markets. While these gains by further opening fluctuations in the market are common, government data in order to help the magnitude of the current demand strengthen management, improve reduction is the largest since the market perceptions of risk, and second world war. By the end of the increase accountability for service year, demand for oil is expected to be delivery in its post-COVID 19 recovery. down by 9-10 percent, for coal by 8-9 Information disclosure in public and percent, for gas by 2-4 percent, and for natural assets management could also electricity by 5-10 percent. Renewable enable the general public to energy is one of the few sources complement regulatory monitoring and noticing an increase in demand of enforcement to improve performance of around 1-2 percent which also points the industries or service delivery units. to its economic and financial viability. Due to the supply-demand imbalance, What to do? Collecting and sharing the energy commodity prices have data has proved to be a game changer plummeted in the past months, on during the COVID-crisis. The recent average, by 50 percent below pre- issuance of a broad regulation on COVID-19 levels. In some cases, for digital data sharing and open data, instance, crude oil, the prices have amid the outbreak in early April, was a fallen below theoretical limits (to step forward in the right direction. It negative) for the first time in modern should be followed by the rapid history. Given that over two-thirds of adjustments of sector-specific the global energy system relies on regulations and practices, such as in fossil-fuels, the reduced consumption health, land, environment and natural is having a dramatic impact on carbon- resources, trade, or public finance – dioxide (CO2) emissions. The rate of tax administration - that are limiting decline of CO2 emissions has been the the sharing of this invaluable fastest in over one-hundred years and information even among public entities. six-times larger than the previous Ultimately, a whole-of-government data record reduction of 0.4 Gt in 2009 governance structure needs to be caused by the global financial crisis. implemented to facilitate seamless Countries across the world have noted data sharing across government the highly positive impact of the agencies and with businesses and reduced pollution levels to human citizens. Moving toward this objective health and natural environments. The could be attained by (i) removing gains from reductions in rate of barriers to information accessibility in increase of CO2 emissions and local priority areas; (ii) developing air pollution will be short-lived unless government data platforms or easy-to- they facilitate deeper and longer-term use portal with application behavioral, business, and institutional programming interfaces (APIs) to changes. Furthermore, it is imperative automatically share data between to avoid an emissions ‘snapback’ computer systems; and (iii) improving similar to what occurred during the privacy and security for users. global financial crisis of 2008, when CO2 emissions from fossil fuel Area 5: Aiming for a low-carbon combustion and cement economy production grew 5.9% in 2010 (more than triple the decrease associated Global Context: The COVID-19 with the recession). pandemic and the ensuing lockdowns have created an intense demand shock Why does it matter for Vietnam? The ea 15 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies energy commodity price fluctuation is fossil fuels. At the current rate, energy experienced differently by fuel imports will account for at least a exporting and importing nations. Fuel quarter of all energy consumed in exporting nations are facing Vietnam by 2030. The vulnerability of unprecedented current account deficits Vietnam’s energy system to imported and are reducing fiscal programs while fossil-fuels will leave it exposed to also having to respond to emergency financial risks (foreign exchange spending needs for the pandemic. payments for imports), energy security Vietnam, as a net energy importer (e.g. risks (disruptions in imported supply), oil, gas, coal), has thus far fared well and environmental risks (increased in this regard. Having managed the GHG and air pollutant emissions) COVID-19 crisis better than many unless it seizes the current window of nations, Vietnam’s economy is on the opportunity and undertakes urgent path to recovery. The transport sector course corrections. The timing of these is slowly rebounding, industrial activity decisions is particularly relevant given is resuming, and the year-to-year the policy framework transition electricity consumption, which is fossil expected in the year 2020. Several fuel intensive, is up by 4 percent in the landmark actions are being considered first four months of 2020. Given the which could have a tremendous impact reliance of energy system on fossil- on the energy sector. For instance: the fuels, the instinct would be to expand planned revision of the Vietnam’s consumption (liquid fuel and coal Nationally Determined Commitments inventory at the end of March 2020 (NDCs) can increase ambition on CO2 was 47 percent higher than the same emission reductions and put in place period last year). Since Vietnam has no regret policies and measures that largely eliminated fossil fuel can address air quality and climate subsidization mechanisms, by default, action together, Social-Economic end consumers would benefit from Development Plan (SEDP) which can lower pass-through prices (with connect the climate commitments to allocation being made for the Fuel core economic policy, Power System Stabilization Fund). However, as Development Plan (PSDP 8) which can commodity prices rebound, this near- anchor renewable energy based term financial benefit can have severe generation, Vietnam’s National Energy negative financial as well as economic Efficiency Plan (VNEEP) which can impacts in the long-term with regards accelerate implementation of energy to human health, environment, and efficiency measures, as well as the natural resources. In recent past, proposed revisions to the Law on Vietnam has been the lower middle- Environmental Protection, which would income country with the highest set a strong legal basis for climate average annual change (of about 3 action. As the energy demand for percent) in losses from ambient economy continues to rise, it will be pollution between 1995 and 2015. imperative that investments in the COVID-19 recovery period do not lock- Why now? It is anticipated that energy in Vietnam on a fossil-fuel intensive commodity supply will increasingly be pathway. This would help avoid throttled to respond to the demand potential stranded asset risks in the shock and that the prices will rebound energy sector, given that long-term strongly within a year. Nearly 70 investments with lifetimes spanning up percent of Vietnam’s energy for core 50 years or even longer may not be productive sectors, such as transport, economically viable much earlier than electricity, industry, is derived from that. Taking a low-carbon orientation in abcd 16 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies investments (including stimulus facilities, tax breaks) for firms and measures which should not ignore individuals together with targeted environmental standards for fast- communication campaigns to support tracked implementation) can enhance behavior change towards efficiency. competitiveness, more attractiveness of foreign direct investment, improved Electricity continues to become the public health, and local quality of primary fuel source of Vietnam’s life. Additionally, supporting the modern economy. As such, switching development of a clean energy industry from imported molecules to local will also bring about short-term job electrons through aggressive creation benefits while also potentially utilization of abundant domestic building an internationally competitive renewable energy resources (e.g. solar manufacturing industry in Vietnam. and wind energy) can significantly reduce, and eventually eliminate, the What to do? COVID-19 presents a reliance on fossil fuels. Given unique opportunity to prioritize continued trend of reduced costs of climate-smart investments. These renewable energy, rising investments not only provide long-term environmental costs of fossil fuels, and financial and environmental benefits, the ongoing hurdles experiences in but also bring short-term and low-risk implementing new projects, the positive impacts on employment and opportunity is now to reconsider plans economic activity. Three areas are for large-scale coal-fired power plants. discussed below: (i) demand Following actions should be moderation, (ii) supply diversification, undertaken: (i) revised sector plans and (iii) facilitating low carbon (PSDP 8) should include ambitious investments. targets for renewable energy as part of the generation mix, while also Scaling-up production-side and including all relevant technical consumption-side energy efficiency requirements (e.g. for grid effort is a low-hanging fruit. Following strengthening, battery storage) for actions should be undertaken: (i) enabling successful variable renewable pushing for a shift towards greater use energy integration; (ii) while private of public transport for passengers and investment is essential and should be of railways, waterways, and coastal promoted, public investment in shipping for freight; (ii) promoting e- upgrading grid capacity to evacuate mobility by switching from fossil-fuel renewable energy needs to be driven vehicles to electric vehicles prioritized; (iii) implementing (especially where public transit is not transparent commercial framework for feasible) must become a priority; (iii) promoting private sector investment making efforts to reduce transport (e.g. reverse auctions and demand through prudent use of standardized agreements) can further telecommuting, e-commerce, and reduce costs build investor confidence; promotion of compact urban planning; (iv) distributed generation programs (iv) strengthening regulatory (e.g. rooftop solar systems) can frameworks to implement energy reduce the pressure on the centralized efficiency targets at sub-national and grid supply; and (v) regional power sector levels (e.g. power system loss trade with careful consideration of reduction, industrial retrofitting, energy security (e.g. import of surplus improved building codes, appliance hydropower from Laos and China) can standards, etc.); and (v) providing facilitate utilization of low cost, low investment incentives (e.g. credit carbon energy. faciliti 17 Reshaping the economy COVID - 19 POLICY RESPONSE NOTES through ‘no-regret’ policies Successful clean energy transition will forms of energy would be important. require upfront financial support for Such market-based approaches will long-term economic benefits. Following provide an incentive for firms and actions should be undertaken: (i) consumers to find areas where lower- charging a carbon price on fossil fuels carbon technologies can substitute (not passing on all benefits directly to most easily without disrupting the uses consumers) and using the proceeds for where low-carbon alternatives are not low-carbon investments, including in close to being cost competitive. It renewable energy and energy would also incentivize innovation in efficiency. Given the historically low those areas where alternatives are prices as well as relatively low levels expensive; (ii) supporting private of fossil fuel consumption, this would sector led financing (which can be be a timely opportunity. Adopting a enhanced with government guarantees well-designed carbon pricing or equity support) and launching green instrument (e.g. carbon tax, cap and bonds can bolster investments; and trade system) would make climate- (iii) establishing cost-reflective tariffs smart investments more competitive for electricity which enables long-term and lead to a shift towards low-carbon financial viability. abc Table 6. Recommended actions to ‘flatten the carbon curve’: Objectives Key considerations Examples Demand Promote e-mobility, public transport, and China’s public bus electrification program is moderation other fossil-fuel demand reduction measures. one of the largest in the world Reduce the energy Scale-up investment in improved energy USA’s energy efficiency stimulus resulted intensity of the efficiency of supply as well as consumption of in double the energy cost savings economy as electricity. Hebei’s Pollution Prevention and Control Vietnam’s energy Stricter energy efficiency standards for Implementation Action Plan (China) elasticity to the GDP industry, appliances, vehicles while phasing focusing on reducing emissions in is estimated to be down super climate pollutants (HCFCs and enterprises, household stoves and about 2, which is HFCs) used for space cooling, refrigeration transport one of the highest in the region and calls and insulation. Montreal Protocol support for HCFC phase- for significantly out and HFC phase-down increased ambition Supply diversity Improve planning and provide India, China, UAE: energy from Solar PV Accelerate clean complementary public investment to ensure has reached grid-parity in many countries energy transition growth of domestic renewable energy. Korea plans to shut half its coal power from imported Accelerate development of transparent and plants and nearly triple the share of molecules to local competitive commercial frameworks to attract renewable energy in electricity generation electrons through private sector financing. aggressive utilization Identify and promote training in the skilled of abundant workforce needed to support this transition. domestic renewable energy resources (e.g. solar and wind energy) Facilitating low- Implement a carbon price on fossil-fuels and Canada has successful reduced emissions carbon use proceeds for low carbon investments. using a carbon tax on fossil fuels investments Adopt a well-designed carbon pricing EU, Japan (Tokyo and Saitama), USA Support clean instrument to provide incentives for low (California) have used cap-and-trade energy industry and carbon innovations. schemes to incentivize GHG emission innovation that will Continue electricity tariff reforms and support reductions targeting heavy emitting sectors require upfront development of market-based investment financial support for approach. long-term economic benefits 18