Recently, Fulbright University Vietnam was pleased to receive the DETERMINANT antibacterial masks from Esquel Group and Operation Smile organization. “Hopefully, 5,000 antibacterial DETERMINANT DET30 masks will be enough for Fulbright staff and students to return to school safely. This is Esquel and Operation Smile’s collaborative effort to support the ‘new normal’ operation of governments, NGOs and academic institutions”— said Mr. Viet Nguyen, Country Representative of Operation Smile in Vietnam.
Ms. Bui Viet Lam – Communications Director and Ms. Pham Thi Ngoc Lan – Executive Assistant to the President were the representatives of Fulbright University Vietnam to receive this meaningful gift from Esquel Group. “Fulbright University Vietnam would like to thank Esquel for the practical gift. We will distribute these masks to Fulbright students when they return to school in the near future. Fulbright treasures all donations, in any forms, from benefactors to support the community in establishing a ‘new normal’ after the Covid-19 pandemic,” Ms. Viet Lam said.
On June 19, Fulbright School of Public Policy and Management (FSPPM) organized a webinar titled “Expanding the Access to Covid-19 Vaccines and the Responsibilities of the State”. Leading experts gave in-depth analysis from epidemiological, legal, economic, and public policy perspectives on Vietnam’s vaccination strategy in the context of the fourth wave of Covid outbreaks that requires the Vietnamese government to have a new approach to the pandemic. Among other things, they discussed the need for Vietnam to map out a long-term vaccination and immunization plan.
It is very likely that certain developed countries in the world will continue to discharge the Covid vaccines they do not use, making the supply of vaccines more abundant to countries struggling to have the access to Covid-19 vaccines. While Vietnam is ready to pay for about 120 to 150 million doses of Covid vaccines, the problem is how the country would simplify red tape to receive the vaccines and roll out a comprehensive vaccination program.
Red tape in case of emergency
Prof. Pham Duy Nghia, Director of Master in Public Policy Program at FSPPM, gave an example of bureaucratic red tape when Vietnam Vaccine Joint Stock Company (VNVC) imported around 300,000 doses of AstraZeneca vaccine on May 25, but the batch stayed in the warehouse for 20 days before being sent to cities and provinces affected by Covid-19.
“VNVC paid in advance for the vaccine, so the government would have to pay back the money to the company. But the problem is that the Ministry of Health must get approvals from other ministries before spending money. That procedure is even more complicated for authorities of provinces and cities. If local authorities want to spend the local budget on Covid vaccines, according to Article 26 of the Law on Bidding and Public Procurement regarding procurement in case of emergencies, they must get approval from the Prime Minister. Although the Vietnamese government has not declared Covid-19 situation as an emergency, the administration should act promptly as if it is in an emergency if it wants to disburse public money for urgent procurement. Whether a company like VNVC could bring vaccines to Vietnam and how it could do so depend a lot on the support of the administrative system,” Prof. Nghia said.
Dr. Nguyen Thu Anh, Director of Woolcock Institute of Medical Research Vietnam, commented that the Vietnamese government’s goal of vaccinating 70 percent of the population from now until the end of 2021 is extremely hard to reach, even when there are abundant supplies of vaccines. Calculating based on global data, at the highest speed, Vietnam can vaccinate 500,000 people per day across the country. It is with the condition that Vietnamese people support the vaccination. In case of complications, the pace of the rollout would slow due to people’s worries.
According to Dr. Thu Anh, we should not calculate the vaccination rate based on the doses used per day, but we should anticipate that the number of vaccinated people would drop when vaccination reaches a certain rate. Instead of aiming to vaccinate 70 percent of the population, Vietnam should give priority to provinces, cities, areas, or businesses with the highest risks of coronavirus outbreaks. The risk should not be calculated based on the infected cases, but on the likelihood that people are exposed to the virus due to business activities and daily activities. At the same time, Vietnam should focus on border areas. “If we can control the outbreaks in Bac Giang, Bac Ninh but we fail to closely monitor border areas or immigration quarantine zones, there is high risk for the virus to spread into the country,” she said.
Dr. Thu Anh also noted that we should treat Covid-19 patients based on the level of seriousness. Top priority should be given to people with high risk of death to reduce the pressure on the healthcare system, so the healthcare workers could spend time on elderly patients and patients with underlying health problems.
Domestic vaccine development strategy
At the webinar, experts agreed that there are many lessons Vietnam has learned from the Covid-19 prevention campaign, including the strategy of approaching Covid-19 vaccines. While the Covid-19 variants will stay for a long time in the world and similar pandemics may occur in the future, Vietnam should invest in a methodical and long-term domestic vaccine plan, Dr. Thu Anh recommended.
Vietnam must master the technologies for the research, development and production of Covid vaccine, she said. To do so, Vietnam should invest in human resources, facilities, and associated supply chain so that we can quickly produce a new type of vaccine as soon as it is introduced. Also, the main goal is to invest in scientific research to develop new types of vaccine, according to Dr. Thu Anh.
“We should choose new technologies when deciding to invest. For example, mRNA vaccines are highly effective, can be developed in a very short time and require a short time to expand production scale, while adapt very quickly to new variants of SARS-CoV-2. Vietnam should focus on similar technologies or other technologies that countries around the world are developing.” – Dr. Thu Anh stressed.
She also said that Vietnam should invest in research to develop single-dose vaccines that can treat many diseases. Some countries in the world have now begun to test these types of vaccines or vaccines that can treat cancer.
Finally, Vietnam should install a surveillance system for early detection of new diseases, not only for the surveillance of cases but also for DNA sequencing of bacteria or viruses, laying the foundation for the scientific research and development of new vaccines, as Dr. Thu Anh has shared.
“The development of a new vaccine can go to nowhere and the failure rate is pretty high; therefore, Vietnam should have a large public investment program, encouraging the private sector to join and get the access to public investment resources to develop vaccines” – she emphasized.
On the other hand, Vietnam need to improve the capacity of the healthcare system to roll out vaccination on a large scale with different scenarios of diseases, she added.
Explaining the issues raised by Dr. Thu Anh from a legal perspective, Prof. Pham Duy Nghia said it is a challenge for Vietnam to manage all by itself to ensure health safety for the population of nearly 100 million people. In that context, the legal system as well as the state governance must adapt accordingly. Favorable conditions and incentives must be given to private vaccine research centers so that they can operate with their own mechanism. Above all, these private research centers should be allowed to bid for ideas and the government will fund their projects, even when the government’s investment into these projects fails.
“As an example, BioNTech and CureVac are both German vaccine research centers. The country has invested 300 million euros in CureVac but recently announced the test had failed. In other words, vaccine research is not always successful. But the research of new variants can only be possible thanks to previous studies. There is a very close cooperation between Oxford and AstraZeneca, between Pfizer and BioNTech, etc. The power of cooperation is the reason for the success of vaccine development in a short time” – he said.
He recommended amending the law to allow more freedom for the market and self-responsibility of businesses, but on the other hand also boost the State to be more innovative, to use new tools of regulation. The State can establish new laws regarding vaccine management, including funding for vaccine R&D, monitoring and evaluating research results, production and distribution of vaccines, and the rollout of vaccination. The new law should also mention the responsibility of the State for problems arising after vaccination.
“The State’s mission is to ensure a law on the management, investment, use of vaccines and the prevention of bad effects caused by vaccination. It should be a priority,” he said.
Prof. Pham Duy Nghia also believes that it is necessary to redefine the role of the government in entrepreneurship – the government sponsors new innovations rather than leaving that to private businesses.
“The State invests in a private research center, but if the vaccine is developed, the patent belongs to the private center. The State grants the right to take advantage of the private center’s intellectual property, but in return, the private center must commit to selling the vaccine, even to poor countries, at low prices. That is the reason why the contracts to sell vaccines are not made public. These contracts have a lot of complicated binding regulations between the investor and the developer of vaccines. In this case, the developer of vaccines is a private company but carries out a public mission. This characteristic must be demonstrated in the upcoming law on the management, research, and development of vaccines, and the new law should encourage investment in private vaccine centers, changing the traditional way of State governance,” Prof. Pham Duy Nghia said.
Improve financial backup plan
According to Mr. Nguyen Xuan Thanh, FSPPM Lecturer and member of Prime Minister’s economic consultant team, in principle, the funds for research and development of Covid-19 vaccines as well as the purchase, distribution, and vaccination must come from the State’s budget. These tasks are also the responsibilities of the State. People pay taxes so that when there is an emergency like Covid-19, the State must roll out a low-cost and free vaccination program for them.
In Vietnam, the recent establishment of the Covid-19 Vaccine Fund reflects the consensus between the State, the people, and businesses, when the people and businesses donate money to the fund for the State to implement a nationwide vaccination program and do other things. There are many private companies that are ready to use their own money to buy vaccines for their employees too. According to Mr. Nguyen Xuan Thanh, the State should be aware that it still bears the main responsibility to buy vaccines for the people.
While most countries in the world, no matter rich or poor, have implemented policies to spend more money to support people and businesses during the pandemic, in Vietnam, people and businesses are willing to donate money to the State. In 2020, although Vietnam had to cope with three waves of Covid-19 outbreaks, the budget revenue was still higher than that in 2019, and even exceeded the revenue estimated for 2020 by 9.1 percent.
“When it comes to the purchase of Covid-19 vaccines, people and businesses even donate to the State. It is not fair to them. The State should save money from other unnecessary expenditures to spend on vaccines and other pandemic prevention efforts, rather than continuing to call for donation from people and businesses,” said Mr. Thanh.
Another example of Vietnam’s bizarre budget-saving policies in the context of the pandemic cited by Mr. Thanh is the fact that the Ministry of Finance spent 200 million dollars to be prepared to buy vaccines in 2020 on other categories as soon as COVAX announced it was offering 38.9 million doses of Covid-19 vaccines for free.
“The Covid-19 pandemic has helped the central and local governments to cut off a lot of meeting costs. It can completely be a backup fund for an emergency like Covid-19. In order to cope with crises such as natural disasters and pandemics, financial resources must always be ready to be used when something happens,” Mr. Thanh said.
According to Mr. Thanh, public investment is not necessarily the establishment of state-owned enterprises or the establishment of projects to receive money from the State’s budget for implementation. Public investment can be investments in pharmaceutical firms, private research centers, or universities. In the world, most vaccine manufacturers are private enterprises. Russian and Chinese state-owned vaccine manufacturers also operate under the mechanisms of the market. Therefore, public investment should be understood as sponsoring private innovations and taking the risks of failure.
Xuan Linh-Thuy Hang
Huynh Minh Trang was accepted by three different universities in the U.S.; she was hoping to start her college life in America this September. But like so many other students who planned to study abroad this Fall, she’s stuck in Vietnam because the Covid-19 pandemic has left her in limbo. Trang is among 190,000 Vietnamese students who put their overseas study plans on hold due to the outbreak of the novel coronavirus. Yet, that was the situation a few months ago.
In July, the pandemic still shows no sign of abating and borders still remain closed. In the U.S., California’s two largest districts, Los Angeles and San Diego, recently announced that classes would be online-only in the fall. School administrators elsewhere are increasingly unwilling to risk crowding students back into classrooms until the coronavirus is fully under control. This uncertainty has left many Vietnamese students scrambling to find a solution for their upcoming college aspirations.
The Uncertain Future
Most students who plan to study abroad this year applied to their university of choice before COVID-19 started. Now, they have to face the reality of not knowing whether or not they can attend university this Fall. As universities around the world struggling to decide when and how to reopen, the feeling of bewilderment looms over all international students. For them, the uncertainty poses frustrating questions of logistics and how such disruption drastically alters their academic futures.
With the international borders remain closed for the unforeseeable future, first-year students find themselves in precarious situation of not being able to travel to their universities abroad or find proper accommodation for the next coming years. To complicate the already difficult situation, the second wave of outbreaks adds another level of difficulty and anxiety for international students and universities all over the world.
To help ease such anxiety, some universities are planning to offer a hybrid of in-person and online classes come fall, while some plan to move all their classes online. Although remote learning can help students stay on their academic track, it may come with some major drawbacks. One of the main reasons for students to pursue higher education overseas is for them to live in a new culture and the college life in addition to the education programs. Devoid of such fulfilled experience, the online program becomes less attractive for some students.
Time difference is also a problem for Vietnamese students if they have to take online courses this Fall. For example, if Vietnamese students take online courses which will be taught in America, they have to stay up during the night to attend classes. The time difference would be difficult to overcome.
Pham Hoang Boi, a freshman at University of Minnesota, shared: “My university offers online courses, which they encourage me to take. I took an online course during my quarantine when I first came back to Vietnam, and I think it i\was alright. But to me, it lacked human connection, so I procrastinated. I also encountered other issues: internet connection problems, time zone difference, and difficulty in teamwork.”
For parents, there exists a different type of anxiety: while facing the pressure from the people and even the governments, universities may be forced to open their doors to students sooner than may be advisable. Combined with the unique circumstances that the pandemic has created — including scarce flights, closed borders, and the elevated risk of getting infected, the prospect of sending their children off to a different country becomes much tougher for parents.
“Our entire family and Minh Quan himself agreed that he should stay in Vietnam. The fact that America is suffering from major damage from the pandemic, as well as the ongoing political turmoil make us believe he will be safer here,” explained Dao Minh Son, a father whose son got accepted to Clark University this Fall.
With so many uncertainties and no clear instructions, universities, students, and parents alike have been left with no other option but to hold their breaths and hope for a more comprehensive plan to be announced in the near future.
And the Alternatives
Once the pandemic is over, students will continue to travel abroad for their studies. However, according to many health experts, that time will not come any time soon. As their lives turned upside down, rather than endure a year online with little to no on-campus interaction, some students are choosing to take a gap year to work, learn a new skill or add experience to their resume.
Yet, in such culture as Vietnam, taking a year off is not traditionally done. Many students, such as Huynh Minh Trang, as well as parents, still prefer an uninterrupted education, even in light of a pandemic. These students have begun assessing other options, some closer to home. However, not all Vietnamese students, who planned to study abroad, are eligible to enter public universities in Vietnam. Local private universities, with flexible admissions cycle, became the destination of choice for these students. It is also notable that, for students and parents who decide to change their plans, the most important factor is the quality of the academic experience.
“Our family supports Quan’s decision to apply to Fulbright because we know Fulbright is a university of international standards, which also receives recognition and support from the Vietnamese government. Hopefully, our son will be able to absorb all the precious knowledge that Fulbright has to offer. We also wish that he would have a special experience at Fulbright and enjoy the school’s extracurricular activities,” added Dao Minh Son.
Fulbright University Vietnam, nevertheless, does not have flexible admissions cycle. Yet, Fulbright takes pride in our co-design spirit and our ability to “build the plane while flying it.” That was why the University decided to launch the Visiting Student Program in June, with the original deadline for application being July 06, 2020.
“Although our Spring admissions cycle ended and Fulbright definitely does not encourage students to give up their opportunities to study at top international universities that they have worked extremely hard for, Fulbright understands and empathizes with the concerns of many Vietnamese families. We are deeply aware of our social responsibility to help find solutions to this crisis, including assisting students affected by the Covid-19 pandemic. That’s why Fulbright launched the Visiting Student Program, even though it means that the University would have to expand its resources significantly,” shared Ms. Dam Bich Thuy, President of Fulbright University Vietnam, last June.
Now more than ever, Fulbright understands the precarious situation Vietnamese students and their parents are in. Once again, the University stayed true to its co-design spirit and announced the deadline extension for the Visiting Student Program to July 31, 2020. Students who did not meet the previous deadline can now have more time to apply to this program, if they wish to.
To address the concern most visiting students have regarding their academic credits at Fulbright, Dr. Dinh Vu Trang Ngan, Dean of Fulbright Undergraduate Studies, advised: “Fulbright University will strive to work with international universities where students have been accepted, to make sure they can transition smoothly and have fulfilling learning experiences.”
“Among international universities in Vietnam, Fulbright’s program is the closest to that in the US. I hope I will be able to transfer my credits here to my school in the US. An international education is what I am looking forward to. I believe the Visiting Student Program will be beneficial for me and help me prepare for my studying abroad later on,” shared Huynh Minh Trang.
“Fulbright understands that the Visiting Student Program may not be ideal for all Vietnamese students who now have to face such an uncertain academic future. However, as an institution committed to provide Vietnamese students with a world-class education, we strive to provide them another option to consider,” added Ms. Le Thi Quynh Tram, Fulbright’s Director of Admissions and Financial Aid.
Since the Covid-19 pandemic is the principal reason world oil price are spiraling down, the global crude oil market can only recover to normal, or a “new normal”, when SARS-COV 2 viruses are effectively controlled. Once mass lockdown bans are lifted, the global economy can rumble back to its normal conditions, resulting in increased demand for crude oil.
The article below summarizes a policy webinar conducted by Dr. Le Thai Ha, Director of Research and Senior Faculty member at Fulbright School of Public Policy and Management (FSPPM) on the topic: Oil Price Crashes Amidst the Covid-19 Pandemic.
Crude oil is an essential commodity among the most traded in the global market. Oil price swings have hit the economic health of many countries, including both oil importers and exporters. In her presentation, Dr. Thai Ha first reviewed historical occurrences of collapsing oil prices over the past 50 years to contextualize and better understand the underpinning reasons governing current price shocks.
Dr. Thai Ha first explained some basic characteristics of global crude oil management, and explained why the West Texas Intermediate (WTI) plays a more prominent role in the global crude oil market. In 2015, after heavy investment in infrastructure and record highs in U.S. production output, the U.S. lifted its 40-year export ban on crude oil. When U.S. oil output kept rising, the role of WTI gained increasing importance in the market.
The webinar was grounded on the empirical research conducted by Dr. Thai Ha and her two co-authors on the factors fueling the most recent oil price collapse. Using econometric approaches and quantitative models to analyze time series data from January 17th to April 30th, research findings revealed that uncertainty in U.S. economic policies (as indicated by EPU index) have exerted a long-term negative impact on WTI crude oil prices. According to authors, the more uncertain economic policies are, the higher the risks incurred, precipitating the downturn of economic activity and decreasing demand for crude oil and lowered oil prices. Besides, bad sentiments and the volatility on U.S. financial markets (as indicated by VIX index) are also found to significantly affect WTI oil prices. Dr. Thai Ha and her co-authors concluded that plummeting world stock indexes also take a great toll on crude oil prices long term (see Figure 1).
In addition, the Saudi-Russia oil price war also negatively affected the price of WTI oil. Empirical evidence by Dr. Thai Ha demonstrated that the Covid-19 pandemic contributed significantly to oil price crashes and exerted long term negative effects (see Figure 2). In fact, global oil demand has come under an unprecedented shock due to travel restrictions between countries intended to contain viral spread. Meanwhile, oil supply had surged dramatically as a consequence of Saudi Arabia’s oil price war with Russia on March 8th. Fr Dr. Thai Ha, those were the “dual fists” pounding oil prices downward in a very short timeframe.
Dr. Thai Ha emphasized oil speculation on world financial markets was believed to be a major factor in sending WTI to sub-zero lows for the first time in history. Specifically, futures contracts for WTI oil expiring in May have fallen 300% to negative 37.63 per barrel on Monday (20th April 2020).
Consequences for Vietnam’s economy
Vietnam is both a crude oil exporter and an importer of petrochemical finished products. For Dr. Thai Ha, this means the price crisis might exert both positive and negative effects on the economy.
Decreasing oil prices might have positive effects on manufacturing firms, cutting production and transportation costs. Transporters and freighters may stand to benefit most, as fuel and energy account for the largest share of their cost structures. Reduced production costs also improve the competitiveness for goods made in Vietnam, especially as many recent multilateral and bilateral trade agreements provide our more open economy further advantages. Furthermore, reduced oil prices help citizens save transportation fees, stimulating stronger domestic consumption and boosting the economy. In addition, inflation rates are controlled at low rates, stabilizing the macro economy and attracting greater FDI. Dwindling prices also reduce foreign currency spending in exchange for oil and gas imports or other petrochemical products and increase the foreign exchange reserves held by State Bank of Vietnam. However, Dr. Thai Ha cautioned that these benefits are realized only if Vietnam successfully ensures the continued safe operation of the economy amidst the pandemic.
As Dr. Thai Ha argued, detrimental effects of decreasing oil prices include the reduced revenue for the country from crude oil exports. Although it must be noted oil exports from Vietnam have been on a declining trend, leading to diminishing shares of revenue from oil exports to tax revenue (see Figure 3). As a result, negative effects are expected to be somewhat mitigated. The stock market might be affected as stocks of fuel and oil companies show bearish signs (capital flows to oil & gas sector may be falling).
Dr. Thai Ha explained depressed oil prices may threaten the stability of oil industries –a sector essential not only for the economic health of Vietnam, but of the entire globe. Considering this analysis, Dr. Ha put forward some policy recommendations on how to mitigate the current historic price crashes.. Thai Ha emphasized that although some policy measures can lessen the effects of oil shocks to a limited extent, special attention should remain on the prevalent reason for the collapse: the COVID-19 pandemic. Since the pandemic is the principal reason world oil price are spiraling down, the global crude oil market recovery to normal, or a “new normal”, is conditional to the effective resolution of the pandemic. Once mass lockdown bans are lifted, the global economy can rumble back to its normal conditions, resulting in increased demand for crude oil.
Dr. Ha also evaluated the possibility of oil prices going sub-zero again. Specifically, our researcher argued that the underlying causes behind the fall of WTI are shifting dramatically. On the supply side, OPEC+ efforts to stabilize oil prices are showing early signs of success, while the Russia-Saudi price war has come to an end. Official deals to cut productions among OPEC+ members have reached impressive milestones. Consequently, oil prices have increased 60% during the past three weeks. Regarding demand, transportation and transport constraints are being gradually removed in some countries, while some economies have already observed a return to normal operation, leading to increased demand for oil consumption. Speculators in futures market are more cautious in their investment decisions compared to a few months ago. It is very unlikely that futures contracts will be traded as aggressively as in the late April period.
Indeed, sub-zero oil prices are unlikely. But our researcher outlined two caveats. Firstly, another outbreak of Covid-19 is a reasonable possibility. In such a case, restrictions on economic activities would be imposed again, reducing the demand for oil. Secondly, increasing global oil storage capacity is a slow process. Without currently negotiated deals to reduce production among OPEC+, world storage capacity would only take a few weeks’ time to saturate. OPEC+ commitments to reduce output cannot solve the problem immediately, only slow down the process of eventual saturation until storage capacity increases.
Finally, Dr. Ha noted that the price fall to negative only lasted one day. After the historic dip (over 300%0 on Black Monday, oil prices have reverted to positive numbers the following day, Tuesday April 21st. In fact, WTI futures contracts expiring last May closed at 10.01 USD per barrel, equivalent to a 126.6% increase after one day, the largest daily price increase ever. This indicates that traders and investors still deem crude oil as an attractive commodity to hold and trade, as its nickname “black gold” suggests.
Three graduation theses from the 2020 class of Fulbright’s Master in Public Policy, Policy Analysis concentration (MPP-PA 2020) have been selected as case studies for educational purposes.
These three original works constitute the final theses of 3 Fulbright School of Public Policy and Management (FSPPM) graduate students, Ho Bao Tram, Pham Van Long, and Nguyen Thi Xuan Huong. Their research topics respectively cover agriculture, industry and journalism.
Ho Bao Tram examined local government policies facilitating agricultural start-ups in Dong Thap province from 2016 to 2019, using Gartner analytical quadrants. Pham Van Long investigated the effects of industrial clusters in Vietnam, supporting his research with empirical evidence. Meanwhile, Nguyen Thi Xuan Huong explored how national policies shape public press and the relationship between the state and the press in Vietnam.
Learning through contemporary case studies and original research is a key feature setting public policy studies at FSPPM apart from other policy pograms. Before case studies earned popularity among Vietnamese universities, FSPPM was the first to pioneer this innovative approach in its curriculum, using both paper-based and multimedia formats. Case studies used in our MPP program are compiled from 2 sources: original FSPPM faculty research set in Vietnam, and publications on global, East Asian or Southeast Asian issues produced by prominent American universities, particularly Harvard Kennedy School of Government and Harvard Business School.
The collection of case studies being used at FSPPM are constantly updated to keep pace with social and economic dynamics in Vietnam. Each FSPPM faculty member is well known for engaging case studies in their respective research fields. Lecturer Nguyen Xuan Thanh is a prolific case writer tracing eminent mergers and acquisition deals in Vietnam banking industries, to name a few, Sacombank, SCB, Tienphong Bank and some appraisal projects valuing listed public companies, including Vinamilk, King Do, and REE.
Dr. Vu Thanh Tu Anh, Principal Investigator of many regional development project by FSPPM, is the author of many case studies investigating prospects of provincial development, for instance, “An Giang – Potential and Realities”; “Tay Ninh – Rising to new heights”; “Chu Lai Open Economic Zone – Laboratory for institutional and policy reforms”, and more.
Widely used by FSPPM in our Master of public policy (MPP) as well as in our executive training programs, case studies function aas a link between research and education activities at FSPPM. On the one hand, case studies help learners better understand theoretical knowledge. On the other, they necessitate students apply the fundamental principles taught in class to solving practical problems in the real world. As a technical exercise, case studies help students consolidate economic formulas, analytical and synthetical skills and creative thinking.
Professor Nancy Koehn, Harvard Business School, argued that learning through case studies is more beneficial than conventional problem sets, as they place learners into the drivers’ seat, urging them to apply knowledge, honing their intuition in identifying and seeking solutions to tough problems.
On June 8th, 2020, Fulbright University Vietnam hosted a talk on the “US Presidential Election, COVID-19, China and the future of the world” with two illustrious guests. Nelson Cunningham is the president of the international advisory firm McLarty associates, former special adviser to President Clinton and general counsel of the Senate Judiciary Committee under Senator and presidential candidate Joe Biden. His Excellency Ambassador David Shear is a senior advisor at McLarty associate and the former Assistant Secretary of Defense for Asian and Pacific Security Affairs from 2014 to 2016. Prior to that, Ambassador Shear had 32 years of distinguished career in the US foreign service, including three years as the ambassador of the United States to Vietnam, based in Hanoi. He also served for the diplomatic missions in Sapporo, Beijing, Tokyo and Kuala Lumpur. The talk was mediated by Mai Huong, member of the board at Fulbright University Vietnam and the chairwoman of global communication consultancy network Publicis.
This speaker series organized by Fulbright aims to engage experts from a variety of fields, from academia to business and policymaking, to discuss current Affairs and events, politics, economics and, social changes, with a special focus on the COVID-19 as it continues to influence our society, our economy, and our politics.
In this talk, Ambassador Shear and Mr. Cunningham discussed how intensifying competition between China and the US have made foreign policy a key feature of the upcoming election, what it means for regional geopolitics in South East Asia and Vietnam, and how Vietnam stands to benefit.
Intensifying competition between US and China
“In order for us to avoid a crisis, or for us to manage crises in a stable fashion, the US China relationship really needs three things. One is trust. One is communication at the senior-most levels, and one is restraint. And I think we have seen a diminution in all three of those lately,” says Ambassador Shear.
In the past 30 years, the bilateral relationship of the two countries were based on common interests, while differences were still inherent. Though the two countries cannot eliminate their differences, they were willing to work together to narrow the gap. A fact that seems to have changed in recent years, marked by a serious downturn. “During the era of George H W Bush and Deng Xiao Ping, we believed there were strong common interests between China and the United States, and our ups and downs always seemed to have a floor,” reflects the expert, “but it’ s not clear that there is a floor under US China bilateral relations now.”
The downturn in US China bilateral relations has been a trend since at least 2017 when President Trump came into office, according to Shear, and has only been exacerbated by the current COVID crisis and the US presidential election. The ambassador outlined 5 key aspects of this deeper shift in diplomatic relations.
First among them, says the ambassador, is “blame shifting, finger pointing, and name calling on both sides.” Both President Trump and Secretary of State Pompeo have been called liars by the Xi administration. Meanwhile, President Trump’s stance on the alleged Chinese responsibility for spreading the virus has received wide coverage in the media.
This direct, public, and antagonistic behavior is only further aggravated by a lack of direct communication between US and Chinese senior-most officials. “That communication link has been extremely important in providing stability to bilateral relations historically for previous presidents. But the current President’s communication with President Xi is sporadic at best. His last phone call with President Xi was March 26. The same can be said of communications between Secretary of State Pompeo and Secretary of Defense Esper with their Chinese counterparts,” emphasizes the expert.
A third characteristic of this downturn is the increasing tensions associated with the situations in Hong Kong, across the Taiwan Strait, and in the South China Sea. As the ambassador recalled, the president’s address a week prior had very strong words for Chinese behavior in Hong Kong, and their passage of a national security law which greatly strengthens Chinese law enforcement activities in the special administrative region. This increased tension is also made evident by increased US and Chinese military operations in the vicinity of Taiwan and the South China Sea.
The potential for renewed trade friction between the US and China is also a factor, despite a phase one trade agreement signed by both parties in January. But the Chinese and maybe even the US will have a hard time implementing that trade agreement in the face of the COVID crisis. Yet Ambassador Shear remains optimistic since “the US Trade Representative communication with China appears to be an exception to the overall lack of communication between the two sides, with the USTR stating publicly twice that the talks on implementation of the phase one agreements appear to be progressing. It may be a sign that the two sides are willing to show restraint in the way in which they handle bilateral trade frictions.”
Finally, there is a trend of increased US congressional action on China. Over the course of last year, the U.S. Congress passed the Hong Kong Human Rights Act, which forms the basis of recent US actions to potentially withdraw special treatment of Hong Kong in trade and other areas. Congressional action could also be observed on the Chinese treatment of Uyghurs in Xinjiang. There have also been efforts in congress to more strongly support Taiwan’s efforts to maintain diplomatic recognition with the 15 countries that still recognize its sovereignty.
All these trends demonstrate a bipartisan change in attitude in Washington and Beijing alike. China is increasingly seen as practicing what is called in America ‘wolf warrior diplomacy’ to assert their claims. As Shear explains, “Wolf warrior refers to a 2015 action film, featuring Chinese Special Forces units fighting a variety of enemies of China, including the United States. That term wolf warrior has caught on to describe the aggressiveness and the outspokenness with which the Chinese are now pursuing diplomacy.” The ambassador shared two examples. In Australia, the Chinese ambassador in Canberra scolded Australians for proposing that the international community conduct an inquiry on the origin of the Coronavirus. The Chinese government’s subsequently imposed limits on Australian beef imports into China. Secondly, Vietnam and other ASEAN claimants in the South China Sea are also familiar with Chinese activities in the region, including the recent sinking of a Vietnamese fishing boat.
Meanwhile as Cunningham explains, “China is increasingly seen as a competitive threat to the United States because of the policies of President Xi and his administration.” Cunningham recalls that the last 30 years had seen Republicans and Democrats alike working collaboratively to bring China into a system of multilateral agreements, through trade and extensive people to people exchanges, and perhaps even liberalizing the country to a certain extent. But Cunningham explains that “although it appeared to be working under Hu Jintao, it became clear that that approach had to change in response to Xi Jinping’s leadership.”
South East Asia in US foreign policy
The sharp downturn in US-China relationships consequently brought China to the front stage of US politics, with China becoming, for the first time in decades, a central issue in the US presidential campaign. “We’re going to see in this election both sides vying for who’s going to be tough on China,” he explained. Therefore, both parties will see an increase in negative rhetoric relating to China, but also a stronger focus on foreign policy compared to most election cycles.
Cunningham explains that presidential candidate Joe Biden’s platform includes a deepening or strengthening of American ties to its allies. “He wants to bring back the America that our allies and trading partners around the world have known, trusted, and worked with. Renewed and normalized ties with Japan, South Korea, and all of our friends and allies in Southeast Asia are a centerpiece of his administration’s policy.” Cunningham emphasized the interest, for a potential Biden administration, of increasing the US level of engagement in South East Asia. “We need to try and support the emergence of a strong, prosperous Vietnam and a strong, prosperous Southeast Asian region.” For Ambassador Shear, that increased cooperation between the United States its allies and partners is important for maintaining stability in the region where Vietnam in particular can expect a continued increase in US cooperation.
Both speakers also discussed the Trans-pacific Partnership (TPP). In American domestic politics international trade has become a potential issue, with a strong focus by the current administration on the trade imbalance. This would be less the case in a Biden administration, but as Ambassador Shear says, “we need to find new avenues and build new structures for international cooperation to face China.”
“The TPP was a brilliant strategy to bring together the United States and its largest trading partners, including the Southeast Asian countries, but also to function as a powerful incentive for China to play by international rules,” reflects Cunningham. But although the Chinese approach to international diplomacy has hardened, the importance of fostering ties remains. “I don’t think we will see the US enter the revamped Transpacific Partnership. But I will certainly see the United States embrace the goals of it, and perhaps promote a new way to bring together our allies in what will certainly be a difficult and confrontational relationship with China.”
Opportunities for Vietnam
Some might worry that Vietnam will be stuck between two giants or forced to ‘pick a side’. But for Cunningham, it is not in the U.S.’ interests to force a choice. “We have to work to build a relationship in ASEAN that is not based on an us vs them strategy. It is not saying ‘you have to be with us, or else.’ It’s saying instead, ‘here’s why you want to be with us.’ Because of the trade ties, because of the multilateral cooperation, because of the people to people ties between us and Southeast Asia,” says Cunningham.
For the ambassador, Vietnam also stands to benefit from increased leverage in their negotiations with China, conducted on a variety of issues, on a daily basis. As he explains, “strong engagement by the US in the region increases everybody’s leverage vis a vis China. And the stronger all of our leverage is, the better we’ll be able to secure our interests vis a vis Vietnam’s big neighbor to the north.”
Vietnam is also uniquely positioned to benefit from increased competition between the different trading regions. For Cunningham, if China continues to open its market and to have rules that are attractive to foreign investors, Vietnam’s industrious workforce and good infrastructure are key factors that could allow the country to benefit greatly from these global trends.
Vietnam does not only stand to gain from the shift in supply chains. It is a prime candidate for the establishment of supply chains that move from China, as well as new supply chains through greenfield investments. As Ambassador Shear points out, Vietnam has seen increases in foreign direct investors and leasing of factory and warehouse spaces, as supply chain capacity in the country grows together with the rapid construction of new economic and industrial zones. For the ambassador, this trend of outflow of supply chains from China will steadily continue. “Countries will be very cautious about the speed and extent to which they move their supply chains out of China, partly because of the highly skilled Chinese workforce, partly because of the very dense and efficient supply chains that have developed throughout China particularly in the Pearl River Valley. This isn’t going to be an avalanche, but a long-term phenomenon.”
“The globe has recently taken notice of Vietnam’s efficient control of the management of COVID-19 which demonstrates increased governance capability not only at the central level in Vietnam, but the local level as well. I wish to congratulate my Vietnamese friends on how they’ve managed the COVID crisis, but also on how well they’ve increased the ease of doing business for foreign direct investors in Vietnam,” concluded Ambassador Shear.
“I think future historians will look back on this as a transitional moment when East Asian values will be taken seriously for the simple fact that they are clearly working, potentially fostering a global cosmopolitan vision beyond neoliberal ideologies. Or they will look back and say this was the moment when we turned to authoritarian nationalistic surveillance states, and that was the end of neoliberalism.”
May 24th 2020, Michael Puett, Walter C. Klein Professor of Chinese History and Anthropology at Harvard University, shared his insights on the topic of “Governance, values, and what the world can (and can’t) learn from Asia” in the context of governmental responses to the COVID-19 pandemic. This talk was hosted by Professor Nam Nguyen of Fulbright University Vietnam as part of our ongoing speaker series seeking to elevate the debate on the COVID-19 crisis, bringing perspectives of global experts to scholars and policymakers, and the general public, in Vietnam and in the world.
As governments struggled to keep the pandemic under control with various degrees of effectiveness, a clear distinction emerged between the failures of broadly Western societies to contain the pandemic, namely the U.S. or European states such as Italy, the UK or France, and the successes of East Asian societies, such as China, Taiwan or Vietnam, among others.
In this talk, Dr. Puett outlines key ideas to understand how fundamental ideological differences regarding the role of government in those societies have contributed to making some better equipped than others to deal with the crisis, and how this moment will shift – and come to define – the ideological balance in the post-pandemic world.
Neoliberalism, from its birth in the British Empire…
To understand western political ideologies, Dr. Puett first outlines important aspects of its historical context, specifically the birth of classical liberalism, before discussing how neoliberalism came to be the dominant, or even only, ideology in the western political landscape. Classical liberalism arose in 19th century Great Britain. For Dr. Puett, a defining characteristic of this ideology is its focus on the individual, and its consequent goal becomes to create an economic, political and social world in which each individual should be allowed to pursue their self-interest, limited only by the exercise of self-interest by other individuals. But how would one create this ideal society?
At the time, some individual entrepreneurs were already very successful in pursuing their self-interest, in economic terms, through the mechanisms of the market. The key neoliberal idea, then, was to apply these existing structures to other aspects of society, modelling the entirety of the social and political order on the same vision. Allowing market forces to affect every level of society requires limiting the scale of government, reducing regulations to the minimum. In this ideal state, the government would not run the market. Instead the market would be regulating society, even establishing wealth as a meritocratic principle. “Those successful in the market would gain social mobility as well as potentially immediate access to political power, leveraging their wealth to decide future regulations. The implication here is that those wealthy individuals or corporations would theoretically know how the market works best, and is exemplified most clearly in the U.S. today, where states are run by entrepreneurs and corporations engage in lobbying,” emphasizes the expert.
But our expert explains this ideology arose in a very specific time and place. Indeed, classical liberal ideas arose during the British Empire, a period of radical economic disparity between an elite ruling class becoming extraordinarily wealthy, and a general population becoming poorer. “Keep in mind that when classical and neoclassical liberalism were being developed in Britain, the country was at the height of its global power. Operating in free markets was the key through which many countries throughout the world would become the sources of raw materials and very cheap labor needed by the states and corporations of the West, mainly Great Britain itself as the dominant empire. It is not too surprising to see its resurgence, as well as similar consequences in the current global power that is the U.S.”
…To a global ideological hegemony
Neoliberalism did not gain traction immediately. In fact, after WW2, “it was an accepted fact that state intervention in the economy, investments in infrastructure and regulations were important.” This ideology instead rose to prominence in the 1970-1980s through Margaret Thatcher’s Great Britain and Ronald Reagan’s America. And yet, the most significant shift for our expert was its adoption, in the 1990s, by moderate leftists Tony Blair (UK) and Bill Clinton (US). These political leaders took ideas commonly associated with the right and claimed neoliberalism was not simply a good political ideology, but instead the correct political ideology for both sides of the aisle.
“One of Margaret Thatcher’s key statements was that this ‘was not a good system, or even the best system. It was the only system.’ There was no alternative. And chillingly, I think in part it became a vision that was accepted by much of the global elite,” recalls Puett.
This new, lasting political consensus brought about the reorganization of the social order in those two countries. In this scenario, not only does the government run on market principles, but everything from healthcare to educational institutions, and even families should be governed by this vision of a competitive marketplace. “Schools, for example, would train students to think in competitive terms about their own self-interest, hopefully helping them to become great entrepreneurs,” says Dr. Puett.
Global institutions further contributed to establishing this ideology around the world. Dr. Puett relates the example of the International Monetary Fund, which would establish conditions to join these new global markets. Namely, state power must be reduced: regulations on every aspect from worker safety to discrimination or environmental concerns were to be abolished in order to allow market principles to operate. And yet, this view of the world has possibly been shaken with the disastrous responses seen in America and in Europe to the crisis.
“These strategies were so successful that in our 21st century market principles have really become the dominant view in the world. But our current era may be seeing the beginnings of a very different way of organizing social political and economic life, learning from the successes of East Asian countries.”
Keeping Market and Government separate: The East Asian context
Dr. Puett shared with us his insights into political theory in Asia. In contrast to a model based on the individual, which “did not gain much resonance through East Asian history,” most of the views that would historically come to prominence are instead based upon the idea of relationships. In other words, if the starting point is relationships and not the self-interested individual, the immediate question is: “what relationships are dangerous? And which ones allow for human flourishing?”
The professor emphasizes that most of these political models and societies recognize that many relationships people engage in are not good and require constant efforts to change and improve. Humans are made of myriad relationships, whether family members, friends, different institutional orders, and more. “From this perspective, it is undesirable to have a single ideology to be dominant in all spheres of life. No single ideology is likely to foster good relationships in all of the spheres, from the familial to the political or economic.” Although Dr. Puett recognizes that markets have played a key role in the incredible growth of East Asian economies, the critical point is that from the perspective of those societies, markets should exist in a separate sphere.
Instead, meritocratic principles should apply to select the governing elite outside of the marketplace, separating as much as possible the wealthy elite from their meritocratic, bureaucratic, educated counterparts. “When the engine for social mobility is education, not the marketplace, it becomes a distinct mechanism for gaining political power,” explains Dr. Puett. To this end, a bureaucracy can hopefully teach aspiring leaders that promotions depend on examination systems, and assessment of their leadership qualities. Government officials can also be physically moved around to other geographical locations, preventing them as much as possible from overly connecting with local networks of power.
For the presenter, this clear separation allows for the state to organize and execute projects that go against the natural order of the market, such as large infrastructure projects. “Furthermore, building a road, or a bridge, will also reshuffle the deck and open opportunities for others. Local power structures may not want to see their situation change. But the state should not have to worry about that,” elaborates Puett.
Contrasting results in the pandemic
Whether analyzing the decisive lockdown protocols implemented despite their negative economic impact, the emergency construction funded by the Chinese government of hospitals in Wuhan, or the wide scale deployment of testing, tracking and public healthcare measures, the measures most effective at containing the epidemic required the fast action of a government unhindered by market forces. As our presenter explained, this has been a determining factor for East Asian countries to control the epidemic. “States that have developed this meritocratic elite and have the strength to initiate large scale government initiatives have responded extremely successfully to the crisis,” concluded Puett.
Meanwhile, the consequences of the neoliberal ideology in the West have been disastrous, as agencies at the national level were underequipped after many years of neoliberal policies limiting their ability to operate. As Dr. Puett explains, “top talent has simply been driven away after years of defunding, meaning we lacked not only the resources, but also the meritocratic elite necessary to respond decisively and effectively,”
Stark economic inequalities also resulted in aggravating the suffering of the economically disenfranchised and minorities the most. “The homeless and extremely poor minorities have not been able to gain any kind of support, and the effects have been devastating. The healthcare system has been very good for the wealthy elite, but horrific for those who were not. The dangers of neoliberalism have now been made extremely clear,” the expert emphasized. But changes never come without risk.
Opportunities and dangers in equal measure
“Moments of transition also hold peril,” declared Michael Puett. Indeed, COVID-19 has not only revealed the benefits of stronger governing institutions. It has also enabled attitudes toward surveillance that will not necessarily go away.
The expert on East Asian politics warns us of the dangers of ‘Legalism’, an ideology that has become “quite dominant in China.” If neoliberalism represents making the market the be all end all solution, legalism represents its mirror image through state government control. A tendency now further empowered by new technologies and the surveillance capacity developed in response to COVID-19. “China has not only seen exciting projects such as fast increases to infrastructure. It has also seen the development of a surveillance state working through algorithms developed by Google to trace all movements of citizens occurring throughout daily life, who you talk to and who you meet,” elaborates Puett.
Those technologies can be used to the benefit a broader national response to a pandemic, such as through contact tracing, but are harder to scale down after the crisis, a worrisome outcome. “Increasingly, powerful voices in America are also saying that maybe those surveillance state techniques developed in China should also be applied here,” says Puett. But the expert would argue for extreme caution: “Many other East Asian countries have seen success in curbing the epidemic, but it seems that those technologies from China have gained the most resonance in America as a response to neoliberalism.”
In conclusion, Dr. Puett reemphasized the need for a global debate to address the pandemic, but also to seriously decide which practices from East Asia should be implemented, and what their implementation would mean. “With the challenges facing us, both for this crisis but also the impending environmental crisis and our uncertain world, it is crucial to allow these ideas and rethink and challenge our most fundamental assumptions, but also to consider carefully what it takes to to build a global cosmopolitan order.”
On May 20th 2020 Fulbright University Vietnam hosted Xihong Lin, Professor of Biostatistics at Harvard T.H. Chan School of Public Health, as she presented her recent findings and lessons learned from COVID-19 and the response in Wuhan Province, China, the epicenter of the pandemic, as well as data from the US and Europe.
This talk is part of Fulbright’s ongoing COVID-19 talk series striving to understand this virus and its implications on the future of our societies, gathering experts from around the world to examine the multi-faceted impact of COVID on areas ranging from public health, to the economy, public policy, education, and business. The talk was hosted by TMG Group CEO and Fulbright University Vietnam Governing Board member Tran Trong Kien.
Professor Lin studied COVID-19 in the city of Wuhan, looking at the transmission patterns of the disease and the response from city authorities. Her research received worldwide attention as it constituted some of the earliest and most rigorous efforts to comprehend the virus. She strived to answer the question: what can we learn from the data? What have been effective intervention strategies? What are the risk factors affecting the spread?
“It’s important to let the data speak and develop evidence-based strategies. Wuhan’s experience helps us not start from zero,” says Professor Lin.
From social distancing to centralized quarantine
Professor Lin first discussed the effectiveness of various measures, comparing among others the reproduction values or R values. R values are the average number of new infected per contagious individuals and is a way of rating a disease’s ability to spread. In Wuhan, the implementation of social distancing through citywide lockdowns, suspension of traffic, and home quarantine on January 23rd greatly reduced the spread of the virus, dropping from an R value of 3-4 to 1.
“An R value of 3-4 demonstrates a very infectious disease, and social distancing demonstrated its effectiveness by bringing this value close to 1. But to truly consider an epidemic under control, this value has to drop as close to 0 as possible. For this, social distancing is not enough,” explained the statistician.
Indeed, household members tend to fall ill together. When living with a sick household member, the risk of infection rises as high as 50%. To reduce the number of new infections, authorities needed to control the source of infection, which meant protecting family members and loved ones by isolating infected cases through centralized quarantine centers, triaging by likelihood of infection (See graph below).
“Social distancing helped flatten the curve by reducing between-household spread, and centralized quarantine slowed in-household infections, therefore bending the curve to finally stop the epidemic,” says Professor Lin.
A societal effort to beat the virus – and return to normal
The statistician also urges us to pay special attention to five vulnerable groups. As shown above, family members and close contacts of infected cases are at highest risk of infection. But health workers as well as essential workers also bear the heaviest burden with disproportionate infection rates. The elderly also demonstrate a higher vulnerability to the virus. In Massachusetts, data shows the average age of infected cases is 53 years old, affecting those over 80 years old the most. Finally, low-income households also deserve special attention, suffering from typically higher density homes and poor housing conditions making social distancing difficult. Individuals in this socio-economic group also feel a stronger pressure to go back to work.
Xihong Lin outlined the 6 pillars needed to control the epidemic: mask wearing, social distancing, widespread testing, contact tracing, isolation and quarantine, and of course treating infected patients. All these elements constitute barriers to the spread of the virus at various scales, requiring the collaboration of individuals and institutions at all levels of society to study, contain, supply, and contribute to overcoming the crisis. “At all stakeholder levels, from international organizations, to governments, academia, business and citizens, it is important to work together as a team to curb the spread of the virus,” says the professor.
Reopening international borders
Vaccines remain beyond the immediate horizons, and immunity has only reached up to 20% in New York, far from herd immunity levels which begin at 50 to 60%. Those herd immunity levels also represent a cost in lives of more vulnerable members of society “that most countries are not willing to pay,” says Professor Lin. Yet as the virus gradually becomes contained, countries around the world are considering the loosening of social distancing measures as well as the reopening of international borders. Wuhan province waited 2 weeks without community spreading before reopening. But in the US, some states have already reopened despite an R value still above 1. For Dr. Lin, it is to be expected that different states would make different decisions while keeping in mind both public health and the economy. The key to success, for our expert, is multi-stage, evidence-based strategies.
“Start small, and slowly open more. Each phase of reopening has to go hand in hand with developing strategies relevant to each of the six pillars. Before the development of a vaccine, those previously mentioned prevention measures remain critical,” says Dr. Lin. Countries will have to consider options that work best for them. Xihong Lin emphasized the case of Korea, where individuals coming into the country have to be tested and quarantined before entering the country, and are required to install a contact tracing app to control community spread and limit international risks of contagion. But other strategies can be explored. For example, data suggests Vietnam might have the testing capacity to see systematic testing as a viable option, opening international travel while limiting risks.
“There is a chance to see a surge in cases when the global economy and travel normalizes. At the same time, public awareness of the right behaviors is growing, plans and resources dedicated to monitor and contain the virus increase, which will be strong factors in preventing or limiting new surges of the virus,” Dr. Lin concludes.
Covid-19 has highlighted stark differences in crisis management approaches and responses by different states. These differences are determined by the prevalent legal and governmental traditions found in each country. As Assoc. Prof. Pham Duy Nghia argues, this healthcare disaster once again emphasizes the importance of public leadership and governance: despite different growth approaches adopted by each country, effective crisis management requires a responsible elite group and a competent executive government backed by civillian trust and support.
Over 400 participants watched and discussed with Associate Professor Pham Duy Nghia, MPP Director at Fulbright School of Public Policy and Management, on the topic: “Covid-19 pandemic: An analysis from legal and public governance”. This is the second seminar in the online policy series hosted by FSPPM faculty during this April and May to discuss the lastest developments of this global epidemic from different perspectives.
As a leading public policy research and education institution in Vietnam, FSPPPM faculty has been observing the Covid-19 pandemic closely to come up with timely and authoritative analyses to support their policy recommendations.
Two divided responses: East vs. West
Reviewing the global responses to Covid-19 in the last three months, the dominant strategy adopted by most countries has been “flattening the curve” and mobilizing resources to contain the outbreak. However, some discernible differences emerged in how each country responded.
In late January, when the pandemic broke out in Wuhan and surrounding areas forcing China to issue massive lockdown procedures in some provinces, epidemiologists warned the possibility of a global spread. While Asian countries with vivid memories of the disatrous SARS in 2003 were fully aware of the dangerous consequences of a possible outbreak, Western countries showed a somewhat indifferent attitude. President Donald Trump’s tweet in February argued that Covid-19 was not as dangerous as seasonal flu, a disease which kills thousands of Americans every year. Some European governments, for instance the U.K. and Netherlands, advocated for a so-called “herd immunity”, tolerating the infection rate of 60% to create community-wide protection. It was not until March when the pandemic spiralled out of many government’s control, with infected cases and mortality rapidly escalating, that these countries began to establish more suppressive measures.
Even when the threats of an epidemic call for pressing state intervention, measures adopted by different nations varied in extent and effectiveness between Eastern and Western states, according to Professor Duy Nghia. More aggressive measures were typically adopted by many East Asian countries such as China, Taiwan, Korea, Singapore, Vietnam, and more, curbing the spread. Infected areas established lockdown, suspicious cases were quarantined, social gathering were limited, schools were closed and masks were made compulsory in public. Some countries even comtemplated using controversial measures such as various digital tracking apps. Meanwhile, European countries’ only recommendation to citizens was t practise social distancing. Masks in public were also not compulsory. It was not until March when infection cases overwhelmed the healthcare capacity in some countries that governments did resort to national bans on public events.
So far, it can be confirmed that early efforts to curb the transmission of Covid-19 diseases in Asian countries have been more effective considering the lower rate of infection and mortality. Among success stories, Vietnam stands out, given the constraints in national resources and healthcare system, for maintaining infected cases under 300 with a record of 0 registered deaths.
On the contrary, the pandemic is taking a severe toll on more developed and wealthier nations in U.S. and Europe with infection numbers accelerating daily with no clear signs of these countries passing infection peaks.
A lesson in crisis management
From the fight against Covid-19, according to Assoc. Prof. Pham Duy Nghia, there are many important implications on how to develop a competent and responsive government.
“During a crisis, whether a state is democratic or authoritarian matters little; the ability to correctly identify and respond to threats to the nation is much more important.” How one government recognizes threats predisposes their attitudes to counter these threats. On the other hand, European and U.S. states missed the first precious weeks or even months to act, while drastic measures during later stages are not as efficient to recover control of the situation.
Even when the government is fully aware of the dangers, the decision to intervene or not, and at what extent, are affected by careful considerations of trade-offs between costs and benefits, between economic growth or public health. Western countries were hesitant to act against the outbreak, too unwilling to forgo economic growth, and missed the golden opportunity to effectively contain the disease.
After priorities are determined, available resources should then be mobilized to counter against the pandemic. That said, resources should be allocated to the healthcare sector to counter against the transmission. Prof. Nghia noted that transparency contributes to the effectiveness of counter measures. The success of Vietnam and other countries imply that constant updates on the state of the pandemic can help stakeholders make rational decisions, contributing to strengthen social trust and consensus.
To manage a crisis like the Covid-19 pandemic, empowerment and trust to authoritative experts should be prioritized. Professor Nghia cited the terrible consequences when populist leaders ignore the warning of healthcare experts to please some voter groups. For example, the Brazilian president insisted that Covid-19 is just inflated fears and threatened to fire the Brazilian minister of health. The president himself also joined anti-lockdown protests. To this day, Brazil remains the country most devastated by Covid-19 in South America with 45,000 infected cases and 3000 reported deaths. Likewise, the UK, Italy and some other countries are regretful for their populist decisions in early stages, as leaders decided to please voters rather than base their decisions on evidence-based analyses from experts.
Pathways to a competent government and responsible leaders
From those observations, Dr. Pham Duy Nghia argued that “an advanced market economy without a competent government and responsible leaders can lead a nation to disaster just as well when confronted with emergencies like Covid-19 pandemic.” Advantages of the market economy, such as property rights, freedom of enterprise, freedom of contract are undeniable. However, differences in Eastern and Western historical and cultural traditions leads to various approaches to build a competent government and responsible leadership.
The speaker explained that Asian cultures with great emphasis on community values can tolerate partriachal governments and place greater trust in governmental institutions. As a result, citizens are more tolerant of governmental measures restricting their freedom of movement or enteprise to mitigate the outbreak. Some are willing to give out their personal information in “tracking smartphone apps” to circumvent the spread of the disease and protect public health. These governmental and cultural traditions reinforce public support for Asian states’ containment decisions. Civilian support for the government’s policies laid the foundation for Vietnam’s success in mitigating the disease. Dr. Nghia cited the survey of Dalia GMbH stating that 62% of respondents believed the intervention measures of the Vietnamese government were appropriate, the highest consensus among 46 nations in the survey.
The Covid-19 pandemic also demonstrated the fact that policies are crafted by elite groups, although all governments claim to be by the people and for the people. Therefore, a selfish elite group seeking to secure their own interests instead of being accountable to public interests can push one nation to disaster.
One clear example is the lack of transparency observed in some responses to the situation that saught to protect the interests of ruling groups, even in democratic societies. The Japanese government was denounced for their confusing and obscured pandemic statistics, as well as their late declaration of the state of emergency. The Abe administration is currently criticized for deliberately hiding the reality of the pandemic to keep the Olympics 2020 from being cancelled. On the other hand, U.S. journalists found out that advisor Peter Navarro had submitted two policy memos (dated 29th January 2020 and 23rd Fenruary 2020) warning the dangers of Covid-19, both of which were ignored by Trump offices, fearing that drastic measures may send the U.S. through an economic downturn, diminishing Trump’s chances to be re-elected to the White House. The consequences of turning a blind eye to these early warnings have had severe and deadly consequences: the U.S. topped the world with the highest number of infected cases, and deaths.
Confidence in Vietnamese legal traditions
With early achievements in the fight against corona virus, Dr. Pham Duy Nghia encouraged Vietnam’s confidence in its legal traditions, and observed that legal identity and public governance in Vietnam are shaped by multiple factors, including political commitments, the legitimacy of ruling groups in Vietnam, international commitments, the code of conduct in the private sector, civil society and domestic communities, and the soft power of global multinational corporations. Besides, similarly to other Asian countries, the cultural, religious beliefs of Vietnamese people also remain influential factors. In other words, “while law assumes a supreme position in some countries, in Vietnam law is an additional resource when other social responses fail to achieve their desired outcomes.” This explains why Vietnam can quicky contain the pandemic with resource contraints, since pre-existing community groups and behaviours boost the quick implementation of pandemic measures.
“The question now is after the crisis, how should Vietnam take advantage of these diversified resources to come up with policies backed by great public support?” asked the professor.
As a keen observer of legal reforms in Vietnam over 30 years, Dr. Pham Duy Nghia believes this question is increasingly important considering that Covid-19 is fundamentally changing the dynamics of globalization and international commitments, a primary factor motivating legal and institutional reforms in Vietnam.
During her talk at Fulbright University Vietnam, former Assistant Secretary of the Treasury for Economic Policy and Chief Economist of the United States Department of the Treasury, Harvard Professor Karen Dynan forecasted that countries which took swift actions to control the spread of Covid-19 early such as Vietnam could emerge out of this financial crisis as winners.
Dr. Vu Thanh Tu Anh, Dean of the Fulbright School of Public Policy and Management (FSPPM), also shared the same viewpoint. In the talk, Dr. Tu Anh emphasized that “the way countries responded to the current crisis would determine how they could recover in the medium-term.” If the Covid-19 pandemic prolonged until a much-anticipated vaccine is found, “countries, which got off [the pandemic] relatively safe, would have a more promising start to protect the businesses and households, and resume business activities as normal,” stressed the Dean of FSPPM.
Two top economists from Harvard University and Fulbright University Vietnam had an interesting discussion on the prospects of the world economy. Through the talk, the experts pointed out some suggestions which countries could follow to efficiently respond to such an unprecedented crisis.
How can we escape from this “large hole” of a financial crisis?
According to Professor Dynan, when addressing the issue of world economy, everyone can easily answer the question of how large of a “hole” the world is sinking into. It’s fairly obvious to see that while shutdowns and other social distancing measures are effective for containing the spread of the virus, they are causing grave challenges for the economies of the world. The data of Q1 shows this downward trend quite clearly. The GDP of the world’s largest economy plunged 4% in Q1. That was the biggest decline since the financial crisis in 2008. For the first quarter, consumer spending in the U.S. fell sharply in March, especially in categories that involves getting close to other people. After 10 years of strong economic growth, America is facing a drastic rise in unemployment rate with 38.6 million people filed for unemployment as of May 22, 2020.
However, the more challenging issues are how long it will take for the world to get out of this “large hole” and how it can successfully recover. In other words, will the world economy face a V-shaped recession, which we go into it and get out of it quickly; a U-shaped recession, which takes us longer to recover; or an L-shaped recession, which we may not get out of at all? Our two experts admitted that there are too many uncertainties to accurately forecast how the world economy can recover post Covid-19 pandemic. To recover, each country has to succeed on both fronts: control the spread of the disease and overcome the economic aftermaths.
Professor Dynan emphasized that the structural damage a country faces throughout this current crisis would determine how quickly such country can recover afterwards. When an economy shuts down, it will have to face a “structural damage,” meaning all business activities become disrupted, or fractured. For example, restaurants have to close because they cannot afford their rents, and after a while, cannot reopen their business; or a family loses their home because without a job, they cannot pay their mortgage. “The idea is to prevent widescale bankruptcies among households and businesses because that is the type of structural damage that could really hold back the economic recovery,” Professor Dynan suggested. She also recommended governments to directly offer financial support to businesses to help them pay their employees, as well as to households to help them pay for the necessities.
Even though the world economy looks rather grim, Professor Dynan still held a more positive outlook for the future. First, the world economy at the start of the year 2020 was rather healthy. This stands as stark contrast to the financial crisis in 2008-2009, which happened because of the structural imbalances of the economies. Thus, if we can contain both the spread of the virus and the deadliness of SARS-COV2, the economy can quickly return to normal because there will be fewer structural imbalances to correct.
Moreover, unlike the 2008 financial crisis, this time, there is still ample room for central banks to apply appropriate fiscal policies and monetary policies to lessen the damage, and help governments better manage the crisis. Professor Dynan commented that since the start of the pandemic, central banks have been promulgating such efficient monetary policy. For example, in America, central banks swiftly acted as the lenders of last resorts, providing liquidity to struggling companies at a low interest rate. This action not only helps companies from going bankrupt but also prevents the economy from a more damaging financial crisis.
Who to save first: Big corporations or hardest-hit ones?
According to Professor Dynan, there is also ample room for governments to use fiscal policies to avoid a worse financial crisis. During the 2008 crisis, standard fiscal policies were also applied to cut tax, raise public spending, and in turn, raise production an employment. However, during this Covid-19 crisis, governments are using a different type of fiscal stimulus to prevent the aforementioned structural damage. For example, the American government targeted an aid of $600/week to people who had lost their job due to Covid-19. The French government offered direct aid to companies to keep people employed. Vietnamese government also provided direct support to those whose jobs had been affected by the virus, even though the level of support was still modest compared to their actual earnings.
Some Vietnamese economists suggested that with limited resources, governments should focus on saving big corporations. Professor Dynan, however, believed that “governments should continue supporting businesses or individuals who are on the verge of bankruptcy.” Such fiscal stimulus will help prevent structural damages, keep countries in a better position to economically recover, and mitigate the impoverishment risk in the lower class.
Also shared this viewpoint, Dr. Vu Thanh Tu Anh believed that “while fiscal policies and monetary policies focus on the imminent crisis, we should not overlook the structural imbalances which are crucial to the economic growth in the future.”
According to both experts, one of the structural imbalances that most countries, Vietnam included, is facing is the growing inequality between the rich and the poor. Unfortunately, the Covid-19 pandemic actually worsened inequality. In America, most of the 38.6 million unemployed people are service workers, earning minimum wage. In Vietnam, according to Dr. Vu Thanh Tu Anh, approximately 5 million business households, which comprise of 20 million affected individuals, are taking the hardest hit and have no capability to get back on their feet. Therefore, to avoid social unrest, fiscal stimulus must be directed to this vulnerable group, not because it is an economic issue, but because it is also a social security issue.
“Deciding who will receive aid and under which requirements can shape or distort the economy in many years to come,” Dr. Vu Thanh Tu Anh warned. He added that policies should be designed to minimize exploitation. For example, governments need to ensure that aid must be delivered to small businesses and households that need it, not to big corporations with abundant resource.
“When the pandemic is behind us, governments have to find the solution for the growing inequality gap. Else, it will foster the rise of populism and support for populist policies. Those are the challenges we have to solve in the near future,” Professor Dynan reiterated.
We should not worry about public debt yet
In just the past few weeks, the world witnessed a spike in government spending to respond to Covid-19. This stokes concern over an uncontrolled public debt. However, Professor Dynan shared that “now is not yet the time for us to worry about high public debt, at least for America, even though America’s ratio of federal debt to GDP is expected to exceed 100%, the highest since World War II.” The reason, she explained, is that the American government can still borrow at very low rates, below 1%. This shows that there is a great willingness among investors to finance the government’s spending.
“The moment we need to worry about public debt is when interest rate starts to soar,” Professor Dynan added.
However, the experienced economist admitted that this scenario is not true for all emerging market and developing economies. These low-income countries may have to face worsened outbreaks because of weak healthcare systems. They may not even have the choice to apply appropriate measures to prevent a long-term recession. With limited resource, they may have to borrow at a higher interest rate, which will set them up for a future sovereign debt crisis. Professor Dynan emphasized that rich countries must play their role in this global crisis. Organizations like the IMF and the G20 should have a more serious conversation about the right response, which involves debt standstills and eventually debt forgiveness for countries that cannot get out of this crisis without proper support.