Vietnam won’t close factories amid Covid surge

Vietnamese factories making everything from shoes to smartphones are expected to continue production despite record Covid-19 infections, reversing a policy of sweeping lockdowns last year that hobbled global supply chains for Western retailers.

One of the world's biggest garment makers, Vietnam reported more than 26,000 new infections on Sunday, or about double the peak last year, when factories supplying brands such as Nike, Zara, Apple and Samsung were shut for months.

But unlike nine months ago, when the Delta variant was spreading through a mostly unvaccinated population, now millions of factory workers have been fully vaccinated and the Omicron variant is proving less severe, the government said.

"The risk of widespread lockdowns is very low this year as Vietnam has successfully carried out its Covid-19 vaccination campaign," Dang Duc Anh, director of the National Institute of Hygiene and Epidemiology, told Reuters.

Vietnam has been relaxing curbs in recent months, with schools re-opening last week and the government saying on Sunday it would lift restrictions on arriving international passenger flights.

More than 76 per cent of the population has received at least two vaccine doses, up from 3.3 per cent early in September last year, the health ministry says.

The American Chamber of Commerce in Hanoi, which represents US businesses and last year urged the government to ease its curbs, is anticipating a better 2022, said Adam Sitkoff, its executive director.

"I do not expect to see additional countrywide lockdowns as serious cases in most parts of the country are at a manageable level and the authorities have learned that economy-crippling restrictions are not sustainable," Sitkoff told Reuters. The government is targeting economic growth of 6 per cent to 6.5 per cent this year, up from 2.5 per cent in 2021.

Smooth factory operations in Vietnam, the second biggest exporter of clothes and footwear to the United States after China, will also help free up supply chain bottlenecks that are pushing up inflation around the world.