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Coronavirus

Vietnam launches $1.1bn COVID vaccine fund: 5 things to know

South Korea, Japan, and Taiwan donors chip into Hanoi's campaign

Health workers wait to be inoculated in March at the start of COVID-19 vaccination program in March. The country has launched a fund to finance the purchase of 120 million doses by year's end.   © Reuters

HANOI -- Vietnam will launch a public fund to finance the country's effort to secure 120 million doses of COVID-19 vaccines by the end of the year, as the country's industrial northern provinces struggle to control the spread of infectious strains of the virus.

The move comes as Hanoi shifts its strategy in dealing with the pandemic from containment to encouraging the population to be inoculated.

Since late April, key industrial parks in two northern provinces, Bac Giang and neighboring Bac Ninh near Hanoi, have been urged to tackle to the highly transmissible variants that have forced many factories to either shut down or slow operations.

In response to the outbreaks at the factories, Prime Minister Pham Minh Chinh held an emergency online meeting with authorities nationwide on May 29, calling for Vietnamese to adopt the spirit of "fighting the pandemic like fighting the enemy."

The Vietnam Fund for Vaccination and Prevention of Coronavirus Disease 2019, which will officially launch on Saturday, will play a role in financing the vaccination drive, a crucial weapon in the country's battle against pandemic and to protect manufacturing supply chains, which are a key economic engine for the communist-led country.

On Saturday night, Chinh plans to deliver a speech to call for donations from companies and individuals, domestic and foreign, to support the program.

Here are five things to know about the new vaccine fund.

What is the size and role of the vaccine fund?

The fund aims to help Vietnam secure enough doses to vaccinate the country's 100 million strong population and reach herd immunity by the end of 2021. The Health Ministry says it needs 150 million doses of COVID-19 vaccine, worth 25.2 trillion dong ($1.1 billion), to inoculate the roughly 75 million people required to reach herd immunity.

The need to quickly raise money to pay for the massive inoculation drive prompted Hanoi to launch the inoculation fund, the first of its kind in Vietnam. The money will be used to buy vaccines from overseas and to develop homemade ones.

COVID cases continue to climb in Vietnam. On Friday, Vietnam reported 224 new cases nationwide, with 141 in Bac Giang and 47 in Bac Ninh. The country has recorded 5,174 cases since April 27 when the current wave hit the country.

The increase comes despite the World Health Organization's observation, reported on Thursday, that there was no alert from the WHO over the "a new COVID-19 variant" detected in Vietnam. Health Minister Nguyen Thanh Long said on May 29 that the government had detected "a new COVID-19 variant" that combines characteristics of two existing variants first found in India and the U.K. Kidong Park, the WHO representative in Vietnam, told Nikkei Asia on Wednesday that the variant detected by Hanoi was largely an existing Indian variant.

What is the funding strategy?

The government plans to allocate as much as 16 trillion dong for the vaccination program. "In addition to the [public] budget, it is necessary to mobilize more resources from the voluntary contributions of domestic and foreign organizations and individuals, to join with the state," said Vo Thanh Hung, director of the Finance Ministry's state budget department.

To attract more money from the private sector, the fund will adopt "open and transparent fund management mechanisms," state media quoted Hung as saying. "All are based on the voluntary spirit of organizations and individuals. With every co-contribution, even the smallest, we will respect and manage it openly and transparently," he added. Hung also said company contributions to the vaccine can be included in deductible expenses when calculating taxable income.

Hanoi is calling for all parts of the country to participate in the funding effort. Vietnam Fatherland Front, a voluntary grouping of political organizations, on Thursday launched a "vaccines for workers" campaign calling for its 63 municipal and provincial members to make donations to the fund.

A vendor peels pineapples next to a sign urging people to wear masks to help curb the spread of COVID-19 in Hanoi on June 2.   © AFP/Jiji

Is the business community willing to help?

On Saturday, the Ministry of Finance issued a list of key donors -- companies, organizations and individuals. A published list of large donors, which includes only those that contributed 5 million dong or more, shows total donations of 251.2 billion dong. Vinamilk, the country's largest dairy maker, and staffers of FPT Telecom are among the list of Vietnamese donors. Among foreign companies, the local units of Hanwha Life Insurance and Daewoo of South Korea, along with Japan's Tokio Marine and Taiwanese insurer Cathay Life are also on the list.

Apart from the list, Vingroup, the largest conglomerate in Vietnam, HDBank, Vietcombank, Vietinbank, Agribank, and Tien Phong Bank have publicly expressed willingness to contribute to the fund.

European businesses say they are also keen to participate. "This is a very positive move, not just for European business but for Vietnam as a whole," said Alain Cany, chairman of the European Chamber of Commerce in welcoming Hanoi's decision to set up the fund. The chamber also wants Hanoi to allow foreign companies to vaccinate their staff at their own expense. According to a recent survey conducted by the business group, 79% of members agreed that businesses should be allowed to inoculate their workforces.

Meanwhile, Mary Tarnowka, executive director of the American Chamber of Commerce in Vietnam, told Tuoi Tre, a Vietnamese news site, that many American Chamber of Commerce members have indicated willingness to help pay the cost of vaccinating their employees. "Any contribution from the private sector to the procurement of vaccines must be combined with the government, in order to avoid competition between the private sector and the government while resources are scarce," she added.

How many doses has Hanoi secured?

Hanoi says it is set to acquire 120 million doses within the year, 30 million doses short of its target of vaccinating 75% of the population to achieve herd immunity. The doses include 30 million from AstraZeneca and 20 million Russian Sputnik V vaccines. Hanoi says it is in talks to buy 5 million doses from Moderna, as well as 31 million from Pfizer.

Vietnam is set to receive 38.9 million doses free of charge from the COVAX Facility, a global vaccine-sharing program backed by the World Health Organization. Hanoi has also registered with COVAX to buy an additional 10 million under a cost-sharing mechanism, according to Viet Nam News.

On Friday, local media reported that the Health Ministry has authorized a COVID-19 vaccine from China's Sinopharm for emergency use, hinting at Hanoi's eagerness to tap all available sources for vaccines. On the same day, Prime MInister Chinh held a phone meeting with his Chinese counterpart, Li Keqiang. The two leaders agreed to strengthen cooperation and support for Vietnam in the fight against COVID-19, according to Hanoi government's portal.

Homegrown vaccines are expected to fill in the gap of 30 million doses. One such vaccine, produced by Nanogen Pharmaceutical Biotechnology, will enter Phase 3 clinical trials and is expected to be available for commercial use by the end of the year. The company says it can produce around 70 million doses of the vaccine a year.

Two other candidate vaccines, one being tested by the Institute of Vaccine and Medical Biologicals, the other by Vabiotech, are entering the Phase 1 and Phase 2 trials, respectively. But these will not be available in 2021. Another vaccine that may be administered in Vietnam is Russia's Sputnik V. If an agreement is reached, local production of the Russian will start around the fourth quarter, with monthly output of 5 million doses.

What are the challenges down the road?

Vietnam's inoculation drive comes amid a global shortage of vaccines. "The goal is to create herd immunity in 2021, but the demand for vaccines in countries is very large," Health Minister Nguyen Thanh Long acknowledged in the emergency online meeting.

"The shortage crisis happened in March and April, mainly due to the outbreak in India. India is a main producer of COVID-19 vaccines but it had to stop exporting the vaccines, even via COVAX," Kidong Park, the WHO representative in Vietnam, told Nikkei Asia on Wednesday.

Vietnam was relatively successful in containing the pandemic during previous waves of COVID-19, as it implemented stringent containment measures, including testing, contact tracing and isolation.

Ironically, that has contributed to Vietnam's slow start with the vaccination drive. "The government has been one of the world leaders in preventing the spread of COVID-19. The challenge now is to match that success with an ambitious and accelerated mass vaccination program," Cany of EuroCham told Nikkei.

"It is unclear how firm the commitment is that Vietnam will obtain 120 million doses this year," Dr. Pham Thang, an emergency care physician told Nikkei. He says reports issued by the Ministry of Health say that while vaccine makers have promised to provide shots, they have not guaranteed to deliver them on the government's timetable. "Nor have they guaranteed the safety of the vaccines, and manufacturers say responsibility for safety lies with those who administer the shots," Thang told Nikkei.

Thang pointed out that vaccines are not the only way to prevent epidemics. "Vaccines are only the first step in achieving herd immunity, which occurs through a combination of vaccination and natural immunity conferred by the spread of the infection itself. Vietnam must therefore change its approach and apply many other measures if it wants to achieve effective herd immunity above 75% in 2021," Thang said.

Additional reporting by Kim Dung Tong in Ho Chi Minh City.

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