Bubble and Vaccine announced but can businesses be saved?

By Glen Craig

This article starts by acknowledging two fundamental truths, which are all too rarely discussed together.

Firstly, the nation’s health is paramount, and the Government has done an exceptional job at ensuring that Vanuatu has remained COVID-19 free, particularly whilst repatriating 5,000 people.
Secondly, the global events mean that this is undoubtedly Vanuatu’s biggest-ever economic crisis– the devastating reality is that there is a level of poverty and suffering within Vanuatu that has never been seen before. Far too often, there is a perception that a robust economy and health care of its citizens in conflicting goals, and this is how the debate is framed.
This is simply not the case – it is obvious that any outbreak of COVID-19 would have a profound economic impact, on top of the health and social impacts, and so Vanuatu must remain COVID free.
Furthermore, a healthy population is an economically productive one. The most important policy question that this country currently faces is therefore not a trade-off between health and economics, but instead it is how to ensure that Vanuatu can maintain its health status whilst minimising the economic fallout from COVID-19 in the short-run, whilst ensuring that the country can thrive over the next decade.

In the short-term, there is no doubt that businesses in Vanuatu are suffering. In a survey run by the Chamber of Commerce and Industry in early December, 42% of businesses said they were using savings to survive. We are all too acutely aware that this situation is not sustainable. Business owners and managers have done their very best to keep as many staff employed. Still, economic realities mean that we will see more and more businesses reducing their workforce sizes or closing entirely. For example, 28% of businesses surveyed had definite plans to reduce their workforce size, with a further 41% considering it. This number will just compound all of the negative impacts which we have seen – increasing hunger, increasing poverty, increasing unemployment and other social issues, reduced demand, reduced money flowing back to the islands, reduced investment. These issues were minimised to some degree last year due to numerous Government initiatives – the Employment Stabilisation Programme, the SME Grant, the VNPF releases, and other fiscal boosts such as supporting hotels through the repatriation scheme.

Indeed, it is no exaggeration to say that the next few months could have a profoundly negative impact on the next decade. If more businesses begin to close, and if more of our skilled workers head overseas, then the outlook for the next decade is suddenly very bleak, and recovery will be substantially more difficult.

Conversely, if we can maintain our businesses, our jobs, and our skilled workers, then Vanuatu will be in a strong position to quickly bounce back, allowing the country to focus on the more fundamental development questions.

Luckily, Vanuatu is in a position to do something about this easily. Thanks to the citizenship scheme, and the prudence of Government Ministers and officials in saving much of this income, Vanuatu is in a unique fiscal situation within the region, and indeed near unparalleled globally. Governments around the world have been borrowing vast sums of money to support their businesses and people. Vanuatu does not need to borrow – it has cash due to its Citizenship programme, and this is absolutely the time to spend some of it now – to support the jobs, livelihoods, and welfare of the people of Vanuatu. If the income from the Citizenship Programmes cannot be spent in Vanuatu’s biggest economic crisis to support the people of Vanuatu, then what is the point of these programmes?

Forward-looking, the biggest economic question is how and when will the borders open. Thanks to the vaccines currently being rolled out globally, there is now a clear light at the end of the tunnel. These vaccines have been widely used in some of the countries in which COVID-19 has most impacted, and they are already saving lives and bringing the end of this disaster closer and closer. Results from Israel and the UK prove that these vaccines are safe and effective, massively reducing the prevalence of mild and severe diseases and basically eliminating death. There is good news about vaccines on a near-daily basis. For example, on the day of writing, the US Food and Drug Administration announced very positive preliminary findings for the Johnson & Johnson vaccine. This is a single-shot vaccine that can be stored at fridge temperature and so is perfectly designed for roll-out across Vanuatu.

These vaccines have transformed the picture for many other countries – for example; the UK is now looking at lifting almost all domestic COVID-19 related restrictions by June. Closer to home, both Australia and New Zealand have very recently started their vaccine programmes, and these will accelerate rapidly – in

Australia, for example, they plan to have offered every adult a vaccine by the end of October. With the vaccine proving to be such a potential gamechanger, the inevitable question is, what does this mean for Vanuatu? For example, if an Australian comes from a state with no reported COVID-19 cases in the last month, if they have had the vaccine, and if they have a negative test in the 48 hours before they travel, then does the Government of Vanuatu have a sufficient level of confidence to allow this potential tourist to travel? What will it take for Australia to let this person travel? What infrastructure will Vanuatu need to put in place to allow it to happen? What contingency plans need to be made?

These are questions that we must start to consider now, and crucially, these are debates that must be communicated to the public. This is for many reasons – firstly, it will take time to agree on all of the details and protocols with other nations, and these discussions must happen before our neighbours reach the required level of safety, not when it is reached. This will allow the borders to open as soon as is safely possible. The people and the businesses of Vanuatu simply cannot afford for the country to be six months late to this party. If our borders remain closed whilst those of our key competitors for tourism and investment open up in a safe manner, then this will represent a catastrophic missed opportunity for our struggling tourism operators to benefit from the first wave of tourism.

Secondly, by communicating a clear plan to the country will increase business confidence and allow them to begin to plan properly for the future. Businesses understand the situation and are not after a specific date for reopening – however, a clear pathway to borders opening so that the private sector can understand the plan, combined with vital short-term economic support, would prove transformational to their confidence and prospects of getting through this crisis.

Finally, Vanuatu’s people must understand the plan – we do not want to see a situation where tourists are not welcomed back, even as they are safe. As an example of why a widespread communications campaign is key, there is already an alarming level of lies and mistruths about the vaccines circulating on social media within Vanuatu, with a very limited rebuttal. These malicious and incorrect points must be countered early and firmly.

On the note of the domestic vaccine programme, this will help to give Vanuatu further confidence to open up and be a critical step in fully easing border restrictions. It is improbable that the world will be able to fully eliminate COVID-19, so vaccines are crucial. This vaccination programme will be a highly complex challenge and one which the private sector is ready and willing to support. Much of the relevant expertise – communications, database management, logistical management, and even administering the vaccine – already exists within the private sector. Everyone knows the importance of safely and quickly administering the vaccine. This represents a perfect opportunity for the private sector and the Government actually to work together for everyone’s long-term benefit, so let’s use this opportunity.

We are now approaching a year since the borders first closed and since this unprecedented global crisis began. If we were to score countries around the world for how they have coped, Vanuatu would come out very highly – there has been no COVID-19 here, and the economic disruption has been limited. This is something that should be a huge source of national pride. The rest of the world now has a clear pathway out of this crisis, thanks to the vaccine, and for many countries, it is clear the worst has passed. For Vanuatu, however, the worst economic impacts could just be starting now. This is now the time to act – to support businesses immediately and to begin to clearly plan and communicate the plan for the longer term. If the Government takes this opportunity well, to ensure the economic impacts are limited, then when history looks back at COVID-19, the people of Vanuatu will be able to proudly stand up and say that this beautiful little country of 300,000 had a globally unparalleled response. This is something we should all be striving together for.