Hanoi Enterprises Benefit from Demand Stimulus Package

 

Mr Pham Duc Tien, Deputy Director of the Hanoi Department of Industry and Trade said despite negative effects of the global economic crisis, the municipal industrial production value reached nearly VND36.9 trillion (US$2.07 billion) in the first six months of this year, up 3,9 percent from the same period last year. Meanwhile, the industry and construction sectors in the first half grew 4.65 from the same period last year. The foreign-invested economic sector witnessed the lowest growth of 0.2 percent in the six-month period, the state-owned sector grew 4.6 percent and private firms grew 7.9 percent. Some production industries still maintained high growth rate in the period including precise industry with 44.4 percent, equipment and machine production 33.8 percent and oil and gas production 20.8 percent.

 

Mr Tien partially attributed the accomplishments to the effects of the government’s demand stimulus that has applied a wide range of supporting methods of subsidized loans and tax policies as well as efficient management mechanism by Hanoi authorities.

 

The most prominent efforts to deal with corporate difficulties is the efficient implementation of the Plan No. 25 by the municipal government with priorities given to provision of subsidized loans for enterprises under the government’s stimulus package. Municipal banks had boosted subsidized loans worth nearly VND70 trillion (US$3.92 million) in the first seven months of this year, fostering production and trading operations by many enterprises.

 

In tax policies, a total of 23,267 companies in the city have enjoyed corporate income tax cut worth VND310 billion (US$17.4 million), 24,245 firms benefited from tax delay worth VND528 billion (US$29.64 million), 24,254 companies enjoyed value added tax (VAT) reduction worth VND528 billion (US$29.64 million), and 477,516 people benefited from tax delay worth VND639 billion (US$35.87 million). The municipal tax department has slash tome for tax refunding to 15 days from the earlier 30 days and the time for tax code registration to only five days.

 

In addition, many other efficient methods have been applied to support enterprises including trade promotion programmes, enhancing administration professional of corporate leaders, dealing with inadequacies involving land and factories, and trademark promotion.

 

 

We has planned to build a component production and a car production plant in Dong Anh district as well as expand the light truck production plant in Me Linh district through 2012. We are also building a 90-hectare industrial park to product heavy trucks in Thanh Hoa Province, which will use equipment and facilities imported from developed countries. However, we are facing some difficulties with the most prominent being production sites. The merging of former Ha Tay into Hanoi has led to changes in administrative procedures and caused site clearance behind schedule. Despite the promotion of the government’s demand stimulus, enterprises may encounter some new challenges in 2010 upon the end of the package, he said.

 

I hope that the government should give priority to investment promotion with a focus on high-tech investment to bring about long-term effects. Most of the subsidized loans have been spent on buying normal equipment and machines, real estate and consumption goods, which will result in short-term effects.

 

Since the beginning of this year, our company has been making every effort to gradually negative effect of the global economic crisis, obtaining revenue growth of 18 percent from the same period last year and paying an average salary of nearly VND3 million ($168.42)/person/month. Our company is accelerating production to ensure sufficient goods supply for inked contracts. However, the company is also worried about potential challenges after the end of the stimulus package. Short-term subsidized loans have not yet fostered corporate production and trading as much as expectations. Many companies proposed the government to extend the deadline of the subsidized loans to June 2010 so as to help enterprises better recover and large-scale companies to invest in modern technologies and high-quality labour force.

 

The government’s demand stimulus is able to prop up the current economic decline. In the first six months of this year, our company’s revenue completed over 54 percent of the full-year target and our production and trading operations are expected to be improved by the end of this year. Despite recovery in the world economics, foreign partners are still hesitant to order Vietnamese goods. Enterprises are also facing fierce competition right in domestic market due to the appearance of illegally imported goods mostly from China, in addition to false goods regardless of great efforts of authorities.

Minh Duc