Stronger Troubleshooting Measures Needed to Revitalize the Economy

11:20:47 AM | 6/9/2020

A series of governmental policies designed to address business hardships against enterprises and boost public investment disbursement will importantly help invigorate the economy that was adversely affected by the Covid-19 epidemic.

Seeing that the early containment of the pandemic is a very important opportunity for Vietnam to grow in a challenging world, the Government and the Prime Minister are determined not to yield to challenges, adopt innovative administration, address supply chain disruptions, and actively attract investment resources, both domestic and international, for development.

The Government has hosted various dialogues with localities and businesses and introduced many policies and resolutions to remove difficulties and revive the economy, including Resolution No. 68 on the program to reduce and simplify business-related regulations in 2020-2025 and most recently Resolution No. 84 on tasks and solutions to removing business difficulties against enterprises, accelerate public investment disbursement and ensure social order and safety in the context of the Covid-19 pandemic on May 29.

Further removing difficulties in business

According to the newly issued Resolution No. 84, the land rent cut of 15% in 2020 will be applied to enterprises, organizations, households and individuals that directly lease State-managed land if they have to cease business operations due to the Covid-19 pandemic.

In addition, they will be exempted from the guarantee fee arising in 2020 from Government-guaranteed loans for aviation enterprises with outstanding loans recorded as of December 31, 2019; enjoy a 50% discount of takeoff and landing fees and air traffic control fees for domestic flights from March to the end of September 2020; be allowed to the minimum price of VND0 for State-fixed aviation services from March to the end of September 2020.

A 2% rate cut on loans financed by the SME Development Fund is applied to small and medium enterprises; a 50% reduction of registration fee is applied to domestically manufactured or assembled cars until the end of 2020 to stimulate domestic consumption; a payment term is extended for special consumption tax, levied from March 2020, on domestically manufactured or assembled automobiles, till December 31, 2020. Special consumption tax will be revised to support domestic production development.

Besides, as for FDI companies, according to the resolution, foreign experts, managers, investors and high-tech workers working for investment and business projects in Vietnam are allowed to enter Vietnam to keep their projects and enterprises working but they must comply with regulations on pandemic prevention and control. Any discrimination against foreigners living and working in Vietnam is strictly prohibited. Work permits are renewed for foreign experts, managers and technicians working in enterprises in Vietnam. New work permits are issued to foreign experts, managers and technicians to replace those not allowed to enter or not returning to Vietnam.

The Government also allowed contributions and supports for the fight against Covid-19 pandemic which are rational expenses deducted when corporate income tax is calculated.

Accelerating social investment

The Government urged central and local authorities to quickly consider and settle investment procedures for projects submitted by enterprises, not further delay unsettled records, and urgently report to competent authorities for consideration and settlement of issues beyond their authority.

At the same time, they necessarily guide the formation of safety standards and criteria for each type of production and business to ensure a double goal: Effectively preventing and fighting against the pandemic and facilitating enterprises to conduct business safely amid Covid-19 pandemic. Best preparations are needed to attract new investment resources, including planning work, infrastructure, human resource training, energy supply and administrative reform.

In addition, they will essentially speed up investment promotion in line with Covid-19 prevention regulations; proactively research and apply mechanisms and policies on startup stimulation, and business support for recovery and expansion. They will need to raise morale, attitude and competence of their employees, especially enforcement staffs; stop bureaucracy and harassment; and promote the spirit of business support.

Inspectorates of the Government, ministries, agencies and localities have seriously based on the Government’s Resolution 35/NQ-CP dated June 30, 2016 on business support and development to 2020 and the Prime Minister’s Directive 20/CT-TTg dated May 17, 2017 and Directive 11/CT-TTg dated March 4, 2020 to review inspection plans to reduce inspections in the time of pandemic, not perform unplanned inspections and shift to retrospective inspection from early inspection methods. Quick conclusions on inspected projects have been quickly completed to suggest treatments according to the law.

Stepping up public investment and disbursement

The Government allowed no application of the regulation on 10% saving of total investment on new projects in the medium-term public investment plan in 2016-2020. These projects will be funded according to the 2020 public investment plan.

The Government will further review regulations on budget, investment and construction, timely remove barriers and obstacles, accelerate public investment and fund disbursement, and enhance the performance of public investment projects. It will remove obstacles and difficulties in the implementation of Decree No. 68/2019/ND-CP dated August 1, 2019 on management of construction investment costs.

The Government submitted to the National Assembly’s Standing Committee and the National Assembly for consideration and decision of such contents as a 30% cut of environmental protection tax on flight fuel as per Resolution 579/2018/UBTVQH14 dated September 26, 2018 to December 31, 2020; an exemption of water extraction fees for water producers in 2020; a 30% reduction of corporate income tax for micro and small enterprises in 2020 during the time of Covid-19 pandemic.

While the world economy is being severely affected by the Covid-19 pandemic, Vietnam is proving its resilience with a solid macro foundation and the Government's determination to revive the economy. With its good resilience, despite worrying macroeconomic indicators seen in the first five months of the year, if the May performance was taken into consideration - the first month of applying the social distancing with the economy starting the “new normal status”, there are still new rays of hope. Resolution 84, with new and practical support measures, is considered a “strong healing” measure that plays an important role in stimulating the economy after the pandemic because enterprises can only adapt and shift quickly to new changes when the policy response of central and local authorities keeps up with the actual situation.

According to statistics, as many as 5,056 enterprises resumed operations in May 2020, an increase of 32.7%. In the month, total retail sales of goods and services increased by 26.9%; the index of industrial production (IIP) rose by 11.2%; and exports expanded by 5.2% over the previous month. Enterprises felt encouraged in investing in production and business.

The State budget disbursed over VND122.2 trillion (US$5.3 billion) for public investment from January to May 2020, equaling 25.98% of the plan (compared to 23.25% in the same period of 2019). Foreign investment disbursement reached US$6.7 billion or 12.37% of the plan. The image and reputation of Vietnam in the international arena was increasingly enhanced. Vietnam ranked 12th out of 66 emerging economies by financial health, according to the rankings released by The Economist Magazine in May 2020.

This shows that, after the social distancing, the economy is being restarted and gradually going back to its normality.

By Thu Ha, Vietnam Business Forum