Supporting SMEs to Overcome Difficulties

Given the complicated development of the COVID-19 epidemic, the business community, especially small and medium-sized enterprises (SMEs), is looking forward to supportive policies from the Government and central agencies.

Resilience required in tough time

Businesses, especially SMEs, are facing numerous difficulties due to the complicated and prolonged pandemic. A quick online survey by the Ho Chi Minh City Business Association (HUBA) showed that, during this 4th COVID-19 wave, up to 84% of SMEs are in difficulty, of which 40% lacked business capital; 80% have their markets contracted; 52% reduced staff; 14% have input supply chains disrupted; and 50% were hindered by social distancing measures to prevent COVID-19 contagion.

This explains why many businesses had to terminate operations. According to the Business Registration Administration (Ministry of Planning and Investment), 85,500 companies left the market in the first eight months of 2021, up 24.2% over the same period in 2020.

Currently, enterprises are facing numerous hardships: Contracted aggregate demand, short cash flows and increased input costs; disrupted or locally stalled production, consumption and export supply chains; hindered distribution as a result of COVID-19 epidemic prevention measures, and difficult employment. And, although the Government issued many support policies, most SMEs have not yet accessed such support.

As a leading exporter of Vietnamese cinnamon products to the world, Vietnam Cinnamon Production and Export Joint Stock Company (Vinasamex) is also confronting difficulties. Sharing with Vietnam Business Forum, Ms. Nguyen Thi Huyen, General Director of Vinasamex, said that the COVID-19 pandemic has given rise to increased production, export and investment costs. Investment projects are delayed by mobility restrictions; costs rose because of new administrative procedures; and logistics and shipping costs increased. Besides, customers and partners in the US and Europe could not come to Vietnam to boost trading and investment cooperation as before.

Businesses waiting for practical and timely support

To support businesses to overcome COVID-19 epidemic impacts, the Government recently launched a series of support policies; extended tax and fee exemption and reduction; extended the deadline for tax and land rent payment to support businesses and individuals hurt by the COVID-19 epidemic; and introduced monetary - credit support packages. However, these measures so far have little effect and many SMEs cannot access these supports.

According to economic experts, many companies only have access to some loan support for paying wages to their employees' salaries for the time being, while many other credit support programs are inaccessible because they have to meet other borrowing requirements from banks. Therefore, it is necessary to have timely policies and close solutions on credit support and debt rescheduling for businesses affected by the COVID-19 epidemic.

Like most other construction contractors, Mr. Ngo Huu Tiep, Chairman of the Board of Directors cum General Director of Giza E&C, is looking forward to practical and timely support policies from the government. He hoped that the government will have workable policies to ensure the balance of supply and demand and stabilize the market price of construction materials. Besides, it will necessarily introduce more accessible credit sources, extend loan repayment terms and reduce interest rates to ensure production and business.

Ms. Nguyen Thi Huyen, General Director of Vinasamex, hoped to access the government's support policies, especially zero-interest loans to pay salaries for employees in addition to measures to support traders and exporters to connect with importers in European, the United States and other markets.

“I really hope that the government, ministries and relevant agencies, especially the Ministry of Transport, consider supporting seaport services, reducing logistics costs, and facilitating import and export," she noted.

Previously, on August 29, SMEs in Ho Chi Minh City also jointly proposed that the government help to remove their difficulties when they were suffering heavy damage from the epidemic. Their specific proposals included suspending payment of social insurance premiums for at least six months after announcing the end of the epidemic; exempting and reducing 100% of social insurance premiums of employers and employees during the pandemic time when they have to halt operations and apply social distancing measures.

In addition, companies need support policies concerning tax, fee and interest rate. They hope that the Government will have a step-by-step roadmap for gradual reopening when workers are vaccinated.

By Ha Linh , Vietnam Business Forum