Businesses go downhill, another bailout proposed

06-Mar-2021 Intellasia | Vietnamnet | 6:49 AM Print This Post

The Ministry of Planning and Investment (MPI) is considering asking the government to launch the second support package to help businesses stand firmly amid the Covid-19 pandemic.

MPI minister Nguyen Chi Dung met with enterprises on March 1 to learn about the situation and design policies to give supplementary support to help enterprises cope with the difficulties caused by Covid-19.

A similar meeting was held at the same time last year where businesspeople talked about their problems and made proposals.

After the meeting, the ministry gave advice to the government to set up policies to support enterprises. Some policies were not effective, but in general, the bailout helped enterprises maintain production and ensure the continuation of production and supply chains, and supported social security for people, especially the poor.

As the Covid-19 pandemic remains unpredictable, businesses are still facing challenges, Dung said, adding that he has proposed that the government allow the second bailout.

Also on March 1 morning, the minister had a working session with aviation businesses. The working session in the afternoon of the same day focused on the production sector, and the processing and manufacturing industry.

A survey conducted by MPI has found that the health of businesses is at least at an optimistic level. The number of newly set up businesses in 2020 was 134,900, a decrease of 2.3 percent compared with 2019. The total number of workers in the newly registered businesses was 1 million, down by 16.9 percent.

Nguyen Chi Sang, deputy chair and secretary general of the Vietnam Associaiton of Mechanical Industry (VAMI), said the biggest problem for enterprises is the lack of orders. The turnover for automobile enterprises is on the decrease. Mechanical engineering enterprises, after one year of Covid-19, have seen orders decreasing, while transport fees are on the rise.

A representative from VAMI proposed that the government prop up the costs for specialised quarantine, saying that this costs enterprises a lot of money. The association also proposed creating favourable conditions for domestic enterprises to participate in domestic projects.

Meanwhile, Le Ngoc Duc, CEO of Hyundai Thanh Cong, proposed continuing the application of the policy on car registration tax reduction for automobiles to be manufactured domestically in 2021.

In June 2020, the automobile market witnessed the decline of 35 percent because of Covid-19, which put difficulties for all manufacturers. The government then decided to slash the vehicle registration tax by 50 percent applied to domestically made products.

The policy, plus the manufacturers’ effort to reduce the selling prices, helped the market grow in the second half of the year. The total market output decreased by 10 percent only by the end of 2020 in the context of Covid-19, according to Duc.

He went on to say that in early 2021, the sales once again dropped dramatically as the 50 percent tax registration reduction policy was no longer valid.

Regarding the steel manufacturing industry, the Vietnam Steel Association (VSA) said it is lackluster with moderate production and slow sales as many construction projects have been suspended for fear for new pandemic outbreaks.

The goods circulation has been slow because of weak demand. The transportation of materials and goods in the northeastern part (Hai Duong, Hai Phong, Hung Yen and Quang Ninh) has been facing big problems because Hai Duong and Quang Ninh are the epicenters.

VSA has asked the State Bank of Vietnam (SBV) and joint stock banks to create preferential credit policies, allowing payment delays for the loans to be due and slashing lending interest rates.

The association also asked local taxation agencies to delay the tax payment to avoid pressure on enterprises; and consider reducing the corporate income tax.

According to Truong Van Cam, deputy secretary of Vitas, the total textile and garment export turnover in 2020 was $35 billion, a decrease of 9.8 percent from 2019. In the first two months of 2021, the export turnover was $5.8 billion, up by 4 percent compared with the same period last year.

Cam said orders are not lacking, but the prices are on the decrease. Enterprises, especially ones in epidemic-hit areas, are facing difficulties in goods circulation.

Hai Phong City authorities have set very strict quarantine regulations. As a result, goods have been stuck, and enterprises could not get materials from Hai Phong Port and could not export their products.


Category: Economy, Vietnam

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