State accelerates continued succour for businesses and people

With all production and business activities having been seriously affected by the COVID-19 pandemic, the government has continuously promulgated new solutions, including the establishment of another special taskforce of the prime minister, to help individuals and enterprises stay afloat, which facilitates economic growth this year.

From this week, leaders from the ministries of planning and investment; finance; labour, invalids, and social affairs; as well as those from many other ministries and central agencies, will continue being busy with meetings to work with business associations and enterprises to have better understanding about firms’ performance before taking sound support measures to help them resume operation and remove bottlenecks.

Last week, Prime Minister Pham Minh Chinh inked and enacted Decision No.1447/QD-TTg on setting up a special taskforce of the prime minister in charge of removing difficulties for businesses and people badly affected by COVID-19. Headed by Deputy Prime Minister Le Minh Khai, the taskforce’s vice heads include Minister of Planning and Investment Nguyen Chi Dung, Minister of Finance Ho Duc Phoc, and Minister of Labour, Invalids, and Social Affairs Dao Ngoc Dung. The taskforce’s other members are also leaders of other ministries and central agencies.

“The taskforce is tasked to access and gather all information about woes of enterprises and people, and then submit to the prime minister proposals on feasible measures to phase out the difficulties,” stated the decision.

Notably, the decision also stressed that the head of the taskforce is permitted to utilise the prime minister’s stamp, and the taskforce’s vice heads and other members can use the stamps of their units to carry out their tasks assigned by the taskforce. This would mean the taskforce’s members will have greater power to make decisions and solve difficulties for businesses and people.

This taskforce must also closely combine with the prime minister’s special taskforce on removing difficulties and promoting the implementation of investment projects at ministries and in sectors and localities, so that feasible consultancy can be provided for the prime minister. The latter taskforce was established under the prime minister’s Decision No.1242/QD-TTg, dated July 16, 2021.

Prime Minister Chinh in the cabinet’s meeting on Vietnam’s socioeconomic development in August and the first eight months of this year ordered that the special taskforce of the prime minister in charge of removing difficulties for businesses and people badly affected by COVID-19 must roll up its sleeves to find solutions to help the business community and the public.

“It is also a must to implement the government’s resolution on supporting enterprises, cooperatives, and people amid the pandemic surging. Efforts are to be made to quicken the speed of amending all legal regulations which are currently overlapped, inconsistent, and infeasible to the reality. These regulations are impeding enterprises from performing production and business activities,” PM Chinh emphasised. “Ministries, sectors, and agencies must take the initiative to receive information and solve difficulties facing enterprises as soon as possible.”

Enlarging the lifebuoy

The prime minister ordered that all documents on supporting enterprises and people must be implemented very soon as part of the government’s efforts to reach all socioeconomic development goals, including an economic growth rate of 6-6.5% this year and higher from next year.

“In the short term, we also put the prime target to control the COVID-19 pandemic and then gradually recover domestic production and business activities in areas where the pandemic has been controlled effectively. Good control of the pandemic is a decisive factor towards national economic recovery,” PM Chinh said. “Greater efforts must be made to effectively control the pandemic in September.”

The government on August 20 enacted Resolution No.94/NQ-CP on adopting the revisions of 10 laws in a bid to offer more favourable conditions to enterprises and investors. The 10 laws include the laws on special consumption tax, customs, investment, enterprises, public-private partnerships, and public investment, among others.

Similarly, the National Assembly Standing Committee is expected to soon promulgate a resolution on tax exemption and reduction to assist people and firms hit by the COVID-19 pandemic.

Four groups of policies are proposed, with three put forward the first time since first the pandemic appeared in Vietnam.

Specifically, there will be a 50% reduction of personal income tax, VAT, and other taxes arising from business activities in the third and fourth quarters of 2021 for households and individuals doing business in all sectors and geographical locations, with different forms and methods of tax declaration and payment.

There will also be a reduction of 30% for VAT for business activities in the sectors seriously affected by COVID-19, such as tourism, transportation, hospitality, catering, sports, entertainment, art, press, television, library, archives, museum, and other cultural activities.

Furthermore, there will also be exemption of the late payment of interest arising in 2020 and 2021 (the two years affected by COVID-19) for businesses and organisations (including their dependents and business locations) that have incurred continuous losses in 2018, 2019 and 2020.

Meanwhile, under the fourth group of policies, the government will keep a 30% reduction of corporate income tax (CIT) in 2021 for businesses, cooperatives, non-business units, and other organisations as applied in 2020.

Besides that, the Ministry of Finance has also submitted to the prime minister a 30% reduction in land rental in 2021 for those badly affected by the COVID-19 pandemic.

New economic forecast

A few days ago, Standard Chartered Bank has revised down its GDP growth forecasts for Vietnam from 6.5% to 4.7% for 2021 and from 7.3% to 7.0% for 2022 due to softening economic indicators, the worsening pandemic, and a still-slow vaccination rollout.

The bank anticipates a further downgrade and an interest rate cut by the State Bank of Vietnam if COVID-19 cases are not brought under control by September. It sees a rebound in the fourth quarter and expects trade data to remain supported by improving global trade. Softer economic growth is expected in the third quarter.

According to the bank, the COVID-19 situation will likely continue to dampen inward investment for the rest of 2021 and may create further tourism uncertainty.

“Vietnam’s economy is being hit by the pandemic like many others in Asia and other parts of the world; however, we remain bullish on the economic prospects over the medium and long term.” said Tim Leelahaphan, economist for Thailand and Vietnam under Standard Chartered.

Global analyst FocusEconomics also said that the recent surge in daily COVID-19 cases represents a key downside risk to the outlook. “Our panellists expect Vietnam’s GDP to expand 5.8% in 2021, which is down 0.6 percentage points from last month’s forecast, and 6.8% in 2022.”

According to FocusEconomics, after GDP growth accelerated in the second quarter, clocking the fastest rate of expansion since the fourth quarter of 2019, conditions appear less encouraging in the third quarter of this year. Industrial output decreased for the first time in five months in July as the manufacturing sector swung into contraction, while growth of goods exports fell to a five-month low. This came against the background of a significant spike in COVID-19 cases from early July, with daily infections hitting record levels in mid-August.

According to the General Statistics Office (GSO), since July, the number of businesses affected by the pandemic and kicked out of the market or completing procedures for dissolution has been larger than the number of newly established enterprises. Specifically, the respective numbers were 79,700 and 75,800 in July, and 85,500 and 81,600 in August.

On average, about 11,400 enterprises left the market every month in the first seven months of the year, and nearly 10,700 businesses suffered from the same fate every month in the first eight months.

Also, in the first eight months of this year, the COVID-19 pandemic forced about 85,500 enterprises, both local and foreign ones, to halt performance and complete procedures for dissolution, up 24.2% year-on-year. Notably, nearly one third (24,000 or 28.1%) of this figure come from Ho Chi Minh City, up 6.6% year-on-year.

Of these 85,500 enterprises, about 43,200 halted production and business, up 25.9%; some 30,100 businesses stopped operation and waited for conducting procedures for dissolution, up 24.5%; and as many as 12,200 firms completed such procedures, up 17.8%.

According to the GSO, the economy’s index for industrial production (IIP) in August decreased 4.2% month-on-month and 7.4% year-on-year. The 8-month IIP increased 5.6% as compared to the same period last year. Meanwhile, the seven-month IIP climbed 7.9% year-on-year.

In the first eight months of this year, the manufacturing and processing – which create 80% of industrial growth – went up 7% year-on-year; while production and distribution of electricity increased 6.6%, and mineral exploitation decreased 6.2% year-on-year – causing a 1% reduction in industrial production.

Source: Nhan Dan Online