Finance Ministry proposes US$1-billion support package for businesses affected by Covid-19

The Ministry of Finance (MoF) is considering a new supporting package targeting businesses affected by the Covid-19 pandemic worth VND24 trillion (US$1 billion).

Minister of Finance Ho Duc Phoc revealed the move in a hearing held by the National Assembly (NA) on July 25.

Minister of Finance Ho Duc Phoc. Photos: quochoi.vn

“The new package is proposed based on the fact that businesses are facing severe hardship from Covid-19,” Phoc said.

If realized, this would be the second rescue package for the economy that is initiated by the new government, following a social package worth VND26 trillion ($1.13 billion) for workers and businesses 15 days ago.

In April, the government issued Decree No.52 on extending the payment deadline for taxes and land rental fees until the end of 2021, estimated at around VND115 trillion ($5 billion).

According to Phoc, the MoF is proposing postponing the effective date of Circular No.40 which provides guidance on the payment of value-added tax, personal income tax, and tax administration for business households and business individuals, until January 1, 2022, instead of August 1, 2021.

According to Phoc, to aid the current fight against the Covid-19 pandemic, the MoF advised the government to cut 10% off regular spending and 50% of costs for meetings and foreign travel.

“Substantial steps should be made to enhance efficiency in public investment, including those financed by the ODA, along with greater efficiency in the management of insurance and stock markets,” Phoc suggested.

Regarding funds to purchase Covid-19 vaccines, the finance minister said it has allocated VND8.2 trillion ($356.8 million) to buy 91 million doses of vaccines, along with another VND12.2 trillion (531 million) that is currently subject to the government’s approval.

Overview of the NA's hearing.

Businesses on brink of collapse

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc at a NA’s discussion held on the same day note the economic situation in the early third quarter “looks bleak” due to negative impacts from the fourth Covid-19 outbreak in a number of provinces/cities.

“Vietnam’s economy is going through the most challenging period we have seen for many decades,” he added.

VCCI Chairman Vu Tien Loc.

Loc said social distancing measures in many provinces and cities are bringing enterprises, especially small and medium ones, to the brink of collapse.

“Except for enterprises in finance, banking, and insurance, the majority are struggling for survival, with those in services being the hardest hit,” Loc stated, saying there would be no way for these enterprises to recover in the post-pandemic period unless substantial supports are given.

Meanwhile, Loc also stressed the necessity of speeding up the vaccination program, with a focus on industrial parks to avoid disruption of economic activities.

“Vietnam should also look at the plan to reopen the economy in line with the vaccination progress,” he added.

In a context when most businesses have no income as a result of Covid-19 restriction measures, Loc said an effective solution would be to continue providing financial means for vulnerable groups, saying this would stimulate consumption and address social issues at the same time.

For the services sector, in addition to financial support, Loc noted vaccine passports for international and domestic tourists could be viable when reaching a certain vaccination coverage.

“Vaccine passport is a major requirement for the economy to recover,” Loc stated.

Sharing Loc’s view, Vice Chairwoman of the NA’s Committee for Judicial Affairs Nguyen Thi Thuy urged the government to assess business resilience to offer more efficient support measures.

In the meantime, Deputy Vu Thi Luu Mai from Hanoi called for greater urgency in implementing the $1.13-billion social package with a high level of transparency and fairness, saying this would help relieve some hardship on the people.