Measures devised to help transport firms overcome challenges of COVID-19

At present, transport firms are in urgent need of support from the State and Government management agencies to address the financial difficulties concerned with the resumption of business operations.

Several policies that aim to reduce management agencies fees are viewed as helpful to transport firms so that they may continue to operate and avoid bankruptcies connected to COVID-19.

Timely assistance

A report by the Ministry of Transport shows that the amount of passenger traffic and, therefore, revenues derived from passengers in the first half of this year was equivalent to just 20-30 percent of figures from equivalent periods before the pandemic.

Meanwhile, quantities and revenues of cargo transport are at about 70-80 percent of pre-COVID 19 periods. Data from tracking systems indicate the number of transport vehicles that were in operation nationwide in May stood at only half the normal amount.

Currently, about 90 percent of the transport companies borrow money from banks to operate and invest in their fleets.

Four waves of COVID-19 outbreaks have hit the country since April 2020. As a consequence, firms in the sector have become sluggish or had to halt operations entirely. Some businesses do not generate enough revenue to pay their drivers a salary, cover social security premiums, pay taxes or settle outstanding loans.

If the pandemic persists and the operation of vehicles has to be suspended, many transport firms may face bankruptcy, said a representative of the Transport Ministry.

Therefore, the ministry has put forward various solutions to the Government in a bid to address the financial troubles of these companies and help them resume business operations.

Assessing the  support of State management agencies as timely, Khuc Huu Thanh Hai, Director of Dat Cang Transport, Trade and Services Company, said that they have already enacted relief policies for companies in the sector. 

From July 1 until the end of this year, transport units will employ a 30 percent reduction in road transport tolls for civilian cars and buses.

Nguyen Thanh Binh from the Vietnam Register said it is the third consecutive instance of fee reduction since August 10 last year to help people suffering from the economic effects of the pandemic.

An accurate number of vehicles that have been eligible for reduced fees has yet to be released, Binh said. However, more than 805,000 vehicles were estimated to have enjoyed reductions totalling over 316 billion VND (more than 13.7 million USD) as a result of the initial cut in fees.

In addition, the Transport Ministry and relevant agencies have been asked to cut value-added tax to zero per cent for 12 months, extend deadlines for loan settlements and halt social security premium collection until December 2021.

Support from the State is urgently needed

Some fees have been significantly reduced in the aviation sector. The cost of airport utilisation has been cut by 90 per cent and that of transaction registration, 80 per cent. This will be applicable from July until December 31 this year.

Underlining the necessity of these solutions in the current context, leaders of the Civil Aviation Authority of Vietnam (CAAV) said that in the recent past, the State rolled out numerous measures to support firms, particularly those in the aviation sector.

At the same time, the CAAV is creating the best conditions for firms to restructure, target new markets and shift from passenger transport to cargo transport as needed.

However, the main challenges are uncertainties caused by COVID-19, which remain unpredictable.

The CAAV forecast the situation will improve in 2021 compared to the previous year, especially in the latter half as the COVID-19 vaccination drive will have a hugely positive impact in Vietnam and across the world at large.

Moreover, key markets of Vietnam’s aviation industry, such as Northeast Asia and Europe, are likely to achieve herd immunity, paving the way for the resumption of international flights by the start of the fourth quarter this year.

The aviation sector is expected to recover from the middle of Q3 of 2021 and the number of passengers passing through the country’s airports may exceed 70 million this year.

Experts believe that the most necessary measure is to have sufficient capital to cover expenses. Therefore, the Government needs to introduce support policies to help airlines avoid bankruptcy and increase their competitive edge against foreign counterparts./.