Accelerating the economy after the pandemic

Speaking at the Prime Minister’s conference with the business community on May 9, PM Nguyen Xuan Phuc once again emphasised that once the social distancing is eased and ‘the beat’ of society has returned to normal, the economy will be like a squeezed spring and it will be time for it to get ready to unwind. Therefore, ministries, sectors and localities must join hands in removing difficulties for enterprises towards reform, innovation, and a high level of responsibility.

Only 2.9% of enterprises have received support

According to the survey of the Ministry of Planning and Investment (MPI), 88% of enterprises said that the Government solutions outlined in the Directive 11 are appropriate, particularly those that help stabilise the prices of commodities controlled by the State which also act as inputs for production in the first and second quarter of the year as well as the exemption and reduction of interest rates and bank fees.

However, the implementation of supporting measures has revealed inadequacies. Minister of Planning and Investment Nguyen Chi Dung said that the smaller the enterprise, the more difficult it seem to be to access the support policies. By the end of April, only 2.9% of enterprises officially received support from the Government policies. About 21.2% of enterprises knew about the Government Directive and were given instructions but have not yet taken any action while 64.6% of enterprises knew about the support policies but have yet to access such policies.

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said that the business community all wishes that the support packages will be quickly implemented in a transparent manner so that enterprises will have a greater chance to survive.

In addition, the disbursement of public investment of about US$30 billion is also expected to create impetus in the economy to recover after the pandemic. If we can promote institutions and mobilise social resources, the targeted GDP growth of over 5% will be achievable in this year.

Chairman of the Vietnam Association of Small and Medium Enterprises Nguyen Van Than said that the 28 credit guarantee funds across the country have a total capital of only VND1,450 billion which is too small given to the needs of the business community, especially in the context of post-pandemic. Therefore, the Association proposed the Government should quickly increase the financial and human resource for these funds, while reducing lending guarantee procedures to share in the difficulties experienced by the banking sector.

In addition, public investment projects need to reduce bidding procedures and be split up so that domestic enterprises, especially small and medium-sized enterprises, have the opportunity to participate. In addition to reducing VAT and exempting corporate income tax for small and micro enterprises in 2020, the Government needs to promote the domestic market and the campaign of "Vietnamese people prioritising using Vietnamese goods".

Chairman of the Board of Directors of VietinBank Le Duc Tho said that VietinBank and other commercial banks have implemented many preferential credit programmes with lower interest rates and service fees to share difficulties with customers affected by the pandemic.

However, the banking industry itself is facing difficulties due to customers' inability to pay due debts , increasing the risk of non-performing debt. Therefore, the banking sector needs the companionship of businesses in addition to timely and supportive solutions from the Government. Enterprises need to build and implement projects that are really feasible while proving their difficulties to avoid profiteering .

In addition, it is recommended that the Government approve a plan to increase equity capital for State-owned commercial banks to help them expand credit growth, provide capital for the economy, and help businesses overcome their difficulties.

The Government should also increase the efficiency of public investment through connecting the banking sector with the planning, investment and finance sector.

Numerous new opportunities

A noteworthy signal is that the prestige and position of Vietnam have been highly appreciated by the international community for the successes achieved following the prevention and control of the COVID-19 pandemic.

The MPI said that this is a "golden opportunity" for the world to know about Vietnam as a safe investment destination and its readiness to receive capital inflows. In the context of complicated developments of the coronavirus in many countries around the world, the control of the disease in Vietnam has created a great advantage for the country to take the lead in recovering economically and establishing a new position in the international arena.

Chairman of the European Chamber of Commerce (EuroCham) in Vietnam Nicolas Audier said that strong measures against the COVID-19 pandemic, including timely public health measures and effective economic support packages have turned Vietnam into a model country in terms of in COVID-19.

These moves have helped Vietnam maintain its economic growth pace, increase the attraction of foreign direct investment (FDI), and maintain the confidence of the European business community.

It can be seen that Vietnam is currently in a good position to welcome new business and investment opportunities and promote stable economic development. However, the implementation of economic stimulus packages is also crucial at this time because Vietnam is a developing market and highly dependent on global demand. While the pandemic has been gradually pushed back in Vietnam, many other countries, including developed economies, have not yet reached the peak of their epidemic.

Vietnam should not only protect domestic enterprises but also support foreign enterprises, an important growth driver of the country, with a focus particularly on export activities, when the pandemic is controlled and global trade is back to normal. With the ratification of the EU-Vietnam Free Trade Agreement (EVFTA), European businesses look forward to further strengthening trade relations between Vietnam and the EU.

Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said that, although heavily affected by the pandemic, the seafood sector is also witnessing new opportunities as the disease is gradually brought under control. Major seafood exporting countries such as India, Ecuador and others are in a state of blockade due to the pandemic and have had to reduce by up to 50% of their production and export output.

Meanwhile, the supply chain of essential materials for domestic aquaculture and aquatic processing is almost completely no longer dependent on the Chinese market. The support industries for domestic fishery production are seeing good development opportunities in Vietnam, thereby creating the conditions for seafood enterprises to be more proactive in their production.

VASEP recommends that the Government continue to promote policies in support of businesses affected by the pandemic, including shrimp farmers and fishermen so as to catch up with market demand in this July and August.