Nearly 90% of businesses affected by Covid-19, need long-term supporting policies

The impact of the disease on the business sectors of the business.

New businesses are affected most negatively

On the morning of March 12, in Hanoi, the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the World Bank (WB) held a ceremony to announce the Report on the Impact of Covid-19 on Vietnamese enterprises with some key findings from the 2020 enterprise survey.

The report was based on survey results of more than 10,000 enterprises in 63 provinces and cities nationwide in the past year.

Presenting the survey results, according to Dau Anh Tuan, Head of the VCCI Legal Department, up to 87.2% of enterprises said they were affected "mostly" or "completely negative" due to Covid-19.

Of which, 72.6% of enterprises said the effects of Covid-19 were "mostly negative" and 14.6% chose the "completely negative" level, only 11% said they were not affected. The difference between private and FDI enterprises in the effects of the Covid-19 was negligible.

Tuan also emphasised that, although this survey ended in December 2020, the results are still quite close to the figure of 85.7% of businesses negatively affected by the Covid-19, which the General Statistics Office announced on April 27, 2020. This shows the impact of Covid-19 is still persistent for businesses in Vietnam.

Along with that, the survey results show newly operating businesses are the group most negatively affected. 89% of private enterprises and 92% of new FDI enterprises that have been in operation for less than three years are affected largely or completely by Covid-19.

The impact of the pandemic on FDI firms is largest in the small group, with 89.3%. The proportion of micro private firms with the highest percentage of reporting being affected at the most, completely negative level is 87.7%.

Private enterprises in some industries have the highest rates of negative impacts, including: garment (97%), information and communication (96%) and electrical equipment manufacturing (94%).

Private enterprises in some industries have the lowest negative impact rate, but still around 80%, such as real estate (76%), mining (80%) and other services (81%).

FDI enterprises in several industries with a high rate of negative impacts include real estate (100%), information and communication (97%), agriculture and fisheries (95%).

Some sectors have a proportion of businesses choosing the most/completely negative impact less than all, including paper production (76%), finance, insurance (80%) and manufacturing. processing rubber and plastic (82%).

According to the report, general estimates show the number of employees who have had to be laid off accounts for about 30% of the employees of a business. Private firms have had to lay off on average about 32% of the workforce, with FDI firms about 17%. Small private businesses have had to lay off about 40% of the workforce.

Pay more attention to the small and micro businesses

However, according to Dr. Vu TienLoc, Chairman of VCCI, 2020 was a difficult year, but also a year marking the resilience of the business community to overcome the difficult circumstances. Enterprises have also awakened and realised many things through the pandemic. Enterprises must rethink their strategies, restructure, retrain their labour force, pay more attention to the domestic market, build supporting industries and Vietnamese supply chains, as well as diversify markets.

In addition to the initiative of the business community, there is a role of encouragement and support from the State. The Government's support policies and companionship amid Covid-19 most appreciated by enterprises are fiscal policies such as deferring and deferring value added tax, income tax, land rental tax and loosening credit policies of banks.

Lending policies with 0% interest rate to pay employees is considered difficult to access, but businesses still appreciate the need of this policy. 75% of businesses think the supporting policies of the Government are useful.

Businesses have actively responded to the pandemic.

However, Dr Loc suggested management agencies need to study and propose to the Government and the Prime Minister for policy packages to support businesses to recover and expand business investment for 2021-2025, because according to many forecasts, Covid-19 will continue to have serious effects on a global scale and could only be completely eliminated after another 4-5 years.

So in the coming time, there should be more long-term policies. For example, the Government must increase public investment, complete infrastructure works, and implement necessary stimulus packages in economic recovery.

In addition, businesses also believe long-term macroeconomic policies need to pay attention to developing the domestic market and promoting the connection between domestic enterprises and consumers to form Vietnamese supply chains. It is necessary to pay more attention to small and micro enterprises due to the poor resilience of this group of businesses.

More importantly, most businesses want to improve the legal system and remove bottlenecks in administrative procedures to improve the business environment.