What do businesses expect from second support package?

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Economic experts as well as many businesses all expect the Government to have a second economic support package to avoid the consequences of an unprecedented pandemic in history. Photo: Internet

Package 1 support –The slow disbursement rate

Regarding the credit support package, according to the State Bank's statistics, as of September 14, credit institutions have rescheduled repayment terms for more than 271 thousand customers with a balance of VND 321 trillion and offeredexemption, reduction of interest rates for nearly 485 thousand customers with outstanding debt of VND 1.18 million of billion.New loans have preferential interest rates with accumulated sales from January 23 to now, reaching VND 1.6 million for 310 thousand customers. Thus, thetotal credit limit has surpassed the initial set amount of VND 300,000 billion. However, thesupport policy still has a low implementation rate such as the package of VND 62,000 billion for workers impactedby Covid-19, of which VND 11,000 billion was only disbursed

Talking about this issue, Nguyen Xuan Duong, Chairman of Hung Yen Textile and Garment Association, Chairman of Hung Yen Garment Corporation andVice Chairman of Vietnam Textile and Apparel Association (VITAS), said after Covid-19,if we want to develop production, the State and all industries must step in and cutcosts for enterprises to survive. With the current difficulties, every business needs more financial resources but the credit support packages still sets the criteria too high with high interest rates so many businesses cannot take advantage of it.

Many businesses said they still cannot access the Government's preferential packages due to difficult access conditions. As for a credit package of VND 16,000 billion with 0% interest rate for businesses to pay salaries to employees, Nguyen Tuan Anh, Director of the Department of Credit for Economic sectors (SBV), said there is one enterprise with the provincial People's Committee approved the list of eligible loans but the business has been self-balancing its source of payrolls without borrowing from this package.

According to the Ministry of Labour, Invalids and Social Affairs, the reason enterprises have not actively prepared loan dossiers and confirmed support regimes for employees is fear that proving financial difficulties may effectproduction and business activities. In addition, the Government has controlled well the first phase sobusinesses let their employees quit their jobs in rotation, and no employees stopped working for onemonth continuously, so they are not eligible for loans by the provincial People's Committee regulations.

Therefore, Duong emphasized that the current support policies and packages are not effective in that the aim is to support businesses who have reached the end of their ability to survive. Why are businesses still persisting and able to survive? According to economic expert Vo Tri Thanh, the Government's efforts are timely, decisive and proactive in giving support policies, however, the implementation speed is still slow andaccess to packages is still difficult, causing the impact from the policies to support the actual operations of enterprises beinglimited.

Reinforce trust and create motivation

According to the survey results of the Private Economic Development Research Board (Section IV - under the Administrative Procedure Reform Advisory Council of the Prime Minister), many enterprises have lostconfidence in issued policy effectiveness and proposed new policies. Enterprises said it is difficult to approach policies because of unreasonable or impractical conditions and complicated procedures. Therefore, a new package of support policies businesses and associations want is aimed towards strengthening trust and creating motivation for businesses.

According to Thanh, authorities need to consider the new economic stimulus package until 2021, because Vietnam still has resources to implement. In addition, the first support policies still need to be implemented, but additional measures must be added, such as extending the deadline for debt settlement and paying taxes and fees; tax and fee reductions and support for large enterprises and corporations. In particular, many experts also said instead of supporting policies when businesses are "exhausted" and broken, they must focus more on policies to help businesses reduce cash flow andhelp businesses balancecash flow into minimum expenses to maintain production

For businesses, Duong proposed the management agencies and the banking industry should have more solutions to cutlending interest rates, loosen loan conditions, and increase labour training costs for enterprises. Moreover, the cost of social insurance and trade union fee accounts for 30% of the salary fund andif these costs can be reduced, businesses will develop. If there is no timely support from management agencies, half of businesses could go bankrupt, and then businesses were forced to lay off workers, the Government had to worry about unemployment benefits and training support.

Along with the above issues, the investigation results of Board IV also show enterprises propose reducingthe corporate income tax by 30% for all enterprises in 2020, instead of only applying to the case of enterprises with total revenue by 2020, it will not exceed VND 200 billion. Cuttingat least 50% of the social insurance, health insurance, unemployment insurance in 2020, even extending into 2021; exemption from paying trade union fees for the whole year 2020 to 2021. It is proposed to reduce the VAT rate from 10% to 5% to cutcosts for consumers to stimulate demand for industries within and immediately after the pandemic.