Eighty two percent of Vietnamese enterprises have anticipated losses in revenue in 2020 compared to the previous year, of them 30% expect a decline of 30 – 50% and other 22% expect losses of over 50%, according to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI).

VCCI Chairman Vu Tien Loc. Source: VGP.

The Covid-19 pandemic has caused severe consequences for businesses, Loc said, referring to a recent survey conducted by the VCCI on impacts of the pandemic on the business community from late March to early April.

Around 85% of the respondents said their markets significantly narrowed while nearly 60% said they are short of working capital. Additionally, over 40% said they are lacking input materials for production and 43% are forced to scale down their operations due to declining demand.

In response to the pandemic, 73% have provided supporting policies for their employees, over 60% adopted flexible working hours for employees, 46% chose to reduce working hours instead of laying off, 42% took this opportunity to retrain workers, and 41% allowed workers to work from home.

The survey revealed only 20% enterprises furloughed staff and 21% reduced salaries so that they can keep their employees.

In need of both short- and long -term solutions

Loc said enterprises have shown their flexibility and responsibilities in a time of crisis, but warned as the pandemic impacts persist, they need both short- and long-term solutions to fully recover.

The VCCI suggested the government should encourage resumption of production on the condition that companies fully comply with anti-virus measures, in addition to a number of companies that have been forced to suspend operation.

The move is necessary for enterprises to survive and ensure social security, Loc said.

Loc recommended the government finalize the list of essential services and products during the Covid-19 pandemic. The government has imposed a social distancing period within two weeks until April 15 and only essential businesses are allowed to open.

As enterprises are taking part in production chains, it is not feasible to allow the production and commercialization of end products or services.

Additionally, Loc urged the soon implementation of the government's fiscal stimulus package that enables delay in payment of value-added tax, corporate tax, income tax, social insurance, among others. Enterprises could go bankrupt before such the policy becomes effective, Loc warned.

Meanwhile, enterprises are looking for a further cut of 2-3 percentage points in interest rates for new and existing loans so that lending rates for loans in local currency would be lowered to 4-5% per annum and those for USD-denominated loans go down to 2 – 3%.

In the long term, Loc said the situation would present unprecedented challenges and opportunities for the business community. Vietnam would receive a new wave of high quality capital inflows as part of a decentralized investment strategy and diversification of supply sources, and this would help Vietnam become less dependent on a few markets.

Loc expected Vietnam to continue to improve its institutional capacity, quality of human resources and infrastructure system to absorb the capital inflows.

There should be more solutions to help enhance capacity of enterprises, particularly micro, small and medium ones, so that they could survive the pandemic and thrive afterwards, Loc concluded.