The Vietnamese business community needs effective measures from the government to help them revive trade and production to their former glory, local insiders have said as many businesses are on the verge of bankruptcy.

This was a key content discussed by economists and business leaders at a seminar held by the Economic & Urban newspaper and its partners on May 21 in Hanoi, in which the participants focused on seeking the best ways to help businesses overcome serious impacts caused by the Covid-19 pandemic, especially its fourth wave hitting Vietnam.

Be active in responding to disease impacts

Though many companies received support packages from the government to cope with Covid-19 in the past, there are a few fitting the requirements of the packages.

General Director of Garment 10 Than Duc Viet pointed out the lack of specific instruction in rolling out the government’s support programs that is making it hard for enterprises to benefit. “The most important support for firms like us in the labor-intensive industry is the VND60 trillion (US$2.6 billion) financial support for laborers. But we are not qualified to benefit from this program,” he told Hanoitimes.

A garment factory in Dong Anh district. Photo: Chien Cong

To be eligible for this program, enterprises must prove that they have their revenue slashed by 30% and the number of employees by 50%. “For a garment firm of nearly 12,000 workers, meeting these targets means we broke already,” he said.

Garco 10, whose product exports to the US, EU and Japan account for 90% of total volume, estimated 2020 would be a difficult year when the Covid-19 pandemic happened, however, thanks to the government’s policies about postponement and deferral of payment of taxes, the company overcame and reached turnover up to VND3.8 trillion (US$164.8 million), an increase of 30% compared to its set plan.

"Like many other companies, the Vietnamese firm has implemented both preventive measures and promoting production and business activities during the period of Covid-19. However, we are worried about the impact of the latest resurgence of Covid-19 when the disease is hitting industrial parks where some of the factories are located," Viet said.

Two hundred workers, who had contact with the confirmed cases, must stay at home. “This will seriously affect our production activities if the outbreak lasts,” he added. "This year, we have received many orders from other foreign markets and our workers are working hard to ensure time for delivery."

Nguyen Xuan Phu, Chairman of the Sunhouse Group, a Hanoi-based house appliance maker, said his group has been active in responding to the impact of Covid-19.

"Local businesses must save themselves first before waiting for supports from others," Phu said.

In 2020, thanks to its strategy focusing on diverse distribution channels and markets, it earned turnover and profit growth of 15% against the previous year. “The best way to do this is to prepare plans for different scenarios,” Phu told Hanoitimes.

Actual measures

Phu said that to cope with the pandemic, large-scale enterprises, accounting for 80% of state budget revenue, need more favorable policies in market access and business expansion instead of purely financial support.

Effective supporting measures for Vietnam’s top 500 companies, including Sunhouse, have helped such companies create spillover effects to their local peers of smaller sizes, he said.

The Sunhouse’s chairman suggested the extent of support should be based on the amount of tax payment or the number of employees. “Such data is available to tax authorities, so they could right away provide support for enterprises once the outbreak occurs,” Phu added.

“The move would also promote transparency and tax payment among local businesses," Phu said.

General Director Viet from Garco 10 urged the government to focus its support on those with high potential for recovery and are able to lead growth in different sectors in the post-pandemic period.

“This, however, should not undermine the government’s timely fiscal support in terms of freezing and waiving payments of corporate income tax, land rental fees, and interest rates, which are also vital for enterprises at the moment,” he continued.

But in order for the business community to completely emerge from the pandemic, he suggested the root of all issues would be to have Covid-19 vaccines. “Vaccination is a long-term and cost-efficient solution. In this regard, the business community is willing to help the government in funding for vaccine purchase,” he added.

Along with Covid-19 vaccines, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc added continuing the administrative reform is essential to aid economic recovery. “This is a key step to save cost and time for enterprises,” he said.

The government should anticipate the market situation during the time of crisis so as to minimize negative impacts on business operation, said Loc.

The VCCI will review and propose the government build transparent, simple and accessible procedures suitable for small and micro-enterprises. It will also coordinate with local business associations to launch surveys on how to propose to the government and ministries and branches.