Global customers count on continuity

September 17, 2021 | 09:00
Foreign investors are lauding the government’s COVID-19 relief measures, but more will need to be done to help them maintain business continuity throughout the evolving crisis.
Global customers count on continuity
Relief measures seek to help businesses resume operations. Photo: Le Toan

The latest wave of the pandemic is jeopardising the survival of some French small- and medium-sized enterprises (SMEs) in the country that are failing to cope with the economic slump because they have no legal or financial ties to France.

Adam Koulaksezian, executive director of the French Chamber of Commerce and Industry in Vietnam, told VIR, “The Vietnamese government has provided a number of relief measures to support businesses during the pandemic. We applaud this initiative and we invite French companies to try to benefit as much as possible from these mechanisms. However, we must underline that there are sometimes operational difficulties that complicate access to these measures.”

The chamber’s latest survey of 63 French companies in Vietnam shows that some additional measures are necessary in order to preserve many businesses. It includes reducing/suppressing social security contributions and waiving penalties related to late payments. There should be a consideration of a longer term approach to VAT and corporate income tax reductions.

“With regard to financial and banking policies, companies facing difficulties need access to bank loans at a preferential interest rate and debt rescheduling for SMEs that had to suspend their activities and that experienced difficulties,” he said.

A French SME in Vietnam’s food industry for more than 10 years hopes to gain access to loans at reduced interest rates with a grace period of one year from the date of the start of the recovery and repayment on 4-5 years.

Michele D’Ercole, chairman of the Italian Chamber of Commerce in Vietnam, told VIR, “The majority of Italian companies are still in operation in an unusual business working environment. At the moment, it is a big challenge for any company, especially manufacturers, to maintain stay-at-work production. However, Italian companies are trying our best because we have customers around the world waiting for our products.”

He added that Italian investors were facing reductions in profit turnover in August. The costs are increasing to keep workers in the factory and pay everything to maintain the stay-at-work model. Thus, Italian investors welcome any relief measures related to the operation of factories like tax exemption, interest reduction, energy, and rental fee support.

Italian investors already accessed the government’s relief measures last year. This year, they will use this small advantage to cope with the pandemic. However, he noted that this is not enough to resolve all of the problems. Ho Chi Minh City and neighbouring provinces like Binh Duong, Dong Nai, and Long An are still facing a harsh situation. The most important thing is to vaccinate the workers as soon as possible in such localities, ensure the free-flow of goods, ease the movement of workers, to get factories back to work as soon as possible, D’Ercole said.

In response to the latest coronavirus wave, the Vietnamese government has announced a support package worth VND26 trillion ($1.1 billion) to support businesses and employees that were severely affected. Another support package estimated at VND24 trillion ($1 billion) relating to tax and fee payments for affected businesses is also being considered.

The government last week launched a new resolution on supporting businesses, cooperatives, and business households in the context of the pandemic. Accordingly, about one million businesses will receive credit support while 160,000 businesses will enjoy extension, exemption, and reduction of taxes and fees. The relief measures will help 50,000 businesses to resume operations in 2021, it is hoped.

The government assigned the Ministry of Labour, Invalids and Social Affairs to guide Vietnam Social Security to study and propose policies to suspend and reduce the payment of social insurance premiums in 2021. Meanwhile, the Ministry of Transport is to coordinate with the Ministry of Finance and the State Bank of Vietnam to develop a plan to support air transport enterprises and report to the prime minister in September.

The Ministry of Industry and Trade will study and report to the prime minister a plan to reduce electricity tariffs for warehouses by logistics enterprises, agro-forestry-fishery processing enterprises, and some commodity industries that enjoyed export turnover of over $1 billion in 2020.

By Vy Bui

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional