Extending tax schedules, pushing ahead with vaccinations, and dipping further into the budget are just some of the drastic measures the business community in Vietnam is looking for to climb its way out of the current stagnation.
|Various state budget options offered up to quicken recovery, illustration photo |
The Vietnam Chamber of Commerce and Industry (VCCI) last week proposed to the government to extend the time for its support measures to the end of next June to ensure its effectiveness and consistency. According to the VCCI, it will not be until the first quarter of 2022 that business activities can return to a normal state, but the current time limit for applications is limited to 2021.
Another resolution from the National Assembly Standing Committee on tax exemptions and reductions to support businesses and people is also being finalised.
The MoF forecast that the state’s budget revenue results in the last months of the year will not be comparable to previous terms because of the pandemic. However, updated data on Vietnam’s economy for the first half of 2021 shows that the economy is continuing its recovery from last year.
But despite this, and proposals to extend some support measures, it is widely accepted that a massive rollout in vaccination programmes is the ticket to ultimate recovery for businesses large and small from the pandemic. Tran Chi Gia, director of Meko Garment JSC in the Mekong Delta city of Can Tho explained, “The support policies can come just in time, but workers now need to be given both shots of the vaccine so that businesses are able to return to production soon.”
Meko has around 1,200 workers, of which only about 645 workers received their first vaccine injection as of August 10. The company had to halt its production as it failed to meet the requirements of the stay-at-work model.
A slew of measures to help all sorts of companies survive is seen as the key, as so many fall by the wayside. According to the General Statistics Office, in the first seven months of the year, Vietnam saw nearly 80,000 enterprises suspending their operations for a definite time, with some completing dissolution procedures, an increase of 25.5 per cent over the same period in 2020. Of these, 40,300 enterprises temporarily suspended operations, up 23 per cent over the same period last year. Another 28,000 enterprises are now waiting for the dissolution procedures, an increase of nearly 29 per cent.
VCCI chairman Vu Tien Loc said that many businesses are trying to hold on and keep customers, jobs, and incomes for employees by borrowing or injecting further capital and trying to organise production according to the stay-at-work model.
Alhough he recognises the great efforts of the government, Loc pointed out, “The policy design has not reflected business reality”. The results of a VCCI survey with nearly 12,000 businesses throughout the country at the end of 2020 showed that groups of solutions to support budget revenues have the best effect and impact on businesses.
Narrowing the gap between policy and implementation is one of the issues that Loc considers “particularly important” to support the business community, citing another survey conducted by VCCI in conjunction with the National Economics University. Nearly 80 per cent of surveyed enterprises stated they had not received support from the government yet, and a relatively high percentage of enterprises did not even know about these measures or how to apply for them.
Vietnam’s state budget revenue continued to increase into 2021. MoF data from August 9 showed that state budget revenue in July increased by 15.6 per cent compared to the same period in 2020. Accumulated revenues in the last seven months reached 67.9 per cent of previous estimates, an increase of 15.6 per cent.
While a budget surplus is preferable, revenue sources from businesses and production as well as the central budget may not be entirely sustainable and have showed signs of a slowdown in the last two months. Therefore, businesses say, to achieve and exceed the estimate until the end of the year, local authorities may need to take measures to increase revenues from production and general business.
Vietnam’s state budget revenue comes mainly from taxes and fees, profits from state-owned enterprises, and grants. Tax and fee revenues contribute nearly 91 per cent to the total state budget.