Business Community Needs Support to Overcome Current Difficulties
“Like the rest of the world, Vietnam’s economy and business community are experiencing a very tough time because of the COVID-19 pandemic. The economic development goals of the country and businesses are facing unprecedented challenges. More than ever, the business community urgently needs the support of the Government to overcome this hard time.”
This heartfelt message was delivered by VCCI President Pham Tan Cong at the online meeting between the Prime Minister with the business community and localities on solutions to continued business support amid the COVID-19 pandemic.
Businesses sharply shrink in scale
Prior to this conference, the Vietnam Chamber of Commerce and Industry (VCCI) received 357 pages of reports and recommendations from 132 business associations (including domestic associations, foreign investor associations and cooperatives) and businesses across the country. VCCI made a report on business operations, suggestions and recommendations of the business community, sent to the Prime Minister at this event. The 52-page report, which summarized 192 specific recommendations, was delivered to the participants.
According to the VCCI President, the overall picture of the business community is portraying a sharp decline in working scale and an increase in negative impacts on all business aspects. Only in the first eight months of this year, over 85,000 enterprises, or over 10% of existing enterprises nationwide, withdrew from the market, an average of over 10,000 businesses a month, more than 24% higher than in the same period in 2020. And behind every business that shut down is livelihood loss to workers and economic decline.
Affected by pandemic contagion and prolonged social distancing, in the past four months, the economy's aggregate demand declined, production and trade stagnated, supply chains were disrupted, workers were laid off, and business costs skyrocketed. A lot of orders were lost and many economic sectors operated below 60% of capacity. All economic sectors and industries were adversely hurt, with tourism, seafood processing, and transportation hardest hit.
Regarding labor, according to a survey by VCCI, on average, 90.8% of enterprises reduced staff during the pandemic time. In other words, about nine out of 10 companies accepted layoffs due to business underperformance in the midst of the pandemic outbreak. Pandemic-caused layoffs are most common in the Southeast, the Mekong Delta and the Central Coast with 95%, 93% and 92% of enterprises in these localities cutting staff, respectively.
According to the survey, the tolerance of Vietnamese companies to the prolonged pandemic and social distancing showed that a typical business can endure for only a maximum of 6 months, with the lowest seen in agriculture, forestry and fishery (4.7 months), information and communication (4.9 months) and construction (5.3 months). “Companies faced numerous and enormous difficulties and obstacles in the COVID-19 time. You can see them in the report and I prefer not giving a presentation on them because this forum is to seek and discuss solutions, not tell hardships,” VCCI President Cong said.
Businesses must be recognized as actors in the fight against Covid-19
VCCI President Cong said the business community expressed their high consent with the Prime Minister's points of view: "We must live with the pandemic for a long time, we cannot control it completely, we must adapt and have a good way of doing things.” This new approach leads to the need for change in the COVID-19 response strategy instead of focusing all efforts on one main front - disease prevention. From now on, it is necessary to focus on the second front - economic recovery and development. Both fronts are important and interactive. Good pandemic prevention and control will enable safe production, and the latter will generate resources to win the former. With this approach, VCCI proposed two new policies:
Firstly, businesses must be recognized as actors in the fight against COVID-19, thus confidently empowering, equipping and improving their own medical capacity. It is necessary to recognize and allow them to actively test and treat mild infection cases, depending on their own capabilities. The Government only needs to support, guide and issue appropriate regulations and policies.
Secondly, a solid economic front is a foundation for victory on the medical front, so it is necessary to resolutely protect and support ongoing operations of enterprises when we accept to live with the pandemic.
In addition, dual goals need dual tasks and this approach matches the Prime Minister's new view on long-term coexistence with COVID-19. VCCI proposed renaming the "Steering Committee for COVID-19 Prevention and Control" to the "Steering Committee for COVID-19 Response and Economic Recovery" to combine the tasks of fighting the pandemic, maintaining production and economic recovery, which are defined as an important, urgent and necessary to businesses. At the same time, VCCI proposed the Prime Minister add the business community to the Steering Committee for COVID-19 Prevention and Control at all levels.
According to the VCCI President, to bring the Government's business support policies into play, policymaking and enforcement should be determined by level and roadmap, including urgent solutions that need to be executed immediately, recovery support solutions and solutions for restructuring and sustainable development in the medium and long term.
For urgent solutions that need to be implemented immediately, the business community requested the Government to early review and amend regulations on health and pandemic prevention in the new context; issue a rule in lieu of Directives 15, 16 and 19 with pandemic prevention contents in the new normalcy where we accept to live with the pandemic; have guidelines and policies to encourage and support companies which already have medical facilities and health workers to improve their capacity, medical equipment and medicines for treating COVID-19 pandemic and provide healthcare training on pandemic prevention.
As for safe production solutions, the business community said that maintaining safe functioning when we accept to live with the COVID-19 pandemic, in the long run, is a new normal context where many policies and regulations will no longer be appropriate. Therefore, it is recommended that the Government and the National Assembly promptly research, construct and promulgate new policies and regulations, including laws, to actively avoid the risk of obsolete policies that hinder business operations in the new normal.
Moreover, the Ministry of Health will coordinate with relevant agencies and sectors to work out a set of common criteria for safe production during the pandemic time for enterprises and localities. The business community requested the Government to direct localities to immediately abolish their own regulations on mobility and transportation restrictions.
Regarding business recovery support policies, according to VCCI President Cong, the business community asked the Government to direct relevant agencies to urgently guide exemption and reduction of tax, fee, electricity and water bills, and other measures mentioned in Resolution 105/NQ-CP.
On continued digital transformation, the Government will request central and local bodies to increase by at least 30% business administrative procedures which are carried out electronically and without contact; and reduce time for these procedures by a third. The State Bank of Vietnam (SBV) will have stronger support policies such as extending credit limits, exempting and reducing loan interests, raising collateral limits to increase the value of working loans from 70% to a higher level, increasing opportunities to access capital for micro, small and medium enterprises (MSMEs) and business households in the form of credit guarantee funds and SME support funds.
With respect to medium and long-term solutions, VCCI President Pham Tan Cong suggested that, in addition to supporting policies on tax, fee and credit, it is also necessary to develop structured policies towards sustainable development, such as improving the business environment, promoting public investment, digital transformation and digital economy, accelerating import and export procedure reforms and making good use of opportunities from free trade agreements (FTAs).
No seaport infrastructure fee on goods in transit
Vietnam Shipping Agents and Brokers Association (Visaba)
Goods in transit and transshipment are only circulated within a port's area and transported mostly by waterway, which does not cause traffic congestion, and it is therefore unreasonable for transited goods to be imposed additional infrastructure fees, thus placing more burden on businesses.
The increase in seaport infrastructure cost for goods in transit and transshipment will reduce competitive advantage for businesses in Ho Chi Minh City because when cost increases, shipping lines will transport goods to other destinations or change shipping methods. This causes loss of revenue for port operators, increases logistics costs for customers and reduces revenue for the city's budget. We propose considering no seaport infrastructure fees for goods in transit or transshipment to Cambodia and other localities throughout the country. This is in line with the Government's policy on business support to restore business operations caused by the COVID-19 pandemic.
Aquatic products containing animal products are not included in the list of items subject to quarantine under the Law on Veterinary Medicine
Vietnam Association of Seafood Exporters and Producers (VASEP)
Expanding the list of "processed goods" subject to quarantine is unnecessary, inconsistent with the policy of reducing the list of goods subject to specialized inspection, with current laws and common international practices.
We strongly advise against listing aquatic products made from animals, animal products or products containing animal products (dried, canned, cooked, ready-to-eat and frozen goods) as subject to quarantine according to the Veterinary Medicine Law, except for raw, fresh and chilled products. The above products are governed by the Food Safety Law
In addition, inappropriate fee regulations are upsetting business operations, especially in the context of the COVID-19 pandemic contagion. We recommend not collecting fees for using infrastructure, services and public utilities in seaports in Ho Chi Minh City till the end of December 31, 2021 and revising down fees.
Income tax and land tax exemption considered
Vietnam Advertising Association (VAA)
Advertising has been already difficult in recent years due to policy problems and the COVID-19 pandemic outbreak in 2020-2021.
However, advertisers’ access to governmental support policies on tax, land rent and bank loans during the pandemic time is hard. Authorities believe that advertisers are included in Point c, Clause 2, Article 2 of Decree 41/2020/ND-CP dated April 8, 2020 of the Government on the extension of tax and land rent payment deadlines to access supports stipulated in Decree 41.
Therefore, the Vietnam Advertising Association proposed the Government and the Prime Minister consider easing access to policy support for advertisers as other industries. Urgent solutions include exempting income tax and land tax, providing preferential loans for advertisers, and especially soon lifting trade restrictions for businesses to quickly restore business operations.
For outdoor advertising, advertisers should have advertising fees reduced, extended and exempted in 2020-2021 and have a 1-year free lease of State's land rentals to compensate for customer loss due to the pandemic
By: Anh Mai/Vietnam Business Forum
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