Support packages need to be activated quickly

The results of the survey on the business situation of enterprises in August this year by the Ho Chi Minh City Union of Business Association show that 40 percent of enterprises said that there are still many difficulties in recovering production and business activities after the Covid- 19 pandemic, 44 percent still face difficulties, 9 percent have started to overcome difficulties, and 5 percent have returned to a normal operational state.

Production at a garment company in Ho Chi Minh City. (Photo: SGGP)

Production at a garment company in Ho Chi Minh City. (Photo: SGGP)

Among the affected enterprises, 40 percent of enterprises have faced a shortage of capital, 88 percent of enterprises have market narrowed down, 52 percent of enterprises will have to cut more labor, and the material supply chains of 14 percent of enterprises have been broken. These are the results of the survey after the Government has implemented a series of policies to support enterprises affected by the Covid-19 pandemic in terms of credit, and support on labor and other expenses. This shows that the recent support packages have not been as effective as expected.

Mr. Pham Binh An, Deputy Director of the Ho Chi Minh City Institute for Development Studies, added that 76 percent of enterprises participated in the survey said that they have not yet approached the State's policies to support enterprises. Besides the policy of deferring tax payment and land rent payment, which have been deployed to most of the subjects with tax debts and land rent debts, only 10 percent of enterprises have approached the policy of debt restructuring, debt rescheduling, and interest rate cut. Moreover, there is no information about which businesses are allowed to borrow money without interest or low-interest rates to pay salaries and retain employees. Enterprises also have not received any reduction in fees.

‘Recently, we had field trips in many districts to train new mechanisms and policies with the participation of hundreds of enterprises. However, when we asked how many businesses have access to support packages, only a few hands were raised. This is an extremely worrying situation,’ Mr. Pham Binh An said.

Ms. Pham Thi Ngoc Ha, Director of San Ha Company, said that to develop and maintain an outlet, it requires vast amounts of capital. In the context that purchasing power declines sharply, but premises rent and labor costs cannot be cut, so enterprises are facing several difficulties.

‘Enterprises must have access to loans with preferential interest rates. The interest rates for medium and long-term loans have been decreased, but the current reduction level is not significant enough to encourage enterprises to borrow money to expand their production and business. As for support packages, to get access, enterprises have to prove the extent of damage and perform various procedures, so it is very difficult for enterprises,’ Ms. Ha shared.

Similarly, most enterprises in the garment and mechanical engineering industries all said that it is difficult to access the VND62-trillion support package for the unemployed.

According to the Director of Le Nhung Garment Company, after receiving the information on the Government's support package, the company has contacted many places and was finally referred to the Vietnam Bank for Social Policies. However, when contacting this bank, the bank staff said that they were waiting for instructions and requested the company to complete the file as in the decision when there are instructions, they will notify it. However, so far, the company has not received information.

At the seminar ‘Accompanying with enterprises to respond to risks of the Covid-19 crisis’ held recently, Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, acknowledged that as soon as the Government noticed the losses caused by the Covid-19 pandemic to enterprises and the economy, it has been proactive and drastic in both the fight against the pandemic and promulgation of policies to support and remove difficulties for production and business, ensuring social security. In general, the Government's decisions and policies all have followed the situation. The Government has listened to enterprises to build the most appropriate scenarios and handling solutions with the ultimate goal of supporting production and business without disrupting the macroeconomic stability. But until now, the implementation speed of support packages has been slow. Accessing business support packages is very difficult, leading to limited production and business recovery activities. Dr. Vo Tri Thanh cited that enterprises are required to provide several procedures when seeking financial support, and after receiving the procedure guidance, most of them cannot meet the requirements. For instance, businesses that want to be supported with bank loans must meet the criteria of having cut 50 percent of employees compared to the time before the Covid-19 pandemic; meanwhile, during the pandemic, they all struggled to retain as many workers as possible to resume production after the pandemic is controlled. 

According to the Vietnam Textile and Apparel Association, the supporting policies of the Government are currently being implemented extremely sluggishly because many regulations must be met. This is necessary to ensure that there is no profiteering. However, to meet production needs, the implementation should go through a few steps of manual review, based on an existing database, to be able to speed up the progress. The Vietnam Social Security and the Vietnam General Confederation of Labor should amend and adjust the current regulations and replace them with the condition that enterprises with a decrease of 20 percent in revenue or profit over the same period are allowed to access the support packages. To support textile enterprises to overcome difficulties, the State needs to allow textile enterprises to be exempted from social insurance contribution and trade union fees from May to the end of December this year. Because these are huge expenses for enterprises. Moreover, the Government provides financial support by reducing corporate income tax, land use tax, and personal income tax, proposing banks to reschedule debts, to not lower credit ratings of enterprises and adding the enterprise support funds to retain skilled workers.

Due to the impacts of the Covid-19 pandemic, the demand in the market has decreased deeply and the inventory is high, enterprises do not need loans. The Government should innovate its ways of doing and be more flexible for enterprises to easily approach support packages, then the support packages will bring into play their maximum efficiency.

By Thuy Hai, Lac Phong – Translated by Gia Bao

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