Recently, the Private Economic Development Research Board (Board IV) of the Prime Minister's Advisory Council on Administrative Procedure Reform submitted policy recommendations (solutions to support businesses during the second wave of Covid-19) to the Prime Minister; aiming to both "rescue" businesses in a timely manner and stimulate consumer demand, so that the economy does not collapse or become paralyzed by the impacts of the second wave of Covid-19.
Regarding the upcoming business support package, Committee IV proposes that it should focus on strengthening confidence and creating motivation for businesses, and that the policy implementation process must truly prioritize supporting businesses.
Specifically, Committee IV proposed the following solutions to the Government:
30% reduction in Corporate Income Tax:
A 30% reduction in corporate income tax will be applied to all businesses in 2020, instead of only to businesses with total revenue in 2020 not exceeding 200 billion VND.
Reduce insurance premiums by at least 50%:
Reduce social insurance, health insurance, and unemployment insurance contributions by at least 50% in 2020, and possibly extend this into 2021.
Postpone the insurance payment period:
Postpone the payment of insurance premiums compared to current regulations (as this is a significant expense for both businesses and employees, especially during the Covid-19 pandemic).
Exemption from paying union fees for the entire year 2020-2021:
The government has assigned the Ministry of Planning and Investment and the Ministry of Labour, Invalids and Social Affairs to work with the Vietnam General Confederation of Labour to assess the urgency and significance of waiving trade union fees for the entire year of 2020 to 2021, instead of just postponing payments for a few months…
Reduce the VAT rate to 5%:
The government is proposing to the National Assembly to reduce the VAT rate from 10% to 5% to lower costs for consumers and stimulate demand for industries during and immediately after the pandemic.
Banks should offer more comprehensive incentives:
The bank is expanding unsecured loan options, continuing to offer preferential interest rates on investment loans, reducing interest rates on existing loans, freezing debt, and extending repayment periods…
Tourism and logistics businesses (part of supply chain management) want to be charged electricity at the same rate as the manufacturing sector, instead of the current service electricity rate, given that the electricity sector has not yet issued a new electricity pricing framework to support businesses in coping with the COVID-19 pandemic.
Reduced deposit amount:
The proposal suggests reducing the deposit amount for tourism businesses, as they are the group most severely affected by the Covid-19 pandemic.
Boosting efforts to attract foreign investment:
The government continues to boost public investment, implement decisive measures to effectively attract foreign direct investment (FDI), and support domestic businesses in better utilizing the opportunities arising from this capital flow.
Committee IV further emphasized that policy decisions and implementation mechanisms to alleviate difficulties must be quick, transparent, convenient, and focus on providing online public services, avoiding cumbersome and unreasonable procedures like the first support package, in order to create the best conditions to support businesses and people severely affected by the pandemic. This is a solution to support businesses during the Covid-19 season.
According to the second report assessing the impact of the Covid-19 pandemic on businesses, recently published by Committee IV, the impact of this outbreak on businesses is particularly significant. The figures are alarming:
- 20% of businesses have to temporarily suspend operations.
- 76% of businesses reported currently being unable to balance their revenue and expenses.
- 2% of businesses have dissolved.
- Only 2% of businesses are temporarily unaffected by the pandemic.
The biggest challenge facing most businesses now and for the next six months is the lack of customers, orders, and contracts for the sale of products and services, while still having to ensure payments for salaries, social insurance, health insurance, unemployment insurance, union fees, electricity, water, and fuel.
According to calculations by Committee IV, the percentage of businesses that have "disappeared" (not registering changes of address or temporarily suspending operations, and the tax authorities cannot contact them) is 4%, an increase of 39,3% compared to the same period in 2019. This could be a forecast indicating a sharp increase in the number of businesses applying for temporary suspension of operations in the coming months due to the second wave of the pandemic occurring towards the end of July and the beginning of August.
At the same time, if these businesses that have temporarily suspended operations cannot restructure their production and business activities, and the pandemic continues for an extended period, it is predicted that the number of businesses awaiting dissolution could increase correspondingly in the last months of the year and the beginning of next year.
