Accelerating action to revive the economy

Thursday, 2020-04-02 17:30:31
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At least US$10.57 billion of the credit support package will be used to help enterprises to hold on through these tough times. (Illustrative image)
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NDO - While the Vietnam’s fight against the COVID-19 pandemic on the medical front has officially entered the 15-day critical period, relevant economic policies have not missed a beat.

As of the last week of March, enterprises in different economic sectors have officially approached the credit support package offered by commercial banks, including interest rate reduction and the reschedule of debt repayment deadlines.

The move is the result of the State Bank’s comprehensive implementation of the Government's Directive No. 11 on the urgent tasks and solutions needed to remove difficulties for production and business activities and ensure social security aligned with coping with the COVID-19 pandemic.

At least VND 250 trillion (US$10.57 billion) of the credit support package will be used to help enterprises directly affected by the disease to hold on through these tough times.

Regarding fiscal policy, the Ministry of Finance has proposed the Government launch a support package of VND80.2 trillion (US$3.39 billion) to save liquidity for enterprises by allowing late payment of a series of taxes and land rent.

The size of this support package has doubled compared to the original proposal of VND30 trillion (US$1.26 billion). At the same time, a series of solutions to accelerate the disbursement of public investment has been implemented to quickly pump nearly VND700 trillion (US$29.65 billion) of available budget capital into the economy in order to fuel economic growth.

In addition, the Prime Minister has recently asked ministries and sectors to research a raise in the support package to minimize the impact of the pandemic on enterprises and people, thus, helping the economy bounce back shortly after the disease is placed under control.

Unprecedented solutions are also being considered, such as providing enterprises with 0% interest rate loans to pay salaries to employees. The implementation of this policy will help enterprises reduce the risk of layoffs in difficult times, making an important contribution to social security.

At the regular Government cabinet meeting in March, the Prime Minister emphasised that the fiscal support package needs to be raised to VND150 trillion (US$6.34 billion) or more to support enterprises in overcoming difficulties.

As an open economy, we are suffering a huge impact from the pandemic with a slowdown in growth across many sectors and an increasing unemployment rate.

In the first quarter of 2020, indicators regarding GDP growth and the labour rate decreased to the lowest level in the past 10 years while the number of enterprises suspending operations soared dramatically.

According to experts, Vietnam’s 3.82% GDP expansion in the first quarter is an important achievement in the context of many major economies falling into recession.

However, the pandemic is becoming more and more complex, unpredictable and has not yet reached its peak, so its impact on the economy may be deeper in the second quarter of the year. Therefore, relief packages must be large enough and aim at the appropriate beneficiaries to help enterprises and people maintain resilience.

The whole country is entering a battle against the pandemic like the fight against an enemy and the Government is speeding up actions to be ready to seize the opportunity to revitalise the economy when the pandemic ends.

It is important to set criteria for each support package and supervise their implementation to avoid risks to the economy, particularly policy profiteering and inflation risks.

Amid limited budget resources and top priority being given to health policy, each enterprise should try to restructure itself and actively overcome difficulties within its capacity.

For nearly a month now, shop lessors and landlords have reduced or exempted the rent while domestic businesses have increasingly used each other's products to reduce the burden of inventory and make up for the shortage of materials. It is not just the business philosophy of ‘saving partners to save yourself’, but also shows the Vietnamese fine tradition of ‘good leaves cover torn leaves’.

The COVID-19 pandemic is a sudden shock from outside, which could drag economies back several years in terms of development, even those in the world's most powerful countries. However, with the strength of national solidarity and a unity in will and action, we are confident we will overcome the pandemic.