EuroCham stresses importance of stimulus packages in Vietnam’s post-pandemic recovery
State financial support for companies hit hard by the Covid-19 pandemic, regardless of the level they are yet, and subject to the Government’s consideration in terms of budget range and macroeconomic stability,
is especially necessary for the post-pandemic economic recovery, the European Chamber of Commerce (EuroCham) in Vietnam noted in its White Book 2020.
Since the pandemic has deeply affected all sectors with very few exceptions, EuroCham said it is essential that rescue and stimulus packages should be equal and not limited to a few prioritized industries. At the same time, they would also be seen as motivational support for businesses.
“Expanding the number of beneficiaries will see the spirit of sharing and support for the whole economy spread widely. To ensure fairness for all businesses, we propose a detailed evaluation of which industries and actors are suffering,” EuroCham stated.
EuroCham suggested the Vietnamese Government reduce 50% of corporate income tax incurred in the financial year 2020 for all enterprises in all impacted industries. The supporting policy should not be limited to small and medium-sized enterprises as many large enterprises operating in sectors heavily affected by Covid-19 are also deeply impacted.
EuroCham also proposed reducing 50% of personal income tax for all Vietnamese residents this year and allowing 50% of value added tax reduction to stimulate demand and consumption, helping the economy and society recover.
“We appreciate the Government’s consideration through issuing Resolution 84/NQ-CP dated May 29, 2020, which allows a 30% corporate income tax reduction for small, medium and micro enterprises and a reduction of land rental of 15% for 2020 for enterprises and businesses whose operations were suspended and other policies,” EuroCham said.
“Nevertheless, we would like to maintain our recommendations to further support businesses in terms of corporate income tax, personal income tax and VAT to stimulate demand and consumption. After an initial rescue package, we would suggest subsequent stimulus packages that could bolster the economy, including the private sector. Similarly, widespread coverage would enable the protection of jobs on a large scale. In turn, a higher number of employees will help strengthen domestic demand.”
EuroCham stressed that supporting policies should cover foreign companies, which make up a significant portion of Vietnam’s gross domestic product and support the sustainable growth and socio-economic development of the country. They share opportunities and challenges with Vietnam and continue to support the country during this difficult time, as they are part of its business community.
Therefore, it is essential that Vietnam protects not only domestic enterprises but also supports foreign companies that will be crucial to the country’s economic growth, particularly exports, once the international community has the disease under control and once global trade returns to normal.
This coverage also ensures Vietnam’s commitment to international treaties and free trade agreements that the country has been a member of or is expected to implement in the coming time, particularly the EU-Vietnam Free Trade Agreement (EVFTA).
EuroCham welcomed the measures Vietnam has taken to address the impacts of Covid-19 on the country’s trade and investment environment, while suggesting that further urgent and long-term action should be taken to support the entire business community and both domestic and foreign enterprises.
Grasping opportunities in cooperation with the international community could help facilitate the repositioning of the country’s economy in the post-Covid-19 times, it said.
“We believe that despite Covid-19, this year still marks an important milestone in Vietnam’s international relations,” EuroCham stated.
Vietnam is progressing over finalizing free trade agreements with many partners. The complete implementation of sophisticated trade agreements such as the EVFTA could help boost production, trade and investment and thus facilitate a faster recovery in the country after Covid-19. SGT
If adopted, an increase in the region-based minimum wage for non-state employees next year will further pressurise local businesses, almost all of which are making efforts to deal with the aftermath of the global health crisis.
Despite the positive business results witnessed in the early months of the year, many listed companies have been cautious with their pre-tax profit targets.