Support packages take effect, but need to be stronger

Support packages from the Government and banks would contribute to partly reducing difficulties for enterprises affected by COVID-19, but stronger measures should be taken for the hardest-hit industries, experts said.

Support packages take effect, but need to be stronger

Aviation is one of industries hardest hit by the epidemic. – Photo zing.vn

Prime Minister Nguyen Xuan Phuc announced at a meeting last week that a VND30 trillion (US$1.3 billion) fiscal support package would be implemented to help businesses cope with the coronavirus epidemic.

Commercial banks also pledged to offer a VND285 trillion (US$12.39 billion) preferential credit package to affected enterprises, Phuc said.

According to finance expert Can Van Luc, the fiscal support package will be made by the Government through measures such as tax breaks, delayed tax payments and acceleration of State spending on infrastructure projects.

The Government hasn’t so far detailed the plans for the fiscal package, but it was forecast that on top of fast-tracked public spending on infrastructure projects, government spending will also be directed toward industries which are hard-hit by the virus. These industries include tourism, transport and agriculture.

Meanwhile, the credit support package will cover interest rate reduction and debt payment rescheduling for struggling firms conducted by commercial banks.

"As capital for the VND285 trillion preferential credit package comes from commercial banks without aid from the Government, it will not be a Government's stimulus package," Luc noted.

Banking and financial expert Nguyen Tri Hieu said it was necessary and urgent for the Government to provide the support packages for businesses as many firms had used bank loans but now, they had to scale down or even disrupt their production and business due to the epidemic.

However, Hieu suggested, for businesses seriously hit by the epidemic, stronger support measures should be taken.

He explained that though commercial banks pledged VND285 trillion preferential loans with interest rate cuts of some 0.5-1 per cent per year for firms, the interest rate was still high when production and business performance has been seriously affected.

“As the loans come from commercial banks, without any aid from the central bank, I think the interest rate will remain high for struggling firms as banks still have to pay high input costs and earn profits,” Hieu told Viet Nam News.

 

Currently, the short-term lending rate at banks averages at 7-9 per cent per year, and 9-11 per cent per year for medium- and long-term loans.

Nguyen Quoc Hung, director of the State Bank of Viet Nam (SBV)’s Credit Department, also admitted he was not sure whether enterprises could absorb the VND285 trillion credit package as the businesses were facing both production and market difficulties.

It was difficult for banks to boost lending at this time as capital demands were very low, Hung said, citing SBV’s data that credit growth of the entire banking system in the first two months of this year slowed sharply, inching up only 0.06 per cent against the 1 per cent rate in the same period last year, due to adverse impacts of the COVID-19 epidemic. Compared with the end of last year, credit even decreased by 0.18 per cent.

“The Government should offer stronger support, such as cutting the policy interest rate by some 0.5 percentage points to provide lower interest rate fund for commercial banks, who then can lend to struggling firms at better interest rates,” Hieu suggested.

A lower interest rate was very important, especially under the current context when businesses were shrinking production or even closing their doors, and had no capital demands, Hieu noted.

Central banks of many other countries have so far also taken strong measures, attempting to contain the coronavirus’ economic fallout, Hieu said, citing the Federal Reserve last week was the latest to slash its interest rates by half a percentage point, its biggest single cut and first emergency rate move in more than a decade since the depths of the 2008 financial crisis, as a pre-emptive move to protect the economy from the coronavirus.

Meanwhile, analysts from Fitch Solutions believed the Government’s fiscal support package would see a larger deficit this year versus the Government’s prior forecast.

“We are revising our forecast for Viet Nam to record a fiscal deficit of 3.8 per cent of GDP (excluding debt principal repayments) in 2020, versus 3.4 per cent previously... Accounting for debt repayments, our 2020 deficit forecast is revised to 7.4 per cent of GDP, from 7.0 per cent previously,” Fitch analysts said.

In light of this fiscal package, Viet Nam’s expenditures will be also expected to grow by 8.1 per cent, from 7.4 per cent previously, over the first 2019 full year estimates, according to the analysts. – VNS

Enterprise support around the corner

Enterprise support around the corner

With the coronavirus epidemic badly damaging business performance and undermining local production, Vietnam will officially launch a major support package to spur on businesses’ performance and ensure economic growth.  

Banks to provide support to customers affected by coronavirus

Banks to provide support to customers affected by coronavirus

The State Bank of Vietnam has asked credit institutions to prepare capital sources to meet borrowing demand and provide support to customers who have been affected by the coronavirus epidemic.  

 
 

Other News

.
Major businesses undergo slow recovery after Covid-19
Major businesses undergo slow recovery after Covid-19
FEATUREicon  28/06/2020 

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.

Petrolimex pushes for PGBank-HDBank merger before Aug 31
Petrolimex pushes for PGBank-HDBank merger before Aug 31
BUSINESSicon  27/06/2020 

Petrolimex, which holds a 40% stake in the Petrolimex Group Commercial Bank (PGBank), sought to complete the merger between PGBank and the HCMC Development Bank before August 31, said the Vnexpress website.

Energy revolution
Energy revolution
BUSINESSicon  28/06/2020 

The first solar panel, which was invented by French physician Alexandre Edmond Becquerel in 1839, has become a significant watershed for the energy sector in the future. 

FDI inflows drop 15.1 percent year on year in first half
FDI inflows drop 15.1 percent year on year in first half
BUSINESSicon  27/06/2020 

Vietnam recorded a year-on-year decrease of 15.1 percent in foreign direct investment (FDI) inflows to 15.67 billion USD as of June 20, according to the Ministry of Planning and Investment (MPI).

WB debars Vietnamese firm for collusive and fraudulent practices
WB debars Vietnamese firm for collusive and fraudulent practices
BUSINESSicon  27/06/2020 

The World Bank Group has announced the seven-year debarment of Vietnam-based Sao Bac Dau Technologies Corporation (SBD) in connection with collusive and fraudulent practices under the Danang Sustainable City Development Project

Coca-Cola suspends social media advertising despite Facebook changes
Coca-Cola suspends social media advertising despite Facebook changes
BUSINESSicon  27/06/2020 

The company condemns racism and seeks more accountability from Facebook and other platforms.

Hanoi attracts US$17.6 billion for 229 projects
Hanoi attracts US$17.6 billion for 229 projects
BUSINESSicon  27/06/2020 

Hanoi is going to present investment certificates for 229 projects with a total value of US$17.6 billion and sign 38 memoranda of understanding worth a combined US$28.6 billion, according to the Tuoi Tre Online website.

Vietnam prepares to resume international flights
Vietnam prepares to resume international flights
BUSINESSicon  27/06/2020 

It is still unclear when Vietnam will reactivate international flights and reopen its market to foreign travelers, but agencies and travel firms all are making hectic preparations.

Banks’ support desired for mobile payments
Banks’ support desired for mobile payments
BUSINESSicon  26/06/2020 

New approaches, especially regarding activities of banks, are required to boost the reach of mobile money agents and expand financial inclusion in Vietnam.

Authorities get to grips with new bad debt mountain
Authorities get to grips with new bad debt mountain
BUSINESSicon  27/06/2020 

A spike in the amount of bad loans sitting in banks’ books has triggered Vietnamese authorities to seek new paths to recovery,

Debt limit to be adhered to despite bumps in road
Debt limit to be adhered to despite bumps in road
BUSINESSicon  26/06/2020 

In spite of a dent in state budget revenue and a rise in spending this year causing a big fiscal deficit, the government will be able to retain the country’s public debt situation, ensuring national financial security.

Coronavirus: Qantas to axe 6,000 jobs due to pandemic
Coronavirus: Qantas to axe 6,000 jobs due to pandemic
BUSINESSicon  26/06/2020 

The airline says the collapse in billions of dollars of travel revenue means it has "little choice".

Bayer to pay $10.9bn to settle weedkiller cancer claims
Bayer to pay $10.9bn to settle weedkiller cancer claims
BUSINESSicon  26/06/2020 

The chemical giant is settling almost 100,000 US lawsuits from users of its popular Roundup herbicide.

Olympus quits camera business after 84 years
Olympus quits camera business after 84 years
BUSINESSicon  26/06/2020 

Once a huge camera-maker, it is looking to carve off that part of its business and focus elsewhere.

COVID-19-induced uncertainty continues to drag on emerging East Asian bonds
COVID-19-induced uncertainty continues to drag on emerging East Asian bonds
BUSINESSicon  26/06/2020 

The coronavirus (COVID-19) pandemic continues to drag on local currency bond markets in emerging East Asia, including Viet Nam, as investment sentiment globally and in the region wane and containment measures limit economic activity.

Finance ministry says public investment funds borrowed from abroad must be disbursed quicker
Finance ministry says public investment funds borrowed from abroad must be disbursed quicker
BUSINESSicon  26/06/2020 

Loans borrowed from abroad for public investment must be disbursed quicker if Vietnam is to recover economically from the impacts of the coronavirus pandemic, according to the Ministry of Finance.

VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion
VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion
BUSINESSicon  26/06/2020 

Vietnam needs to revise tax and land policies for foreign direct investment (FDI) companies to ensure a level playing field for businesses.

Process supervision can end licence limbo
Process supervision can end licence limbo
BUSINESSicon  26/06/2020 

Along with luring in new foreign investment inflows, one of the major tasks for the government is to tackle oversights in regards to foreign-invested projects without construction licences.

Vietnam's logistics service industry ready for opportunities from EVFTA
Vietnam's logistics service industry ready for opportunities from EVFTA
BUSINESSicon  26/06/2020 

Vietnam’s logistics service industry is preparing infrastructure and techniques to grasp opportunities from the Europe-Vietnam Free Trade Agreement (EVFTA) to attract foreign investors with a wave of factories.

Vietnam Airlines to buy more aircraft despite big losses
Vietnam Airlines to buy more aircraft despite big losses
BUSINESSicon  26/06/2020 

The national flag air carrier is still moving ahead with its plan to buy 50 narrow-body aircraft, though it has reported a loss of VND2.6 trillion in Q1.

 
 
 
Leave your comment on an article

OR QUICK LOGIN