Number of businesses leaving market reaches record high

The year 2020 is witnessing a wave of enterprises leaving the market after being hit hard by the Covid-19 pandemic.

Chair of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said at a recent policy forum on small and medium enterprises that the business community has suffered heavily.

Number of businesses leaving market reaches record high

2020 is a tough year for businesses

As of November, about 44,000 businesses had suspended their operation, an increase of 60 percent over the same period last year. It is estimated that over 5,000 businesses left the market each month, a record high number, affecting the jobs and incomes of tens of millions of laborers.

To help businesses, the government has launched support packages, including the VND250 trillion credit package, the VND62 trillion social welfare package, and the VND16 trillion package to help them pay workers.

However, problems have been found in the implementation of the policies.

Analysts say that while the government’s policy response is reasonable and policies are good, there are problems in policy design and implementation.

“During Covid-19, policies need to be implemented as if it is now wartime, not in normal conditions. The administrative procedures are still very troublesome,” Loc said.

This is why there were no businesses accessing the VND16 trillion package (which offers loans at an interest rate of zero percent to help them pay workers) as of October 2020.

By November 27, 2020, only 75 enterprises had borrowed loans. This was the result of the Prime Minister’s Decision No 39 dated October 19, 2020 on implementing policies to support people facing difficulties because of Covid-19.

Le Viet Cuong, director of Vun Art in Ha Dong district in Hanoi, said he still cannot access the support packages.

“I believe that the complicated legal procedures are the biggest barrier that had prevented micro businesses from accessing the packages,” he said.

To help businesses, the government has launched support packages, including the VND250 trillion credit package, the VND62 trillion social welfare package, and the VND16 trillion package to help them pay workers.

To get preferential loans, businesses need to obtain certification from local authorities. This is difficult work, because in many cases, enterprises register their business in one place but organize production in other places.

 

As a result, local authorities have refused to give certification.

Small enterprises incur big losses

Surveys have found that small and micro enterprises, agricultural businesses and businesses in difficult areas have suffered the most from Covid-19.

Because of problems in resources, the group of enterprises could not catch up with the policies on supporting enterprises to exploit opportunities to maintain production and other activities.

VCCI said the VND250 trillion credit package remains inaccessible to many small enterprises. Some commercial banks are reluctant to provide loans for fear that borrowers won’t be able to pay debts.

Meanwhile, the costs for borrowing bank loans for small enterprises are always higher than larger firms, about 1-2 percent per annum more. And the proportion of unofficial fees for small enterprises are higher.

Small enterprises are also less likely to enjoy debt rescheduling and interest rate cuts for old debts. The policies are only applied to new loans.

Meanwhile, when enterprises find it difficult to sell products, or even have to suspend operation, they don’t need new loans.

A survey by the National Economics University (NEU) and VCCI found that 78 percent of businesses said they still have not received support from the government.

This once again shows that the policies are good, but the design of the policies doesn’t reflect the ‘breath of life’ and the implementation is not smooth.

The narrowing of the gap between policies and implementation is one of the important issues that needs to be considered when designing policies to support enterprises in the Covid-19 period as well as in natural calamities. 

Tran Thuy

Businesses complain about new CIT payment regulation

Businesses complain about new CIT payment regulation

Under the new regulation, by the end of the third quarter, enterprises have to estimate the amounts of tax of the fourth quarter and pay the amounts.

New regulation on temporary tax payments worries businesses

New regulation on temporary tax payments worries businesses

The taxation body needs to ‘nurture sources of revenue’ rather than bleed businesses dry, businesspeople say.

 
 

Other News

.
Flower markets see peak activity on pre-Tet days
Flower markets see peak activity on pre-Tet days
FEATUREicon  02/02/2021 

Flowers and ornamental trees sourced from China are overwhelming Vietnamese flowers at traditional and online markets. Japanese orchids are selling like hotcakes despite high prices.

General Secretary Nguyen Phu Trong: "What I do not polish myself"
General Secretary Nguyen Phu Trong: "What I do not polish myself"
FEATUREicon  01/02/2021 

Mr. Nguyen Phu Trong has been re-elected as the General Secretary of the Party Central Committee for the 2021-2026 term. 

MIC outlines plan on preparing human resources for national digital transformation
MIC outlines plan on preparing human resources for national digital transformation
FEATUREicon  30/01/2021 

The Ministry of Information and Communications (MIC) is building a plan to develop digital human resources for national digital transformation.

Govt seeks 7.5-8% annual growth in next 25 years via digital transformation push
Govt seeks 7.5-8% annual growth in next 25 years via digital transformation push
FEATUREicon  02/02/2021 

To become a powerful and prosperous country by 2045, Vietnam needs to obtain a GDP growth rate of 7.5-8 percent per annum for the next 25 years. Only digital transformation can helps make this a reality.

Digital transformation opens up new development space
Digital transformation opens up new development space
FEATUREicon  29/01/2021 

"Like exploring new lands, the expanded cyberspace will open up a new development space for the country,” Minister of Information and Communications Nguyen Manh Hung said at the 13th National Party Congress on Thursday morning (January 28).

Vietnamese-made games now played around the world
Vietnamese-made games now played around the world
FEATUREicon  31/01/2021 

To create a level playing field and help Vietnamese develop games reach the world market, it is necessary to have more reasonable policies, experts say.

Education Minister outlines 9 achievements, 5 problems in educational sector
Education Minister outlines 9 achievements, 5 problems in educational sector
FEATUREicon  28/01/2021 

After seven years of implementing Resolution 29 on reforming the education and training sector, Vietnam has gained several outstanding achievements.

Vietnam stands at turning point to recover and make a breakthrough
Vietnam stands at turning point to recover and make a breakthrough
FEATUREicon  29/01/2021 

The 13th National Party Congress is taking place in the context of unpredictable changes in the world, as the Covid-19 pandemic is dividing many countries, the global economy is experiencing negative growth and ongoing trade and economic conflicts.

13th National Party Congress: Hanoi, HCM City aim for digital government
13th National Party Congress: Hanoi, HCM City aim for digital government
FEATUREicon  28/01/2021 

Hanoi and Ho Chi Minh City both plan to develop synchronous, inter-connected digital, IT, and data infrastructure, creating a foundation for digital economic and social development.

Digital transformation: smart homes invented by Vietnamese
Digital transformation: smart homes invented by Vietnamese
FEATUREicon  02/02/2021 

The digital transformation process is being carried out throughout Vietnam, from large enterprises to small shops.

UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
FEATUREicon  28/01/2021 

Dominique Altner, Senior Program Specialist at IIEP (International Institute for Educational Planning), spoke to VietnamNet about the development of Vietnam’s education system in the last five years.

Local specialties reach global market on e-commerce sites
Local specialties reach global market on e-commerce sites
FEATUREicon  02/02/2021 

Displaying local specialties on e-commerce platforms has proven to be the quickest way to increase the value of Vietnam’s farm produce and introduce it to international customers.

Two resolutions for reform
Two resolutions for reform
FEATUREicon  28/01/2021 

The Government has issued Resolutions 01 and 02, showing the spirit of reform and steadfast effort over the years to remove barriers in the business environment, helping people and businesses to thrive.

Digital transformation to contribute 25% of HCM City's GRDP by 2025
Digital transformation to contribute 25% of HCM City's GRDP by 2025
FEATUREicon  27/01/2021 

By 2025, digital transformation will contribute 25% of HCM City's gross regional domestic product (GRDP), said Chairman of HCM City People's Committee Nguyen Thanh Phong.

Wind, solar power sees new boom
Wind, solar power sees new boom
FEATUREicon  27/01/2021 

Many wind and solar power projects are awaiting approval to be added to the list of projects to be developed under the national power development plan.

After 30-year boom, motorbike market sees decline in sales
After 30-year boom, motorbike market sees decline in sales
FEATUREicon  31/01/2021 

The sales of motorbikes decreased sharply in 2020. After 30 years of continued growth, the motorbike market has become saturated.

Vietnam shows its 'firm stuff' after five years of difficulties
Vietnam shows its 'firm stuff' after five years of difficulties
FEATUREicon  26/01/2021 

The US-China trade war, Brexit, the US withdrawal from TPP, Covid-19 and internal difficulties all have affected Vietnam’s economy in the last five years.

Long-term development commitments realised through strategic M&A moves
Long-term development commitments realised through strategic M&A moves
FEATUREicon  25/01/2021 

A potential rise in mergers and acquisitions is sparking concerns that local firms will lose competitiveness by selling themselves to foreign investors.

Reshuffle underway to further stimulate revival of economy
Reshuffle underway to further stimulate revival of economy
FEATUREicon  23/01/2021 

The 13th National Party Congress is expected to set the country’s average annual growth rate of 6.5-7 per cent from now until 2025, when Vietnam may become a higher middle-income nation. 

Tech giants building on ICT potential
Tech giants building on ICT potential
FEATUREicon  23/01/2021 

Vietnam’s ICT market is expected to see a big 5G race in 2021 as international tech giants look to boost partnerships with local telcos to gain more advantages, driven by strong performances in Vietnam in 2020.

 
 
 
Leave your comment on an article

OR QUICK LOGIN