Vietnam introduces timely support for businesses against COVID-19
Vietnam introduces timely support for businesses against COVID-19
Vietnam is taking measures to support its economy as the COVID-19 outbreak grows. Sami Kteily, executive chairman of PEB Steel, shared with VIR’s Thanh Van his insights into the government’s recent move to support markets and maintain economic stability.
Sami Kteily, executive chairman of PEB Steel shared his thoughts on the government's recent support to businesses
|
What is your view on the government's latest move to facilitate businesses amidst the COVID-19 outbreak?
Yesterday, when I was reading the headlines of one English daily that said “Over 28,000 firms suspend operations within two months amid virus outbreak“, I realised the gravity of the situation and I think the issuance of Directive No.11/CT-TTg comes at the right time.
First, in terms of favourable conditions for access to capital and credit financing, especially loans, I believe what the government is offering is very valuable because loan applications are usually very time consuming so it is great news for companies that need to borrow to survive during these unusual times.
I hope that banks will extend immediate de facto loans to all customers who require it under LC that were opened in the past and are due for payment now.
In relation to exemption and reduction of loan interests, as a matter of fact, PEB Steel has already received interest rate deduction from at least two banks we are working with. I am not sure if this is related to the coronavirus and the PM's directive, but whatever the reason is, this comes at an excellent time.
In relation to extending the time for paying taxes, social insurance dues, and similar payments to the government, this represents a big amount of monthly payments so it is very useful and will definitely ease the cash flow of companies who are in need. I just hope that other companies do not abuse the system and apply for an extension when they don’t need it. For example, PEB Steel, which is not affected by the coronavirus, will continue to honour all of its dues, if not even speed them up. Business as usual until proven otherwise.
I can assure you that Directive 11 which came into effect on March 4 came at a good time and based on the discussions that I had with many colleagues at the many Chambers of Commerce in Vietnam of which we are members, we find that it was very welcome. The business community in Vietnam really welcomes the prime minister's directive. We are very happy to see concrete action.
Is the move in time and efficient enough to help businesses cushion the impacts of the COVID-19 outbreak?
I think the timing is excellent. The government’s move to support businesses is very welcome, very clever, and very reasonable on the long-term. It does not come late because I don’t think the COVID-19 has affected all businesses directly in Vietnam, but it creates negative market sentiment with many people already worried that 2020 is going to be a tough year. I don’t think that many businesses in the country are affected.
In our business, steel, many businesses are complaining of the same thing. We at PEB Steel just want to make sure that the supply of raw materials from overseas remains stable. So far, we are still fine, we are signing contracts and there has been no large impact on our business.
How do you expect the measures to support businesses and the economy?
Some of the effects of Directive 11 are related to our business. Luckily our business lines have not really been affected by the COVID-19 epidemic so far. I am really concerned about what is going to happen in the second and third quarters though. However, until then, business is as usual.
The contents of the directive relating to banks are also very positive. Loans are very important to companies and if the directive helps make the time required to obtain loans shorter, that will be great news to many companies. WE have facilities already in place, so this does not really affect us directly. We have applied for a loan to expand business, so if it really works, we can expand our facilities. A shorter loan process would make us very happy.
In relation to taxes, of course people will be very happy at times like this, when cash flows are reduced. Anything offered by the government is very welcome, deeply valued. We are going to continue paying taxes as usual, because so far, we don't see a negative impact, our cash flow and business have surprisingly remained as usual, with new contracts and payments rolling in steadily. Maybe because our customers are not only in Vietnam but also in countries that are not affected by the COVID-19 to the extent like Southeast Asia.
We don’t have a lot of business with Hong Kong and Singapore but these two countries are already seeing signs of improvement, which is an encouraging sign for the global market.
What are your recommendations for Vietnam to mitigate the negative impacts of COVID-19, especially on the business climate and capital disbursement?
I highly appreciate the measures taken by the government to control the COVID-19 pandemic. However, we should not exacerbate the issue even if more new cases arise. So far, we don’t have any fatalities from COVID-19 in Vietnam. It is apparent that the government has done a fantastic job in controlling COVID-19.
However, people still have doubts about what the government says about the exact epidemic situation. So, it’s very important to assure the people and boost transparency around COVID-19. We’ve started preparing ourselves to face the outbreak. Yesterday, we had a meeting to discuss how certain departments will operate from home in the unlikely case that such a measure is necessary. We must take precautions without overdoing it, otherwise, it would create a negative atmosphere which might hurt businesses.
My recommendation is to create a positive atmosphere, share the good news, not only the bad news. There must be a PR campaign to share information and tell people the truth about COVID-19. The main reason is that gossip, rumour, and fake news about COVID-19 tend to hurt. With more information shared, the government would let the people and the business community know the exact situation. Businesses would not have to deal with so much misleading information and would have a clearer picture of how things stand.
All in all, what it comes down to is sharing true information and taking precautions without overdoing it.
