Evaluating the reach of support in turbulent times
Evaluating the reach of support in turbulent times
The COVID-19 pandemic is causing unprecedented damage to Vietnam’s economy when, for the first time, third-quarter GDP plunged 6.17 per cent, causing profound impacts on development not only for this year but also in successive years.
In this context, to help businesses and labourers particularly, the government has provided essential support through bailout packages and programmes rooted in the state budget.
Back in March and April of 2020, directives and decrees were released to help remove difficulties in production and business, and ensure social wellbeing in combating COVID-19. Payment extensions were crafted for VAT, corporate income tax (CIT), personal income tax, and land rent; and a $2.69 billion bailout package was also created.
The support covered both individuals and businesses. The report reviewing support policy implementation for pandemic-hit people and businesses, however, shows that after more than a year of implementation, the actual disbursed amount from the bailout package was a mere $570 million.
By the end of May this year, nearly 13.2 million people were given cash support deducted from the state budget, while the interest-free lending package valued at nearly $700 million to support firms in wage payment for labourers reported a disbursement rate of only 0.26 per cent, with 245 businesses given loans amounting to $1.83 million.
No more support packages were presented in the first half of 2021, and efforts were concentrated on implementing the initial bailout package.
The second bailout package worth more than $1.13 billion was released in early Q3, focusing on tackling hindrances associated with access to capital sources.
Similarly, a business support package dated April this year regulated payment extensions for the aforementioned taxes and land rent to the end of 2021, with more individuals and businesses eligible to borrow through simpler procedures.
In addition, the State Bank of Vietnam (SBV) allowed debt payment extensions and did not change debt classification to pandemic-hit firms with total outstanding balance amounting to billions of US dollars.
The government also allowed considering expenses to support the COVID-19 fight as legitimate when fixing taxable income, simultaneously reducing several kinds of fees and charges to support pandemic-hit people and firms.
In the whole of this year, the taxes and land rent being exempted, reduced, and having extended payment will come to $5 billion, and the charge and fee amount being exempted and reduced would reach $130 million.
In September, the country’s National Assembly Standing Committee approved VAT and CIT exemption and reduction scale of about $926 million. The government also continued to enact and implement several policies to ensure social wellbeing and support pandemic-hit and underprivileged people.
Accordingly, as of September 28 there were 18.1 million policy beneficiaries with total funding surpassing $648 million. From last month, around $1.65 billion from the Unemployment Insurance Fund was disbursed to benefit more than 12.8 million labourers and 386,000 employers.
According to the SBV, by the end of October, local credit institutions had rescheduled debt payments for more than 500,000 customers affected by the COVID-19 pandemic with a total outstanding balance surpassing $11.3 billion; bringing total rescheduled debt volume from January 23, 2020 until that time to a cumulative $23.9 billion.
In addition, banks had exempted and reduced interest rates for more than 1.9 million customers affected by the pandemic with a total outstanding balance approximating $164.78 billion. From January 23, 2020 to the end of October 2021, the total interest income local credit institutions had either exempted or reduced to support customers came to about $1.36 billion.
Credit institutions have also deployed diverse programmes on fee exemption and reduction for online banking services such as offering 50-75 per cent fee cuts for ATMs, points of sale, and interbank transactions via the SBV’s National Payment Corporation, with a total support value of about $63 million.
The lynchpin of government policy and management in 2022, therefore, should be mobilising all resources into fighting the pandemic, while at the same time lowering its impacts to the lowest possible level, both spiritually and financially.
