Lower interest rate for pandemic-hit businesses
Lower interest rate for pandemic-hit businesses
Businesses that were hit by the Covid-19 pandemic will be carefully selected to receive financial support under Decree 31/2022/ND-CP issued on 20 May 2022.
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According to Mr. Trần Duy Đông, Deputy Minister of the Ministry of Planning and Investment (MPI), authorities at MPI will select the right beneficiaries who can enjoy a 2% interest rate cut under a government support package.
Speaking with Saigon Investment, Deputy Minister Trần Duy Đông said that Decree 31 will provide lower interest rates for businesses that were badly hit by the Covid-19 pandemic, and also give other much needed financial support from the State Budget. The beneficiaries will include companies, cooperatives, business householders and vendors that meet the requirements for financial support as set forth in Decree 31.
JOURNALIST: - Sir, the Ministry of Planning and Investment is one of the three designated bodies responsible for implementing Decree 31 for providing a lower interest rate for Covid-19 pandemic affected businesses. The other two are the State Bank of Vietnam (SBV) and the Ministry of Finance (MF). Please could you tell us how this plan will be implemented?
Deputy Minister TRẦN DUY ĐÔNG: - The Ministry of Planning and Investment is working closely with the State Bank of Vietnam and the Ministry of Finance in implementing this important plan. The SBV has provided commercial banks with guidelines on complying with the requirements of Decree 31. MPI is providing assistance in coping with problems during the implementation phase, in case any problem arises. In particular, MPI has been designated to quickly and carefully select the right beneficiaries who can avail of the interest rate cut of 2%, as stipulated in Point a in Article 2.2 of Decree 31.
These are groups with specific purposes for using the loan in one of the registered business areas as stipulated in Decision 27/2018/QD/TTg issued on 6 July 2018 by the Prime Minister in key economic areas such as aviation, transportation and warehousing (H), tourism (N79), accommodation and food and drinks (I), education and training (P), agriculture, forestry and fisheries (A), manufacturing and processing industries (C), software publication (J582), computer programming and related activities (J-62), information services (J-63), and construction activities providing direct services for the above-mentioned economic areas, but not including the construction activities for the purpose of real estate business activities, as stipulated in the economic area code (L).
Decree 31 stipulates that the customers who want to enjoy an interest rate reduction of 2% must satisfy two basic requirements. First, they must have their registered business areas mentioned in Point a in Article 2.2 of Decree 31. This means the customers can take loans and invest in different parts of their business activities, but they must be in the business areas as required. Second, the loans must be used for such business areas, which are nine business areas listed in Decision 27.
- Sir, some registered businesses may not be in a specific business area, but the customers have plans to use the loans in the business areas that allow the preferential interest rates on loans. Will they be provided with such an interest rate cut as stipulated in Decree 31, or if they are in the registered business areas that are provided with such loans, but they do not use the loans for such business areas, will they be able to access the interest rate cut of 2%?
- Article 7 of Corporate Law says that when registering for establishment of a business or registering for a change in business areas or a change to the legal entity of the business, the person who wants to set up a business must choose a business area and register for providing a capital as stipulated in Decision 27 issued by the Government.
For instance, the first level service is accommodation and food and drinks under business code I. When it registers for a loan, the competent agency must check whether or not the business code and the purpose of using the capital are correct. If the registered business area provides accommodation and food and drinks services for such places as hotels, restaurants, guesthouses, hostels and dormitories, the concerned companies are allowed to take preferential interest rate loans. This is why it is imperative to review all the related documents.
We must have all the necessary information about a company when it is established. The person who establishes the company must choose a business area that can be provided with capital and write the business area in the business registration document. When the business registration agency receives the registration documents, even if the business area is not clearly written, but the level 4 registered business area has been recorded in the database, the company will still be allowed to take a preferential interest rate loan. Some enterprises do not have a specific business area and do not have a purpose of using the loan or do not use the loan for the right business area, they will not be allowed to take out such a loan.
- Sir, some enterprises are business householders or have registered for multiple business areas. Will they be provided with such a preferential interest rate loan as well?
- Clause 2 of Article 79 in Decree 01 on registration for establishment of an enterprise, business householders who are involved in production in agriculture, forestry and fisheries, salt making or street vending, are not registered business householders. If these business householders have a purpose of using the loan, they are still the beneficiaries that can be provided with such preferential interest rate loans, because they are in the groups of businesses that are not required to have their business activities registered. Yet they must have a purpose of using the loan for the right business areas as stipulated in Decree 31.
Some businesses register their business activities in multiple business areas, including business areas that can be provided with a preferential interest rate loan as stipulated in Decree 31, but they use such loans to pay their regular costs like salaries, water and electricity bills and office overhead activities. They may fall into one of these two cases. First, they meet the requirements and second their purpose is not so clear yet. If they take bank loans to pay their employee salaries in business areas as stipulated in Decree 31, they will be provided with such preferential interest rate loans. Otherwise, they will not be offered such a loan.
What is worth noting is that Decree 31 also mentions the beneficiaries, including those involved in construction activities that provide direct services for the above-mentioned business areas, but does not include construction activities for the purpose of real estate business activities as stated in the economic business code (L) stipulated in Decision 27.
As mentioned above, the businesses must meet two requirements before they are qualified for such preferential interest rate loans. For companies providing construction services, they must meet the second requirement, because their business area is in construction and not among the nine business areas stipulated in Decree 31.
- Thank you very much.
