Debts of many enterprises will be restructured.

Under the Resolution 13, the State Bank of Vietnam has adopted policies to support enterprises and the market. In the second quarter, the central bank repeatedly cut the starting interest rate ceiling to 9% per year, the loan interest rate to 16%, corporate income tax imposed on small and medium-sized enterprises to 30%, and halved land lease costs. Vu Nhu Thang, Director of the Institute for Financial Strategy and Policy, says groups of solutions with a focus on taxes show a synchronization among the Government’s macro-economic policies, particularly its fiscal and monetary policies. Thang says if a low, stable inflation rate is achieved in the coming months, interest rates may continue to fall, helping companies access low cost credits, reduce costs, and improve production and trading capacity and competitiveness. These achievements may be quite modest compared to the past but in the current climate, they’re acceptable as many enterprises are facing bankruptcy due to a shortage of bank loans. Nguyen Trong Kien, Deputy Director General of Thach Ban Group, said at last week’s seminar on Resolution 13 that a reduction of corporate income tax or loosening of the value added tax may not have much effect on any single company but could have a broad impact, on the economy as a whole. Nguyen Trong Kien said ‘The resolution is really efficient but we are paying more attention to supports relating to policies. The corporate income tax is influencing companies, many of whom don’t make a profit so the policy doesn’t make sense to them, particularly construction material producers. We expect that in the future VAT will drop to less than 5%, or even 0% on some items’.

In the Government’s supporting package, the extension of the payment of value added tax can be considered a 6-month loan with 0% interest providing more capital for production and trading. The extension of VAT payment will apply in the second quarter for two types of enterprises. Do Duc Oanh, Secretary General of the Vietnam Cement Association, says cement producers have benefited from a lending interest rate of 15%, debt restructuring, and an extension of payment deadlines. Nguyen Duc Kien, Deputy Chief of the National Assembly Economic Commission, said bank interest rates are on a decline. Kien makes some suggestions for companies ‘Now each company should develop its own strategy to absorb the loans. State management agencies can’t do this work for enterprises. Companies should identify their markets, review their markets and products, and restructure themselves to match current narrowed production scales’.

A recent Vietnam Report says that 12 groups of solutions essential for restructuring the national economy have basically met restructuring requirements. Although initial achievements remain modest, the Government has acted quickly and responsibly to help struggling businesses.