An enterprise in Hanoi (Photo: Linh Anh – www.ktdt.vn)

(VOVworld) – One of key tasks the Vietnamese Government has set for this year is to resolve the production and business slowdown while implementing compatible solutions on inflation control and macro-economic stabilization. This is a hot issue of the ongoing National Assembly session and the 2012 mid-term Consultative Group Meeting of Donors for Vietnam in Quang Tri province.

Although in the beginning months of this year, the Vietnamese economy has shown positive signs with inflation slowing down prime interest rate dropping, exchange rate stabilizing, and exports increasing, it has also revealed many challenges. There’s a decline of economic growth in which the GDP of the first quarter reached only 4%, much lower than the same period last year. The tightened fiscal and monetary policies have contributed to controlling inflation and stabilizing the macro-economy, but on the other hand, pushed the business community into hardship. High lending interest rates, troublesome access to credits, high input costs, and lingering inventory have curtailed business production and made many companies go under. In this context, the Government has issued a bailout package for business and production. Finance Minister Vuong Dinh Hue, a NA deputy of Binh Dinh province, said this is a support package not an economic stimulation measure. He said ‘The package will focus on supporting businesses in both input and output costs and capital utility. The Government has identified the need to increase the total demand which means to boost the allocation and disbursement of capital for projects with public investment taken from the state budget, government bonds, and the national target programs. With regard to input costs, the package aims to help companies lessen operating expenditures. The Government has worked out solutions on moderate value added tax, the payment of land use tariff and tax debts as well as exempting corporate income tax’.

Cao Sy Kiem, President of the Vietnam Association of Small and Medium Sized Enterprises (Photo: VGP/Kiều Liên)

NA deputy from Thai Binh province Cao Sy Kiem said the package is made timely adding ‘If the package is implemented seriously, it will partly help companies as money they don’t pay to the state will be used for re-investment to boost production’.

However, many deputies said that it requires efforts not only of the Government, and state management agencies but the businesses to fully tap the bailout package. Nguyen Duc Kien, Vice Chairman of the NA’s Committee for Economics and a deputy of Soc Trang province, says ‘The tax exemption for enterprises will greatly affect the state budget. So businesses should increase their social responsibility for workers. It’s true that a company which benefits from the state budget should be required to have better policies for workers’.

At a recent Vietnam Business Forum, preceding the Consultative Group Meeting of Donors for Vietnam, the World Bank Director,Victoria Kwa Kwa, noted that not every business can rely on this Government bailout package. She highlighted the need to specify the potential, competence, and business areas to provide proper assistance. The World Bank official added that solving difficulties for companies to encourage business and investment will be an impetus for Vietnam’s long-term economic growth.