Hanoi will introduce the best possible conditions for businesses to invest and expand production

Hanoi saw a slight drop in its consumer price index of 0.03% in April compared to the previous month. This is a 10 year low. Three of the 11 groups of commodities that have been affected are restaurants and catering services, construction materials and post and telecommunications, dragging down the CPI sharply. The main reason is due to the decrease in purchasing power, caused by both domestic and international economic difficulties. The number of newly registered companies in the first quarter was extremely modest contrary to the number that declared bankruptcy. Nguyen Minh Phong, an expert at the Hanoi Institute for Socio - Economic Development Study, says 'The decline is due to a drop in demand, especially the imbalance between consumer demand and production leading to an abundance of commodities and an increase in the amount of goods in inventory'.

In the current context, businesses are under a great deal of pressure trying to deal with lower sales and over production. To temporarily resolve the issue, many companies have decided to cut levels of production instead of increasing prices. Following the Government’s announcement of a bailout package worth 1.4 billion USD to bail out enterprises, Hanoi has decided to follow suit. One of Hanoi’s top solutions is to promote policies to stimulate the consumer market to help local businesses reduce inventory and lower production costs. Nguyen Vinh Phu, President of Hanoi’s Supermarkets Association says 'The Government should defer tax payments, abolish value added tax between 5 and 10%, and reduce corporate income tax. This along with other supportive measures, will help enterprises to survive these challenging times. More promotion campaigns and jobs are also needed'.

Hanoi is taking prompt action to implement its package of measures from now until the end of the year. The city is also asking that the taxation and customs departments follow the Government’s preferential treatment on taxes and fees. The municipal authorities will increase its budget for trade promotions, expand its export markets and speed up administrative reforms to create a better environment for the business community.