Difficulties in orders, capital, administrative procedures and the risk of criminalization in the economy push businesses into a particularly difficult situation, according to Board IV.
The Private Economic Development Research Board (under the Prime Minister's Advisory Council for Administrative Procedure Reform, Board IV) has just sent the Prime Minister the survey results on business difficulties and economic prospects by the end of 2023.
The survey, conducted by Department IV in collaboration with VnExpress at the end of April with nearly 9,560 businesses, showed an economic picture with many dark colors. Accordingly, over 82% of businesses said they planned to reduce their scale, suspend or stop business in the remaining months of this year.
Among the businesses that are still operating, more than 71% want to reduce their workforce by more than 5% (of which, 22% plan to reduce more than half). Nearly 81% of units said they would reduce revenue by more than 5%, of which, the rate of reduction by more than 50% is 29.4%.
Businesses also showed low confidence, with more than 81% rating the economic outlook for the rest of the year as negative or very negative.
The four major difficulties businesses are facing include lack of orders, difficulty accessing capital, administrative procedures and concerns about criminalization of economic activities. Meanwhile, support from local authorities has not met practical requirements, with 84% of businesses rating it as "ineffective".
To overcome the difficulties, businesses have proposed many solutions to deal with these four bottlenecks. First, they recommend reducing costs to increase competitiveness. For example, the Government could extend the 2% VAT reduction until the end of 2025 instead of the end of this year. Labor costs should also be reduced further by lowering union fees, social insurance and considering changing the personal income tax threshold.
Enterprises also proposed some special mechanisms, such as allowing them to get tax refunds within 3 months after exporting orders and combining inspection and post-audit measures to control risks and prevent tax fraud. Or reducing corporate income tax for exporting units to 5-10%.
Next is to increase access to loans for the economy. Businesses believe that there should be a preferential credit package for key industries and production sectors, with resources reserved for small and medium enterprises.
"Credit should not be tightened for real estate segments related to the construction of social housing, hospitals, schools, and production infrastructure," according to the report of Committee IV.
Workers at Lam Viet Wood Factory (Binh Duong) during production hours. Photo: Dinh Trong
Next is to improve the business investment environment. Accordingly, authorities need to limit inspections (no more than once a year) and not issue new documents to avoid tax, fee, and administrative burdens for businesses. Authorities also need to promptly complete investigations of current cases and issue resolutions not to criminalize economic relations.
Finally, to cope with external difficulties, businesses propose that the Government increase trade negotiations to diversify input markets (especially for the garment, footwear, and woodworking industries...) and output markets to reduce dependence on traditional markets.
Authorities also need to increase their capacity to forecast economic trends, update development incentives and warn of risks.
According to the report of the Economic Committee, the health of enterprises is declining, the economy is very difficult. In the first four months of the year, nearly 79,000 enterprises registered to establish new businesses and return to the market. On average, each month, about 19,700 enterprises are newly established and return to operation.
However, each month, 19,200 units withdraw from the market. Many businesses face great pressure to repay debts, so they have to transfer and sell shares at very low prices, in many cases to foreigners.
Businesses lacking orders is common, workers losing their jobs in many industrial parks. According to the Vietnam General Confederation of Labor, nearly 547,000 workers at 1,300 businesses have had their working hours reduced or stopped working due to a decrease in orders from September 2022 to January 2023. 75% of these belong to FDI enterprises.
Duc Minh
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