No more taxes, fees, or procedures should be increased.
The above comment was made by Mr. Vu Tien Loc, National Assembly (NA) delegate of Hanoi City, Chairman of the Vietnam International Arbitration Center (VIAC), on the sidelines of the 15th National Assembly session. Citing data recently released by the General Statistics Office, Mr. Loc commented that the current economic situation in Vietnam in the first 5 months of 2023 is "very difficult". The main growth drivers of the economy are all on the decline.
Businesses are in dire need of urgent support from capital to tax policies... to overcome difficulties.
In general, in the first 5 months of the year, the number of newly established and re-operated enterprises only reached 95,000 units, down 3.7% compared to the same period last year, while the number of enterprises withdrawing from the market was 88,000 units, up 22.6%. "Most of the enterprises that are operating also have to reduce the scale of production and business. Many enterprises are actually clinically dead," Mr. Loc emphasized.
Talking to Thanh Nien , Mr. Loc analyzed that the biggest difficulty for businesses is due to the sharp decrease in both international and domestic demand. This causes businesses to not be able to sell goods, increase inventory, not be able to produce, capital flows are stuck, leading to lack of liquidity. In addition, access to credit capital is difficult. The real estate market and corporate bonds are frozen, causing a chain reaction to a series of other industries.
The situation of real estate enterprises owing construction, construction debt to construction material suppliers and so on, affecting the entire business ecosystem and the economy is even more difficult. In the real estate sector, there have been reports from associations and enterprises that 70% of construction investment projects are facing legal difficulties. This is a warning of serious stagnation. "The real estate market being blocked affects the entire economy because it is related to dozens of other industries," Mr. Vu Tien Loc emphasized.
Appreciating the efforts of the Government and the Prime Minister as well as a number of ministries and branches in promoting public investment, implementing policies to defer, postpone and reduce taxes for people and businesses, Mr. Loc said that the dosage of the above policies has not yet met the requirements, and the progress is still slow. Therefore, Mr. Loc suggested that in the coming time, the Government needs to implement stronger fiscal and monetary measures, because inflation in Vietnam is decreasing rapidly (CPI in the first 5 months of the year increased by only 0.4% compared to the end of last year), the trade balance is in large surplus (in the first 5 months of the year, we had a trade surplus of 9.8 billion USD), and public debt is only at 43.1% of GDP, much lower than the public debt ceiling of 60% of GDP prescribed by the National Assembly.
"There is still a lot of room for fiscal and monetary policies, especially our fiscal policies. Therefore, this is the right time for us to implement the national policy of easing the burden on the people and supporting businesses. We should not increase any taxes, fees or procedures. Proposals such as increasing electricity prices, increasing taxes on sugary drinks, and imposing packaging recycling costs on manufacturing industries should be stopped...", Mr. Loc emphasized.
Extending fiscal policy to support businesses
Dr. Nguyen Quoc Viet, Deputy Director of the Vietnam Institute for Economic and Policy Research (VEPR), said that the Institute had published a report right before the 5th session of the 15th National Assembly. Reality shows that 2023 is a year of economic decline, even recession due to facing "headwinds" and this risk will last until 2024. Mr. Viet commented that in the second quarter, production and business activities of enterprises are still difficult, even in the third quarter. The competitiveness of enterprises and the recovery of the Vietnamese economy from the end of 2022 to the first quarter of 2023 will also be seriously reduced due to very high lending interest rates, eroding all recovery efforts. At the same time, shortcomings in management, administration and implementation of policies and laws lead to a decline in confidence in the business environment.
"In recent times, we can see the Government's efforts in supporting businesses to recover, helping to strengthen their confidence. However, businesses are still facing many difficulties, with backlogs and bad debts at risk of increasing, and many businesses in some sectors have had to stop operating, especially in the textile, construction, real estate, and retail sectors, leading to reduced working hours and job losses. The Government has assessed that this situation may continue to become more complicated and difficult in the coming time. In particular, some large enterprises operating in multiple sectors and fields have had to sell assets at low values, be acquired or merged to maintain production and business. The situation of low-quality private investment is seriously declining, in addition to domestic and foreign macroeconomic factors, businesses are facing weaknesses in the institutional and legal environment, which are major barriers to the normal operations of businesses and people, eroding the recovery efforts of the whole country," said Dr. Nguyen Quoc Viet.
Associate Professor, Dr. Tran Hoang Ngan, National Assembly Delegate of Ho Chi Minh City, assessed that the difficulties of enterprises since the beginning of May have tended to decrease slightly, however, the number of enterprises withdrawing from the market remains high, especially enterprises in the fields of export production, construction materials, etc. Although budget revenue has decreased in the past 2 years, the budget deficit has also decreased, helping public debt to decrease from 43% of GDP in 2018 to more than 38% of GDP in 2021. Thus, there is room to implement social security packages and support enterprises in the coming time. This is an urgent issue, in the short term, but very necessary.
"In the immediate future, it is necessary to extend the fiscal and monetary policies supporting the socio-economic recovery and development program in Resolution 43 of the 15th National Assembly, which will expire at the end of this year, for another year. At the same time, increase the amount of support for businesses, expand the group of beneficiaries of the policy of reducing 2% of value added tax, corporate income tax, etc. Inflation has now been controlled, so interest rates should be reduced to support the market and businesses. In particular, commercial banks should "sacrifice a little profit" to accompany businesses at this time. If many businesses withdraw from the market and go bankrupt, it will also affect the lending and debt collection activities of banks," Mr. Ngan emphasized.
In the long term, it is necessary to focus on growth quality; review and re-evaluate the mid-term Resolution 31 of the National Assembly on the economic restructuring plan for the 2021-2025 period and control the trade openness of the Vietnamese economy because countries with high openness are often greatly affected when the world fluctuates.
Stronger policies are needed.
Mr. Vu Tien Loc recommended: In order for the economy to overcome current difficulties, we need to have stronger policies. Specifically, the responsibilities of all levels and sectors must be clearly defined as an iron discipline, to further promote public investment disbursement, thereby increasing aggregate demand and creating a spillover effect in the economy. Legal and administrative problems need to be resolved more quickly, so that real estate projects and other production and business projects can be implemented, creating jobs for workers, bringing in revenue and increasing the ability to repay debts for enterprises. At the same time, it is also necessary to increase the attraction of high-quality foreign investment capital, capable of forming joint ventures with Vietnamese enterprises.
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