Domestic market growth maintained
This year, in the context of many difficulties in production and business, the People's Committee of Ho Chi Minh City has allowed the implementation of the "Shopping Season" concentrated promotion program lasting from June 15 to September 15. Enterprises will organize many promotional activities with attractive discounts, which can be up to 100% of the value of goods.
“Due to the long duration, the program will have highlights for promotional activities to become more practical, gradually building a shopping brand for Ho Chi Minh City. Specifically, the Department of Industry and Trade will coordinate with related departments and branches, such as coordinating with the Department of Tourism to organize a river festival. Also during this period, the Department of Industry and Trade will promote the cashless project, thereby helping people have more means and conditions for appropriate and safe payment,” said Mr. Nguyen Nguyen Phuong, Deputy Director of the Department of Industry and Trade of Ho Chi Minh City.
The "Shopping Season" focused promotion program is one of the outstanding domestic consumption stimulus programs implemented by localities in recent times. According to the General Statistics Office, the domestic market continues to be a bright spot in the macro economy in recent times when maintaining very stable growth.
Specifically, July is the peak month of the summer tourist season, so retail sales of goods and services are bustling, revenue increases, especially tourism. Specifically, total retail sales of goods and consumer services revenue in July is estimated at VND 512.2 trillion, up 1.1% over the previous month and up 7.1% over the same period last year. In the first 7 months of 2023, total retail sales of goods and consumer services revenue at current prices is estimated at VND 3,529.8 trillion, up 10.4% over the same period last year (the same period in 2022 increased by 15.7%). Excluding the price factor, the increase is 9.6% (the same period in 2022 increased by 11.7%).
Thus, total retail sales of goods and consumer service revenue continue to remain at double digits, showing the great potential of our country's domestic market.
According to the Department of Domestic Market - Ministry of Industry and Trade, the purchasing power of the domestic market has recovered relatively strongly in the past 7 months, which is a positive bright spot in the context of many other sectors facing difficulties. The domestic market is one of the main growth drivers of the economy, so maintaining the growth momentum of total retail sales of goods is an important factor contributing to GDP.
Continue to strongly implement solutions to stimulate consumption
Although maintaining a relatively high and stable growth rate, however, if calculated at current prices, the total retail sales of goods and consumer service revenue in the first 7 months of 2023 reached a higher scale but the growth rate was lower than the same period last year.
In addition, this figure is still not equal to the time before the Covid-19 pandemic. Not to mention, the demand and purchasing power of the people in general are still weak, not reaching the level before the Covid-19 pandemic, not stimulating production, investment and consumption.
In the context of government spending and total public investment no longer being maintained at high levels, export growth slowing down, consumer markets shrinking, inventories increasing, many export enterprises still facing a shortage of orders... prioritizing stimulating domestic consumption is considered an important solution to compensate for growth from now until the end of the year.
To boost consumer demand, from the beginning of July, value-added tax (VAT) will be reduced from 10% to 8% according to Resolution No. 101/2023/QH15 of the National Assembly for many goods.
Economist Vu Vinh Phu said that this is a good move to stimulate spending, contributing to boosting GDP growth. Because reducing VAT will help reduce direct costs for buyers.
Therefore, the tax reduction will stimulate consumers to shop more, and businesses will have better capital turnover. The 2% VAT reduction on raw materials, spare parts, equipment, etc. also helps reduce production input costs, giving businesses room to reduce product prices and share difficulties with consumers. It can be affirmed that this policy also helps businesses recover production and business.
However, the above "medicine" is still not enough and needs to be increased with many solutions to increase purchasing power for the market such as implementing policies to stimulate domestic aggregate demand through tools from the state and businesses.
For example, at supermarkets and retail stores belonging to Saigon Co.op, in order to stimulate shopping during the upcoming back-to-school season, hundreds of supermarkets, hypermarkets, and convenience stores of the Ho Chi Minh City Union of Trade Cooperatives (Saigon Co.op) including Co.opmart, Co.opXtra... will also offer discounts of 20-30% on school supplies, clothes, school bags...
Or in Hanoi, promotional programs are organized for longer periods with deeper discounts. During low consumption months such as May, July and November, there are separate promotional programs to stimulate market demand. Ms. Tran Thi Phuong Lan, Acting Director of the Hanoi Department of Industry and Trade, said that currently, the Hanoi Department of Industry and Trade has received 21,000 promotional programs from 4,000 businesses registered to participate.
In addition, the Government has recently issued Decree 44 regulating the policy of reducing value-added tax (VAT) according to Resolution No. 101 of the National Assembly. This Decree takes effect for 6 months from July 1 to December 31.
Accordingly, VAT will be reduced for groups of goods and services currently subject to a tax rate of 10%, except for groups of goods and services such as: Telecommunications, financial activities, banking, securities, insurance, real estate business, metals, etc.
The VAT reduction is applied uniformly at all stages of import, production, processing, and trading. The first beneficiaries of this policy are consumers.
In 2022, the implementation of value-added tax reduction according to Resolution No. 43 has indirectly stimulated increased domestic consumption. When total retail sales of goods and consumer service revenue increased by 19.8% compared to the previous year, domestic value-added tax collection did not decrease but increased by 10% over the same period.
This year, the Government has set a target of total retail sales of goods and consumer service revenue increasing by 9%. With the participation of the Government, localities and enterprises, it is expected that total retail sales of goods and consumer service revenue will continue to grow more strongly in the coming time, contributing to the country's economic growth.
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