31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Oct 12, 2021 / 22:42

Vietnamese businesses prompt actions for economic revival

The country needs to come up with a simple and convenient measure to support businesses at this time.

New orders are expected to come to Vietnam in the Spring-Summer season next year despite a loss of contracts with international brands until the end of this year due to the impacts of Covid-19, said Vu Tien Loc, Chairman of the Vietnam International Arbitration Center (VIAC).

Loc also predicted that the country’s economy will recover in the first quarter of 2022 thanks to the great efforts of the Government and the business community. 

 Delegates join the seminar on October 12. HNT Photo: Thanh Hai

At the seminar “Responsibility and bravery of Vietnamese enterprises to overcome the pandemic” held on October 11, Loc mentioned results from a recent survey, which showed up to 20% of orders of enterprises could not be fulfilled and were shifted to other countries to meet the demand in the Christmas season and the New Year of 2022.

“We may resume operations more slowly than surrounding countries so we are missing the opportunity,” he said.

He expressed concern that a lot of migrant workers in the South have returned to their hometowns, leading to a shortage of laborers. The service sector also faced the same problem.

“Reopening is a support package for businesses so that they can restart. Given the fact that the pandemic situation in Ho Chi Minh City and many other provinces and cities has improved, our opening measures would be really effective support to restart economic recovery,” Loc told The Hanoi Times. “However, the reactivation is facing with many difficulties.”

Many local businesses are currently in a state of “burnout” as they face great pressures from disease prevention, rising costs, and psychosocial consequences left by Covid-19. Among these pressures, the medical and economic consequences will be the most difficult for the enterprises to overcome, while the psychosocial one is the heaviest, he said, predicting a number of businesses will have to leave the market in the post-pandemic period.

Le Xuan Nghia, Director of the Business Development Research Institute under the Hanoi Association of Industry and Trade said many Vietnamese enterprises are currently facing bad debts and have no collateral to obtain loans. 

Drawing on the lessons learned from the global financial crisis in 2009, experts suggest that Vietnam should come up with a simple and convenient measure to quickly support businesses at this time.

According to Nghia, governments of the US, Japan, and Europe offered large funding packages to directly support businesses and workers. In emergency conditions, these governments have issued G-bonds to support businesses and workers affected by the uncertainties. 

For Vietnam, the finance for the aid package should be sourced from the foreign currency reserve fund managed by the Central Bank, he said.

Be active for survival

Being of the same mind, Pham Dinh Doan, Chairman of Phu Thai Group, specializing in the fields of trade and consumer products distribution, said the state's support for businesses at this time should come from the available state resources, in the forms of advance loan or deferral of payments due. As a result, businesses can balance cash flow and maintain operations. 

He added, though the debt rescheduling may cause some decline in State revenue, it will certainly be less negative than the shutdown of the number of well-established businesses due to cash flow shortage. 

“Many businesses have had to stop operating for running out of cash. Therefore, I believe that the State should come up with bold assistance measures for businesses and workers as soon as possible and provide a high level of support in the various forms,” he told The Hanoi Times.

Doan also recommended local businesses need to actively implement their plans especially when the State’s support is still limited. First and foremost, they should restructure and review the effectiveness of each field, maintain and invest in potential areas and boldly cut out inefficient business lines.

Besides, local businesses need to have knowledge about mergers and acquisitions as these activities are very normal for them, like buying and selling normal products and services.

Doan added, while waiting for the State's bailout, businesses need to actively negotiate with banks, financial institutions, customers and employees, as a temporary solution to maintain cash flow. 

Mac Quoc Anh, Vice Chairman and General Secretary of the Hanoi Association of Small-Medium Enterprises (Hanoisme), said support policies must be drastic, continuous, transparent, timely, and accessible. 

“The scale of the aid must be commensurate with the severe impact of the pandemic. Conditions and standards of assistance packages must be feasible and the procedures to receive support must be simplified,” he told The Hanoi Times.

Quoc Anh also said reducing corporate income tax is to help the targeting businesses and cooperatives who are making no profit due to the impact of the pandemic. A focus on solving difficulties for key industries, which have spillover effects and long-term, will create new growth room for the economy.

Sharing his same view with the delegates, Nguyen Minh Duc, Editor-in-Chief of the Economic & Urban Newspaper, affirmed Covid-19 has had a great impact on all aspects of socio-economic life as production and business activities in Hanoi and in the whole country showed many difficulties.

"However, during the period, local enterprises are making efforts to demonstrate their bravery to gradually shift production and business activities to a safe status that will help revive the country's economy," he said.