Policies Changed To Fuel Economic Recovery

A series of changes in policies have been made to support the recovery of enterprises affected by the Covid-19 pandemic, hoping to help Vietnam's economy rebound faster and stronger.
March 14, 2022 | 11:01
Policies Changed To Fuel Economic Recovery
Photo: Baoquocte

Financial support packages launched

The Government’s support packages are the driving force for the economy to regain its growth momentum after periods of being almost frozen, according to Nhan Dan. This is considered a fiscal policy with an unprecedentedly large budget of about VND 350 trillion (USD 15 billion), equivalent to 4% of the country's GDP.

Following the many support packages implemented in 2020 and 2021, Resolution No. 43/2022/QH15 was approved by the National Assembly at the beginning of 2022 to serve the program of socio-economic recovery and development.

Immediately after that, the Government issued Resolution No. 11/NQ-CP to implement this program. The timely actions of the National Assembly and the Government have basically met the wishes of the business community and people, showing a strong determination to bring our economy to overcome difficulties soon.

The most notable in the support package of VND 350 trillion (USD 15 billion) is the policy on reducing and exempting tax, fee, and interest rates. Of which, nearly VND 50 trillion (USD 2,3 billion) will be used to reduce VAT by 2% to help support economic growth while stabilizing the macro-economy and controlling inflation.

In addition, many other support policies are being conducted such as providing a 50% reduction of registration fees for domestically assembled and manufactured cars from December 2021 to May 2022 and a 50% reduction of environmental protection tax on jet fuel in 2022.

According to calculations, this will help car manufacturers increase sales volume significantly and help aviation businesses to save about VND 1,600 billion (USD 69 million).

Policies Changed To Fuel Economic Recovery
Photo: Thuong Truong

Rent and service price reduced

The Ministry of Finance is building a policy to reduce land and water surface rent by 30% in 2022 and extend payment deadlines for a number of tax lines in 2022. These two policies are desired by millions of business households and hundreds of thousands of businesses.

According to economist Ngo Tri Long, the fiscal support packages over the past two years have come to life as the economy is growing again with improved budget revenue.

Specifically, the groups of solutions on taxes, fees and land rent are highly appreciated by businesses for their easy access. However, fiscal support policies only contribute to helping businesses increase their resilience for a time, so in the long run, the Government needs to study other non-financial support policies and make effective institutional reforms to help increase the intrinsic capacity of enterprises themselves and the self-recovery ability of the economy.

Policies Changed To Fuel Economic Recovery
Photo: Doanh Nhan

Business environment is improving

Acknowledging the nation’s efforts in improving the local business environment in recent times, Amy Luinstra, acting country director of the International Finance Corporation (IFC), said that despite facing complicated developments relating to the Covid-19 pandemic, Vietnam still recorded remarkable achievements. These can be seen through its improvements in the business environment and the overall competitiveness of enterprises. Thanks to these efforts, foreign investment attraction has sufficiently recovered, coupled with double-digit export growth and a stable macro-economy.

Alain Cany, chairman of the European Chamber of Commerce in Vietnam (EuroCham), emphasized that more than 1,200 EuroCham members all gave optimistic signals for the nation’s "new normal", as shown through the business climate index of EuroCham (BCI) which increased from 42 points to 61 points in January, according to VOV.

With COVID-19 being gradually brought under control, the EU-Vietnam Free Trade Agreement (EVFTA) coming into effect and the EU-Vietnam Investment Protection Agreement (EVIPA) set to be implemented, the country will have the opportunity to attract new waves of foreign direct investment from European nations, Cany noted.

John Rockhold, chairman of the American Chamber of Commerce in Vietnam (AmCham Vietnam), said the most important factor in creating a favorable business environment, as well as maintaining the supply chain is the legal environment that must be fair, transparent, and requires innovation. This will help to both stimulate and maintain the growth of foreign investment inflows that existed before.

Policies Changed To Fuel Economic Recovery
Photo: Zing

Positive outcome recorded

According to the General Statistics Office, nearly 116,800 enterprises were established in 2021 with a total registered capital of over 1,600 trillion VND. Although there was a decrease of 13.4% in the number of businesses and a decrease of 27.9% in the registered capital compared to the previous year, it was a positive result in the context of the complicated developments of the pandemic both at home and abroad.

In addition, foreign direct investment attraction showed signs of recovery with a total registered capital of more than 31 billion USD (up 9.2% compared to 2020), demonstrating the confidence of foreign investors in the Government's pandemic control results as well as the investment environment in Vietnam.

According to Pham Tan Cong, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), as a means of contributing to realizing the goals and effectively implementing the tasks and solutions set out by the Government, the VCCI has proposed that the Government facilitate enterprises’ access to information, policies, and regulations. This can serve as a way of helping them to access capital in order to restore production and business activities.

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