Policies from Vietnamese government to support businesses amid Covid-19 outbreak
Prime Minister Nguyen Xuan Phuc promulgated direction 11/CT-TTg with solutions to support businesses in Vietnam affected by COVID-19. Following the instruction, The State Bank of Vietnam (SBV) has implemented proactive solutions to boost the economy: cutting its policy rates starting from March 17 in an attempt to support the economy which has been hurted by the COVID-19 outbreak; a monetary package of 285 trillions VND (12.2B), which is committed by commercial banks; issued circular on March 13th which supports credit organizations to restructure debt payment deadlines and offer borrowing interest rate reduction and exemption. The Finance Ministry has proposed a decree to delay the tax payment deadline by five months for businesses, including tax and interest rate cuts for loans and reductions in insurance fees and land lease costs.
State Bank of Vietnam (SBV) implemented various solutions, starting by cutting policy interest rates. SBV cut its refinance rate to 5% from 6%, lower discount rate to 3.5% from 4%, and reduced the repurchase rate, known as the open-market operations rate, by the same magnitude. The overnight lending rate in the inter-bank market is reduced to 6% vs 7%. The regulator also cut its interest-rate cap for dong deposits with maturities of one month to less than 6 months to 4.75% from 5%, while ordering banks to lower the maximum dong lending interest rate for short-term loans to 5.5% from 6%.
The Prime Minister has assigned SBV to direct commercial banks to shorten the time to review loan applications, restructure the repayment term, consider loan interest exemption and reduction, maintain the debt category, reduce fees etc with customers go through the outbreak of Covid-19. Also, SBV has approved a VND 285 trillion ($1.2 billion) credit package with preferential interest rates reduced from 0.5 to 1% in order to support businesses and individuals who are difficult to borrow from diseases. This capital source will come from capital balancing activities of commercial banks.
Prime Minister Nguyen Xuan Phuc said the government will issue a program to support businesses in terms of taxes, fees and insurance. The Finance Ministry has proposed a decree to delay the tax payment deadline by five months for businesses affected by the epidemic, covering about VND30 trillion ($1.3 billion) worth of taxes. Also, payment of retirement and death insurance fund for 2 groups of enterprises is suspended: enterprises with 50% of employees participating in social insurance who have to stop or quit or fail to arrange jobs and enterprises suffer from losses from which accounts for 50% of total income due to COVID-19.
Issuer | Circular number | Brief | |
1 | Government | 11/CT-TTg (March 4th) | Urgent solutions to tackle difficulties for business, ensuring social security to response to COVID-19. (Source) |
2 | State Bank of Vietnam | Circular 01/2020/TT-NHNN (March 13th) | Shorten the time to review loan applications, restructure the repayment term, consider loan interest exemption and reduction, maintain the debt category, reduce fees. SBV approved a VND 285 trillion (1.2B) credit package with preferential interest rates reduced from 0.5 to 1% in order to support businesses and individuals who are difficult to borrow from diseases. (Source) |
3 | Finance Ministry | Decision 155/QĐ-BTC Feb 7th 2020 | Promulgate a list of items eligible for import tax exemption for the prevention and control of COVID-19. (Source) |
4 | Finance Ministry | 14/2020/TT BTC March 18th 2020 | Discount and waive fees for 15 types of securities services to support the stock market because of effects of COVID-19.(Source) |
5 | Department of Tax Policy | Draft Extension of tax payment and land rental | Extension of tax payment and land rental payment. (Source) |
6 | General Department of Taxation | Document number 897/TCT-QLN (March 3rd) | Tax payment extension, exemption of late payment interest due to COVID-19. (Source) |
7 | Hanoi Tax Department | Tax exemption and reduction for business households. (Source) | |
8 | Document from The Ministry of Labour – Invalids and Social Affairs | 874/LĐTBXH-BHXH | Suspend the payment of retirement and death insurance fund for 2 groups of enterprises: enterprises with 50% of employees participating in social insurance who have to stop or quit or fail to arrange jobs and enterprises suffer from losses from which accounts for 50% of total income due to COVID-19. (Source) |