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Exhausted enterprises need breakthrough support policies

Created 14 October 2021
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On Vietnamese Entrepreneurs’ Day (October 13), Vietnam News Agency spoke to Nguyễn Minh Thảo, head of Research Department of Business Environment and Competitiveness under the Central Institute for Economic Management (CIEM) about the issues facing Vietnamese enterprises.

Nguyễn Minh Thảo, head of Research Department of Business Environment and Competitiveness under the Central Institute for Economic Management (CIEM). — VNA/VNS Photo

Businesses globally have become worn out due to the prolonged pandemic over the past two years, alongside severe restrictions. In Việt Nam, the business community is craving breakthrough rescue policies which can pull them through this crisis rapidly.

On Vietnamese Entrepreneurs’ Day (October 13), Vietnam News Agency spoke to Nguyễn Minh Thảo, head of Research Department of Business Environment and Competitiveness under the Central Institute for Economic Management (CIEM) about the issues facing Vietnamese enterprises.

Could you tell us about the major difficulties businesses are facing?

The fourth wave of COVID-19 infections along with prolonged lockdowns and restrictions have severely impacted business and production activities, especially in the southern regions, which are home to the country’s production hubs including HCM City, Bình Dương and Đồng Nai.

In September, the number of newly registered enterprises decreased sharply in both the number of new companies and the amount of registered capital. Only 3,899 new enterprises registered to operate last month, down 62.2 per cent year-on-year, while total registered capital fell 69.3 per cent to only VNĐ62.4 trillion (US$2.7 billion). These were the lowest September numbers since 2016.

I think prolonged disease control measures have made businesses increasingly exhausted and reach their tolerance threshold, especially small and medium enterprises (SMEs). They have faced many difficulties, especially the disruption of the supply chain, both in input and output.

The “unprecedented” decisions of some localities have interfered too much in business activities such as controlling the circulation of goods, applying a 3-on-site production,“one road, two locations” models and requesting continuous testing.

These methods not only made production cost skyrocket, seriously affecting the financial health of the business, but also made workers increasingly fatigued, leading to a shortage of labourers. Many businesses were pushed into a dilemma.

For example, in the export industry, only a few of enterprises (15-20 per cent) can implement the three-on-site production model while the rest had to suspend production. This stagnation heavily damaged businesses when they had no revenue but were still paying many expenses such as for factories, warehouses, bank interest and furlough pay. A medium-sized seafood processing company would suffer a loss of about VNĐ10 billion each month when it stopped producing.

The Government has introduced many support policies. In your opinion, have these policies achieved the desired results?

To implement the “dual goal” of both effectively fighting the pandemic and recovering the economy, the Government and authorities at all levels quickly issued solutions to support businesses and ensure social security.

However, in my opinion, the actual implementation is still inadequate and has not met expectations of businesses. For example, the support period is short given unpredictable developments and resilience of businesses declines sharply.

Some solutions make little sense because they are difficult to satisfy. For instance, the first financial support package last year targeting poor people and businesses affected by COVID-19 set hard-to-meet requirements and were not feasible. Another solution such as reducing corporate income tax also had little meaning because businesses do not have profits to pay taxes.

Although the Government in July this year introduced the second support package with some amendments to fix shortcomings in the first package, in reality, affected workers have not easily accessed this support.

Some localities are gradually easing control measures. Can businesses resume production right away?

The fact that localities are gradually easing control measures and drawing up recovery plans is essential because if enterprises do not restore production and business activities, it will lead to many negative consequences such as economic downturn, unemployment, income drop and social security issues. However, despite that, I think businesses will still face many difficulties and barriers.

The first challenge is how to bring workers back to work when there is no consensus on movement of labour among localities. The requirements for isolation and preventive measures and inadequate coverage of vaccination make it difficult for workers to return to cities to work.

Second, the requirements for disease prevention in production are costly for businesses.

Third, finding and connecting with supply chains after a long time of disruption is also a big challenge for businesses.

Therefore, enterprises are longing for the support and companionship of the Government and local authorities in their efforts to maintain production and business.

Could you suggest some effective solutions for enterprises at the time being?

The unpredictable and unprecedented development of the pandemic has caused confusion in management at various levels. Therefore, the Government needs to have a unified direction on a number of principles and solutions.

First of all, all goods except prohibited goods must be circulated. Only when goods are circulated can enterprises maintain production.

Along with that, the Government needs to issue unified guidelines on disease control plans, travel plans between localities with easy-to-understand and easy-to-implement criteria to avoid different understanding and implementation among localities. At the same time, the Government requires localities to consult businesses on their disease prevention plans, avoiding unexpected decisions and leaving businesses without preparation time.

In addition, enterprises should be given the initiative in choosing operating models and production organisation methods. Businesses should not be closed if the infection is confined to a particular production line/workshop, avoiding rigid application of production methods of three-on-site or one route with two destinations. Besides, businesses should be eligible to carry out COVID-19 testing given stressed healthcare workforce.

I also believe that businesses should be given opportunities to contribute ideas to the Government's disease-fighting plans. The Government should better listen to businesses and finally, continuing general support policies for businesses.

 

Source: VNN

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