Support measures urged to empower businesses in post-COVID-19 recovery

Thursday, 2020-10-08 09:42:10
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A worker during his shift in a factory of dairy company Vinamilk. (Photo: Vinamilk)
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NDO – Economists have suggested that the government provide more support to the business community aimed at speeding up the economic recovery post-COVID-19.

>>> Vietnam takes steps to facilitate recovery of manufacturing sector

For the first time since 2015, the business registration system recorded a decrease in the number of newly established enterprises in nine months this year, instead of maintaining an average annual growth rate in two-digit level. In addition, the number of enterprises withdrawing from the market also increased to a record high.

Accordingly, in the past nine months, the country has less than 90,000 enterprises established, down 3.2% over the same period last year, while the number of enterprises to withdraw from the market in the form of business suspension, pending for dissolution and completing dissolution procedures increased dramatically to more than 78,300 enterprises. On average, the whole country had over 8,700 enterprises withdrawing from the market each month, increasing by 27.2% over the same period last year, with most of them having been in operation for under five years.

Notably, the number of enterprises registered to suspend operation increased by a record 81.8% and took place in all business sectors. The negative impacts from the COVID-19 epidemic have forced enterprises to contract, leading to the decrease in new job creation (about 31.8 million labourers affected), unemployment increase and reduced laborers’ income.

The above "talking numbers" about business registration and employment showed that young and small-scale enterprises are facing critical difficulties in withstanding the impact from the pandemic. In fact, indicators regarding enterprise registration have been continuously decreasing since February, when the first case of COVID-19 infection was recorded in the community. However, the "health" of enterprises showed signs of recovery in June thanks to the resumption of normal socio-economic activities and the Government's drastic implementation of support policies provided to the people and businesses to ensure social security.

Although the second COVID-19 wave had laid further negative impact on the recovery momentum, the indexes of enterprise development in the third quarter were kept stable and tended to increase in the following period.

The positive signal is that, even in such a difficult time, investors are still constantly looking for opportunities, reflected in the strong increase in additional capital and committed investment to put into business operation as well as the increased average capital size of a newly established enterprise.

In a recent survey by the General Statistics Office of Vietnam, enterprises operating in the processing and manufacturing sector – the main growth engine of the economy – still believe that their business prospects will be stable and continue to improve in the last quarter of the year.

To speed up the economic recovery process and strive to achieve an economic growth rate from 2.5-3% in 2020 as expected, economists have suggested the government to immediately provide more solutions to support businesses – the largest contributors to GDP growth.

Currently, the concerned ministries and agencies are reviewing, evaluating and reporting to the government on the results of implementing stimulate packages to support people and businesses that were issued right after the COVID-19 outbreaks in Vietnam. Based on the upcoming practical situation, Vietnamese authorities will make specific recommendations for new support policies.

Experts have recommended that the government should continue to offer a large and effective support package to remove difficulties for production and business operation, aimed at recovering the economy in 2020 and creating growth momentum for 2021.

The support should focus on solutions to help businesses maintain and develop their operation, as well as keeping jobs for their employees, along with the need to promote process and procedure reform to facilitate businesses in accessing support policies in a simple, convenient and timely manner.

At the same time, the government should support the business community in finding import markets for raw materials, fuels and spare parts.

In addition, flexible and prudent management of monetary policy, interest rates and exchange rates is required and should be in line with domestic and international market developments. Such policies should be harmoniously coordinated with fiscal policy and other macro policies to control inflation, support production and business operation and promote economic growth.