The Ministry of Planning and Investment (MPI) will look to extend some economic stimulus policies until 2021 if the COVID-19 pandemic continues.

Minister Nguyen Chi Dung held a meeting to discuss solutions amid the second wave of the pandemic in Ha Noi late last week, saying: "MPI will work on policies that best support affected stakeholders and stimulate economic growth."

According to an MPI report, the pandemic had a negative impact on almost all economic sectors and industries, especially aviation, tourism, accommodation and catering services, which forced many businesses to go bankrupt, suspend operations, or narrow their business scale. The pandemic also seriously affected the income and employment of many workers.

In the first wave of the pandemic, Viet Nam introduced two main support packages to help local people and businesses. They included a fiscal policy which was to extend deadlines and reduce the burden of tax and fee payment worth VND180 trillion (US$7.78 billion) and a social security support package worth VND62 trillion.

However, some experts said the effectiveness of the above support packages was still quite limited.

According to a representative from the Ministry of Labour, Invalids and Social Affairs, there were 15.8 million people receiving support worth VND20 trillion from the VND62 trillion package, while businesses could take only VND400 billion, or less than 1 per cent of the package value.

At the same time, data from the General Statistics Office said 17.6 million people have had their income reduced, emphasising that low incomes led to difficulties in stimulating domestic consumption. The data also said the unemployment rate increased at the highest rate in the past 10 years, especially unemployment in the working group aged 15-54 accounting for 30.7 per cent of the total.

The MPI leader said: “Measures must concentrate on supporting small and medium-sized enterprises, which employ a large part of the country's workforce to maintain production and business,” adding: “They are also to encourage them to return to operation, avoiding further labour cuts.”

He also urged that it is necessary to support large businesses that are struggling with cash flow due to high fixed costs and operating costs with declining revenue.

Dung said: “If the pandemic continues, it is possible that some support policies will be extended to 2021.”

First of all, Viet Nam should continue to extend the exemption of value added tax, corporate income tax or personal income tax for households, business individuals and land rent until the end of 2020, the MPI leader said.

The ministry also suggested extending the current policies on debt payment rescheduling, interest and fee exemption and reduction as per circular No. 1 of the State Bank of Viet Nam.

Minister Dung said that there would be a full impact assessment report of how the policies and supporting packages have met demand. Along with this report, the ministry would propose new policies with specific capital resources, time and manner of support.

He stressed: “The second policy must be comprehensive, and the packages must be large enough to cover all affected stakeholders and stimulate economic growth immediately." — VNS