The current turmoil was not caused by a surplus of capital in the financial sector like the global crisis in 2009. The Covid-19 pandemic has hurt the whole economy, from both supply and demand sides. Fiscal policies are considered part of the solution rather and they cannot entirely handle the root of the problem.
Over 700,000 micro- and small-sized enterprises in Vietnam could receive a hefty reduction in corporate income tax payable this year, while more than one million individual taxpayers could be beneficiaries of personal income tax deductions.
The SBV cut its benchmark interest rates by 50 basis points on May 12. Accordingly, the refinancing rate was reduced to 4.5 per cent from 5.0 per cent, discount rate to 3.0 per cent from 3.5 per cent, and the overnight inter-bank lending rate to 5.5 per cent, from 6.0 per cent with effect from May 13.
“It is difficult to restructure the debt repayment period as banks are not ready and are concerned about risks. BOT transport is not a priority for them,” Le Duc Khanh, director of the market strategy department at PetroVietnam Securities, told VIR. “However, powerful state-run banks would have to follow a government order.”
According to the State Bank of Vietnam (SBV), banks are actively offering new soft loan packages to customers. The combined value of this credit package has to date reached VND650 trillion (US$28 billion) with lending rates 1-2% lower than those before the Covid-19 pandemic outbreak. 147,637 customers have borrowed VND553 trillion (US$23.6) since January 23, 2020.
The forthcoming tax amendment on interest expense cap is slated to be beneficial for 1,000 companies adopting parent-subsidiary business models, with reimbursement worth nearly VND5 trillion ($217.4 million).
The SBV said credit demand from firms involved in industry, construction and agriculture had increased by 1 per cent and 0.3 per cent, respectively, while the figures had declined for trade, services, tourism and consumption. Credit demand from small- and medium-sized enterprises (SMEs) also decreased by more than 1 per cent.
Many banks in Vietnam have reduced their profit target for 2020, and plan to support companies severely impacted by the COVID-19 pandemic.