If Covid-19 epidemic persists, we need "rescue" support solutions

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It is essential to avoid any disruption in the production and supply of essential goods. Photo: H. Diu

The National Economics University has just released a report assessing the impact of Covid-19 on the economy and recommending policies to cope with the epidemic.

According to experts of the National Economics University, the Vietnamese economy is facing a big decline due to a non-economic cause. In this context, macroeconomic policies have an important impact on the "resistance" of the economy.

Moreover, the nature of the pandemic shows how long its impact on Vietnam's economywill be felt.

For enterprises, according to the report, if the pandemic laststo the end of April, 49.2% of enterprises will still be in operation; 31.9% will cut production scale; 18.1% will suspend operations; 0.8% are likely to be bankrupt. If the epidemic lasts until the end of June, September or the end of the year, the rate of bankrupt enterprises will be 6.1%, 19.3% and 39.3% respectively.

Survey the impact of Covid-19 on business operations.

This requires the development of a variety of economic policy scenarios ranging from short to long term to cope with the epidemic in both Vietnam and other countries around the world.

Therefore, the report said that if the domestic epidemic could be controlled in April or at the end of the second quarter, the policy response should be "supportive".

If the epidemic lastslonger (until the third quarter or the end of 2020), the Government needs to consider stronger "rescue" measures. The policy solutions should count the delay in the issuance and implementation process to ensure timeliness and effectiveness.

Moreover, the report also said that in all cases, it is necessary to ensure food and essential goods for people. Enterprises supplying these goods need to be strictly supervised and provided with necessary support measures, avoiding the occurrence of production and supply breaks.

In particular, policies should consider vulnerable areas such as workers, small and medium-sized enterprises in the short term (especially in the hardest-affected industries), at the same time we should avoid the collapse of large enterprises which spread to other regions.

Specifically, experts from the National Economics University said that credit conditions must be relaxed for affected businesses,repayments postponed, interest cut, and allow restructuring ofdebt to improve liquidity and endurance of the enterprise until the difficulties are overcome.

The report also recommends reducing and exempting some taxes for businesses such as: reducing 50% of corporate income tax in 2020 for small and medium enterprises; 50% reduction of value added tax rates for goods and services indifficulty, extension of payment of value added tax forsix months; promote the implementation of e-tax service, andsupport businesses and employees with social insurance mechanisms.

Regulators also need legal assistance in disputes over labor contracts between enterprises and workers, andcontractual disputes between domestic enterprises and partner enterprises in import and export goods.

In addition, the report also pointed out that businesses must also have solutions to restructure their businesses towards increasing efficiency, updating technology, restructuring and retraining human resources. Businesses should also develop domestic sources of raw materials, find and replace imported sources, develop raw material sources and link with domestic suppliers.