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Need to "shake hands" more tightly in implementing interest rate support for businesses

17:14 | 08/10/2022

VCN - According to Mr. Can Van Luc, Chief Economist of BIDV and member of the National Monetary and Financial Policy Advisory Council, in order to improve the effectiveness of the implementation of support packages and components in the socio-economic recovery and development program, especially the interest rate support package, closer coordination between credit institutions and businesses as well as the drastic participation of ministries, branches and localities are urgently needed.

Mr. Can Van Luc
Mr. Can Van Luc

How do you evaluate the effectiveness of the coordination in the implementation of fiscal and monetary policies in order to implement the Socio-economic Recovery and Development Program?

In recent years, the coordination of fiscal policy and monetary policy has been relatively smooth. Therefore, Vietnam has basically stabilized the macroeconomy, controlled inflation well, and created confidence for businesses. Currently, foreign investors are also interested in shifting investment capital flows and supply chains to Vietnam.

Deputy Minister of Finance Nguyen Duc Chi: Ready for fiscal solutions to deal with unexpected situations

The Vietnamese economy has faced a double whammy of the negative pandemic impact as well as international political conflicts which are followed by supply chain disruption, and the input materials price escalation. Enterprises face many difficulties in stabilizing production and business.

In order to deal with such unexpected circumstances, the National Assembly and the Government have flexibly and effectively used fiscal policy. Tax exemption and reduction policies have had a direct impact on the economic situation and people's lives. Many fiscal policies such as the financial policy package to support renters and the business support package have been brought into play.

Recently, the National Assembly Standing Committee has made a decision to lower the environmental protection tax on gasoline to the floor level.

This change made a quick impact and was positively responded to by voters and people. In addition, the Government is directing the Ministry of Finance to continue studying tax policies on environmental protection tax, value-added tax, and special consumption tax to submit to the National Assembly in the upcoming session, in order to flexibly deal with fluctuations such as constant energy and petrol price escalation, greatly affecting people's lives.

The Ministry of Finance is ready to study thoroughly and proactively fiscal solutions in order to map out diverse plans and scenarios to deal with all situations.

Economist Vo Tri Thanh: Applying more flexible monetary policy

Recently, Vietnam has chosen the option to both promote recovery and stabilize the macroeconomy. Vietnam has decided to rely heavily on fiscal policy. Even the support of 2% value-added tax originates from the budget instead of using monetary policy. This choice is reasonable because fiscal policy has less pressure on inflation and also has more room than monetary policy. The focus on fiscal policy has created room for monetary policy to respond to risks and uncertainties.

Regarding monetary policy, the consistent maintenance of the State Bank regarding the system-wide credit growth target of 14% in both the short and long term is totally reasonable. If it is loosened, the pressure on the exchange rate will still be great, putting pressure on interest rates, and creating the risk of capital "bleeding". In the future, it is necessary to apply more flexible monetary policy, focus on production and business, limit risky areas, and strictly control investment for the medium and long term.

Uyen Nhu (recorded)

However, some components of the Socio-Economic Recovery and Development Program such as the rental assistance package for workers, and the interest rate-related component have been slow or only partially implemented.

On the other hand, the public investment component of VND113 trillion under the Socio-Economic Development and Recovery Program promulgated by the National Assembly and the Government has also just approved the project list.

It is hoped that the barriers and obstacles that have been identified by ministries, branches, localities and the Government will soon be removed to promote better disbursement of this program. Striving to disburse about 35% in 2022, and about 40-45% in 2023; Particularly, in the next the years, a disbursement rate of about 80-85% is already a great success.

In your opinion, what are the barriers in the process of disbursing support packages and components in the socio-economic recovery and development program?

The barrier depends on the specific component or support package. For example, in the rent support package for workers, the biggest problem is that the implementation process is too slow. The locality also showed fear of making mistakes, leading to some places, sometimes even "laying" more administrative procedures, making businesses frustrated and not interested.

Particularly, the 2% interest rate support program (Decree 31/2022/ND-CP on interest rate support from the state budget for loans of enterprises, cooperatives, business households) is unable to identify the right object.

As required, the main objects here are business households and households are obligated to register their business, while in fact, many business households and households have not yet registered. Therefore, solving this problem in the future is a dilemma.

In the process of implementing support packages and components in the Socio-Economic Development and Recovery Program, especially the interest rate support package, businesses themselves also have concerns about post-inspection and control. Obviously, removing difficulties and obstacles requires close coordination between credit institutions and enterprises. At the same time, it needs the drastic participation of ministries, branches and localities.

In addition to financial and monetary solutions, a skilled and sustainable labor source is an important factor enabling businesses to secure production and business, towards ensuring the stable growth of the economy. What are the important factors to help stabilize the labor market?

Labor is always a key issue both during and after the pandemic, not only in Vietnam but all over the world. Vietnam needs to seriously evaluate and review the entire labor market situation to clarify the limitations as well as the main obstacles and bottlenecks with the labor market.

Besides, given temporary shortages in some industries, it is hoped that ministries, branches and localities have plans to support businesses such as short-term training support programs so that enterprises can have more labor supply in the immediate future. In the long term, many issues must change to develop high-quality, skilled human resources associated with the digital transformation roadmap, creating a more marketable labor market.

Thank you very much!

Thanh Nguyen (recorded)/ Thu Phuong