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Business support packages in the frame for maximum impact



With many businesses becoming gradually exhausted and in critical need of state support, many National Assembly members have asked the government to apply feasible solutions to lift them out of woes.

 What will the government do to continue assisting them in the time to come?

Business support packages in the frame for maximum impact
Vietnam is looking to ensure its financial injections find their intended destinations. Photo: Le Toan/ VIR

Never in Vietnam has a government-initiated pro-business policy been complained about as much by enterprises, experts, and National Assembly (NA) members as the VND62 trillion ($2.7 billion) package to support 20 million poor and unemployed people, with major difficulties in disbursement.

This package includes a VND16 trillion ($695.65 million) sum aimed to provide loans for enterprises at a zero lending rate to pay salary for employees. While the package was announced in April, meagre results have been made in disbursement so far because of too many hurdles.

“Amid numerous difficulties, slow-paced implementation of government policies like this package to assist enterprises hit by COVID-19 is leaving many businesses in the lurch, making it hard to boost economic growth,” said NA deputy Luu Binh Nhuong, representing the Mekong Delta province of Ben Tre.

“Though the government has been making big efforts to boost administrative reforms by reducing and removing tens of thousands of administrative procedures and developing an e-government, the public and businesses are still lamenting over difficulties they are facing when conducting business and production. Enterprises are in critical need of state support or the number of enterprises shutting down production will continue rising.”

Stronger policies in need 

The General Statistics Office reported that in the first 10 months of 2020, almost 85,600 enterprises halted operations, up 15.1 per cent on-year.

In April, the Vietnam Bank for Social Policies (VBSP), in charge of implementing preferential credit policies for the poor and other policy beneficiaries, offered a VND16 trillion package to struggling enterprises at a 0 per cent lending rate in order to pay salaries for their employees.

However, to obtain the loans, borrowers are required to meet tough conditions. Specifically, an enterprise has to have 20 per cent or at least 30 employees with social insurance who are forced to stop employment during April 1 and December 30. The time of layoff must be at least one continuous month. Besides this, the employer must be facing financial difficulties and cannot pay additional salaries, and must not have any bad debt at credit institutions and foreign banks before December 31, 2019.

If the borrower can meet all of these conditions, he must submit a loan proposal to the district-level people’s committee where the enterprise and the bank’s branch are located. Within three working days, the committee must appraise the proposal and then submit it to the chairperson of the provincial-level people’s committee. Within two working days, the chairperson must issue a decision on the proposal, and send it to the VBSP branch which will process the final procedures to provide the loan for the enterprise.

Commenting on this package, NA deputy Mai Thi Anh Tuyet representing the Mekong Delta province of An Giang said the policy does not seem feasible.

“As far as I know, very few enterprises have been able to obtain loans from it,” Tuyet said. “The VND62 trillion package is too slow to be disbursed.”

Tran Manh Dung, a representative from the People’s Committee of Xuan Dinh ward in Hanoi’s Bac Tu Liem district, told VIR that the locality was given by the city’s government VND5 billion (about $217,400) as part of the VND62 trillion package to support those hit by the pandemic in the locality.

“However, only a few people and no enterprises have been able to access the financial support so far,” Dung said. “It is because there is a lack of specific standards for disbursement. Meanwhile, thousands of residents and hundreds of businesses in the locality want the support.”

It is estimated that about 20 per cent of the whole package has been disbursed nationwide so far.

Nguyen Cong Bang, director of Hanoi foodstuff processor Cong Bang JSC, told VIR that his company used to have 100 employees. “However, the pandemic has hurt our business and we had to lay off 50 workers. Now we want to access the preferential loans, but the conditions are quite complicated and we think we will never be able to approach such a kind of loan,” Bang said. “We have had to resort to loans from other sources to secure our business.”

According to many NA deputies like Tuyet, the government needs to review all pro-business policies it has already enacted so that practical and feasible solutions can be taken to lift enterprises out of their problems.

“It is strongly recommended that the government review how the VND62 trillion package has been implemented. Under the reports we have, the implementation of the package is too slow, while too many enterprises are suffering from difficulties and need urgent support. All of them are small- and medium-sized enterprises, and they are the key driving force for job creation and economic growth,” said NA deputy Cao Dinh Thuong, representing the northern province of Phu Tho.

Thuong cited a survey from the Vietnam Chamber of Commerce and Industry stating that as of mid-September, about 3 per cent of the surveyed enterprises received loans from the package. “What is the cause? Is it the lack of responsibility of those in charge of disbursement of the package?” Thuong wondered.

According to NA members, direct financial support is just a situational solution, and in the long term the government should have sturdier solutions. “There must be special policies to help enterprises to spur on demand. If there is no breakthrough in administrative reform, the pro-business policies in 2021 will likely not help enterprises reduce costs and also impede their development and recovery,” Thuong said. “This will badly affect the country’s 2021-2025 Socioeconomic Development Plan.”

Since the second quarter of 2020, the government has also been deploying some drastic measures to support businesses. For instance, the State Bank of Vietnam has been deploying a package worth VND180 trillion ($7.82 billion) for enterprises and households, in the form of debt payment deferral and preferential loans.

However, no concrete reports on how this huge package has been carried out have been revealed.

The World Bank recently published results of a survey of around 500 businesses in Vietnam, asking how they have been affected by COVID-19. Firm revenues reduced substantially and despite the easing of social distancing rules, 85 per cent of firms still reported a reduction in sales by June. Over 50 per cent of respondents reported having their operations affected by a decrease in input availability.

This shock affected firms in the manufacturing and wholesale and retail sectors similarly. On average, firms are expecting highly negative growth over the next six months of -27 per cent for sales and -20 per cent for employment.

Breathing new life 

Assigned by the government, the Ministry of Planning and Investment (MPI) is asking ministries and agencies to provide it with policy recommendations for the second economic stimulus package expected to be offered by the government in the time to come. Besides policies for labourers, this package will likely have a major focus on assisting firms operating in the sectors of aviation, tourism, and consumption services.

One of the notable policies in this package is that the MPI may ask the government to guarantee loans worth about VND11 trillion ($478.26 million) for aviation businesses.

“COVID-19 has caused a massive reduction in revenues of aviation firms and this may lead to insolvency and then bankruptcy,” said MPI Deputy Minister Tran Quoc Phuong. “Without special policies, the aftermath would be extremely negative. This policy is expected to be a kiss of life for firms.”

Moreover, the MPI also proposes a reduction of 70 per cent of environmental protection tax for aircraft fuel for 2021. However, some NA deputies have different angles at the new possible package.

Do Van Sinh, member of the National Assembly Economic Committee, told VIR that a new economic stimulus package is “quite necessary given enterprises face massive complications.”

However, he said, in order for the package to be materialised, it is necessary to have a close look at the current state budget situation, as revenue is expected to be VND1.32 quadrillion ($57.52 billion), down 14.7 per cent on-year.

“Thus, if another economic stimulus package is enacted, how much will it be, especially given the numerous issues with the state budget? I think it is necessary now to first effectively carry out the existing packages,” Sinh said.

Meanwhile NA deputy Truong Minh Hoang, representing the southernmost province of Ca Mau, also told VIR, “It is quite necessary to have a new economic stimulus package to further support enterprises. However, before implementing this initiative, it is necessary to consider the existing state budget situation, which is expected to see a big budget deficit this year.”

“Thorough studies must be made so as to decide on what sectors and who will benefit from the new package,” he said. “It is urgent now to provide more support to businesses.” VIR

Nguyen Dat




VN-Index continues to fly high



Maybank Kim Eng Securities employees monitor share prices in this file photo. The VN-Index of the Hochiminh Stock Exchange expanded by 0.54% on December 2 – PHOTO: THANH HOA

HCMC – Despite unfavorable news about the complicated Covid-19 situation, active trading continued to help the VN-Index of the Hochiminh Stock Exchange fly high, ending at 1,014.32 points today, December 2, increasing by 0.54%, or 5.45 points, against the previous session.

Winning stocks outnumbered losers by 234 to 199. The southern market saw 684.5 million shares worth over VND14.3 trillion change hands, surging by 17.4% in volume and 22.6% in value against the previous session. Some 200 million shares worth over VND4.64 trillion were traded in block deals, including 160 million shares worth VND3.44 trillion of construction enterprise DIG.

The strong cash flow helped many bluechips extend. In the VN30 basket, electricity stock POW shot up to the ceiling price at VND10,800. Other top performers were property firm VHM, brewery SAB and low-cost air carrier VJC, increasing by 2.28% to VND85,200, 1.71% to VND196,800 and 1.27% to VND119,500, respectively.

Among bank stocks, TCB grew by 2.45% to VND25,100, while MBB and VCB were up 2.4% to VND21,350 and 1.63% to VND93,500, respectively.

Other large-cap stocks that gained ground included GAS, MSN, GVR, VRE, PLX, FPT, BVH and EIB, but at modest rates.

In contrast, industrial development corporation BCM, lender TPB and mobile phone retailer MWG were the biggest losers, declining by 4.16%, 2.01% and 1.72%, respectively.

Lender TCB led the southern market by liquidity with 27.5 million shares traded, followed by POW with 24.8 million shares.

On the Hanoi Stock Exchange, the HNX-Index increased by 1.25%, or 1.86 points, against the previous session, to close the day at 150.8 points, with gainers outnumbering decliners by 95 to 63. There were 69.8 million shares worth over VND1 trillion traded on the northern bourse.

The top gainers were service company THD and port operator PHP, which soared by over 9% to VND121,000 and VND15,700, respectively, and investment and trading company TNG and industrial development firm IDC, which shot up to the respective ceiling price of VND15,000 and VND32,400.

Major contributors also included securities company SHS, bank stock SHB and construction stock VCG, up 2.07%, 0.58% and 0.48%, respectively.

SHB led the northern market by liquidity with 9.8 million shares changing hands.

Lender ACB, one of the largest and most actively traded stocks on the Hanoi Stock Exchange, will be moved to the Hochiminh Stock Exchange from December 3.


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Social impacts key success factor for Vietnamese startups: experts



Social impacts key success factor for Vietnamese startups: experts

Entrepreneurs attend the Gala Startup Viet 2020 in Ho Chi Minh City in December 2020. Photo by VnExpress.

Vietnamese startups using technology to create positive and sustainable impacts on the larger community have higher chances to succeed, experts say.

Le Diep Kieu Trang, a popular entrepreneur in Vietnam’s tech industry and founder of private equity firm Alabaster, said while many entrepreneurs focus on short-term benefits, those who can deliver products and services that are both profitable and have a positive influence on society are usually more well-received by the public.

Trang, one of the judges of the Startup Viet Gala 2020, a competition hosted by VnExpress Wednesday for young entrepreneurs to pitch their ideas and raise funds, said many youngsters think creating an app is by itself guarantees success, but in reality, attracting users to the app is the key and this is not easy.

“Apps only have impacts if they can attract users,” she reiterated.

Truong Gia Binh, chairman of tech giant FPT, said although technology is very important and the modern entrepreneur needs to have knowledge of artificial intelligence and Big Data, the most important knowledge is about humans.

“Startups need to know what value are you bringing and to whom.”

To succeed, entrepreneurs also need to find the right teammates and persevere. “No matter how many times you fail, stand up again,” he said.

Other experienced entrepreneurs also said that being persistent was very important. Phan Xuan Canh, CEO of recruitment platform Viec.Co, said in order to achieve a vision, startups will have to try different paths and fail, and perseverance is needed to go through the process.

As a judge at Startup Viet Gala 2020, Trang said she prefers startups that can bring a new and breakthrough product to the table with high technological application, and the company needs to be able to expand its market throughout Vietnam and the world.

“If your business model does not survive in Vietnam, I don’t think you can survive overseas.”

Step out of comfort zone

The problem with many startups in Vietnam is that they try to improve on the traditional business model with modern technology without bringing in any breakthrough idea, and those that only do this will not attract investments, she added.

Trang said she wants Vietnamese startups to think bigger. Although the Covid-19 pandemic has caused major difficulties in most sectors, it has also opened new doors for startups, not just in the Vietnamese market, but the world as a whole, she said.

Entrepreneurs who are willing to step out of their comfort zone and take this opportunity to move forward with more emphasis on the online market will have bigger advantages, she added.

Startup Viet 2020 Gala seeks to identify the best 15 startups in Vietnam and award them with a prize pool of VND3 billion ($130,000).

The winner of the competition on Wednesday was Tep Bac, which provides management and analysis services for seafood farms using technology. Other notable startups in the top five were Drone Pro, a provider of delivery services using drones, and BioStarch, which produces environment-friendly plastic bags using a mixture of cassava powder and primary microplastics for fast decomposition.


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VND4 trillion tower: no buyer after 10 years



Many buildings up for sale cannot find buyers.

JLL has reported a slowdown in the number of real estate M&A deals in the first nine months of the year.

VND4 trillion tower: no buyer after 10 years

One example: BIDV announced the selection of an institution to organize the auction of the debt of Tai Nguyen Construction, Production and Trade Company. The assets put into auction were the principal and interest on the auction day, worth VND4.063 trillion.

Kenton Residences is one of the projects developed by Tai Nguyen. It was initially designed covering an area of 9.1 hectares, comprising nine 15-35-story towers, 1,640 high-end apartments and a 20,000 square meter shopping mall. The total investment capital was $300 million.

The construction began in 2009, but stopped in 2011. In 2017, Kenton Residence was activated again, renamed into Kenton Node, and had the design changed.

BIDV Gia Dinh Branch also announced the compulsory sale of 65 apartments at Ky Nguyen Apartment Bloc in district 7, HCM City developed by Duc Khai JSC. The starting selling price was VND2.188-5.4 billion per apartment with the area of 135.98 to 368.45 square meters.

The prices are reasonable at VND15-16 million per square meter, including VAT.

This is the third time that BIDV has offered to sell Ky Nguyen apartments. The first auction was organized in October 2019, when only one out of 27 apartments was sold.

Commercial banks, one after another, have continuously put real estate into auction to collect debts since the beginning of the year.

VietinBank has offered to sell the land-use rights and assets on land at Can Tho Center, 3.23 hectares, with the starting price of VND190 billion.

On its website, SCB have offered to sell 10 real estate assets which have value of between several billions of dong and hundreds of billion of dong. These include Phuoc Son storehouse in Thuan An commune in Binh Duong province, offered at VND830 billion.

The other assets, houses and land use rights are offered at VND2.2-10 billion.

Dinh The Hien, a finance expert, commented that banks have recently put real estate into auction to collect debts, while they previously sold assets through many different channels.

Though the selling prices are viewed as ‘very reasonable’, many assets still cannot find buyers. The assets of Hung Ngan Housing JSC have been put into auction four times with prices falling by tens of percent compared with the first auction. But they still cannot be sold.

In the latest auction, BIDV set the starting price at VND396 billion, or 24 percent lower than the figure at the first auction in February 2020. 

Duy Anh


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