Vietnam’s trade ministry recommends three solutions to the state to assist local industrial enterprises

Vietnam’s furniture production industry is already seeing the impact of the coronavirus pandemic since the US and Europe were key markets accounting for 58 per cent of Vietnam’s total furniture exports, reported Vietnam News.

The Vietnam Timber and Forest Product Association reported that exports of timber and wooden products would fall significantly in the next three-six months due to the impacts of COVID-19. That could lead enterprises to cut 70 per cent of capacity and even temporarily suspend production.

Some enterprises producing wooden products for the domestic market are currently only operating at about 10-15 per cent of their capacity.

Three main solutions recommended to the government

The most important priority now is to maintain the operation of domestic industrial enterprises during the novel coronavirus pandemic, said the Ministry of Industry and Trade.

According to the ministry, many key industrial sectors are already impacted, especially in the electronics, textiles, leather, footwear and furniture sectors.

Enterprises were also facing lower domestic demand due to the pandemic.

The ministry has recommended to the government three basic solutions to maintain operations at local industrial enterprises.

The ministry suggested for the Government to reduce the time and cost of customs clearance for businesses so they could access imported raw and auxiliary materials quickly, especially for large enterprises and enterprises in key industries such as electronics, automobiles, textiles, garments, leather and footwear, according to the ministry.

In addition, the State should consider practical support policies on credit and tax to help businesses continue production, while helping find new markets at home and abroad for the industrial sector, mainly export markets for key industrial products.

For the textile, garment and footwear industries, the ministry has recommended the Government allow extensions of payment deadlines for corporate income tax and value added tax.

It should also permit extensions of payment deadlines and exemptions or reductions for land rental fees, industrial park infrastructure fees and waste water treatment fees during the pandemic.

Support package for SMEs

The ministry has also asked the Government to consider a support package for corporate income tax for small- and medium-sized enterprises, especially in support industries and labour-intensive industries such as textiles, garments, leather and footwear.

It has been recommended for banks to reduce deposits and international payment fees for enterprises importing raw materials so they can access capital and resume manufacturing. The banks should extend terms for working loans to 11 months.