Directive 11 on Business Assistance and Assurance of Social Welfare amid COVID-19 Pandemic
The global outbreak of COVID-19 has resulted in various economic obstacles for local and foreign investment in Vietnam. On 4 March 2020, the Prime Minister promulgated Directive 11/CT-TTg (“Directive 11”) on urgent objectives and solutions for assisting businesses facing difficulties and assurance of social welfare amid COVID-19 pandemic. Some of the most salient articles of the directive will be discussed hereunder:
Firstly, Regarding the access to capital, finance, tax and credit, the State Bank of Vietnam is required to promptly provide instructions for credit institutions on balancing and providing adequate capital for businesses; simplify formalities, reduce the time needed to process loan applications; improve accessibility of capital; promptly provide assistance such as debt restructuring, reduction or exemption of loan interest, retention of loan category, fee reduction, etc. for borrowers facing difficulties caused by COVID-19 pandemic (first from the emergency assistance package of about VND250 billion). The Ministry of Finance is expected to draft a decree on deferral of tax and land rent for entities affected by COVID-19 pandemic, submit it to the Government and the Prime Minister in March 2020. In addition to the draft decree, the Ministry of Finance shall also propose reduction and exemption of fees and charges to the Government to assist entities affected by COVID-19.
Secondly, in terms of reviewing, cutting administrative procedures and costs for enterprises, the Ministry of Finance shall draft a resolution on increasing personal income tax deductions and prepare the documentation for the draft Resolution of the National Assembly on corporate income tax and assistance for small and medium enterprises. The draft resolution and the abovementioned documentation were submitted to the National Assembly in March 2020. Upcoming decrees and resolutions show the effort of the State authorities to mitigate the impact of the COVID-19 pandemic, especially on small and medium business with limited economic resource.
Thirdly, regarding the facilitation of production and business, export and import production, the Ministry of Industry and Trade shall implement measures for increasing export and improving effectiveness of trade promotion as well as diversifying the export and import markets. Under Directive 11, other key tasks of Ministry of Industry and Trade are to cooperate with local governments in development of production areas, industrial parks and economic zones to ensure adequate domestic supply of raw materials; propose suitable incentives, first of all for the textiles and garments, leather and footwear industries and other industries affected by COVID-19 pandemic.
Finally, the Ministry of Culture, Sports and Tourism shall implement measures to recover and develop tourism as follows: (i) run national tourism promotion programs cooperate with tourism associations in promoting domestic tours; (ii) develop and advertise new products to attract international tourists, especially from unaffected areas; (iii) focus on development of domestic tourism nationwide.
In conclusion, various measure has been and will be taken by State authorities tackle the widespread of COVID-19, including but not limited to exemption and reduction of tax, fees, charges to State authorities, provision of emergency assistance package and assurance of materials in production areas. Such effort is expected to relieve some of the pressure that the COVID-19 pandemic has put on the economy.
If you have any questions or require any additional information, please contact Hoang Tran of ZICO Law Vietnam (a member of ZICO Law).
This alert is for general information only and is not a substitute for legal advice.