Strategies needed to enhance resilience of national economy

With the COVID-19 pandemic triggering an economic downturn globally, Dao Minh Tu, deputy governor of the State Bank of Vietnam, says credit growth last year was lower than that of previous years due to weakening credit demand caused by stagnant production and investment.

The impact of the pandemic has also triggered a wave of business bankruptcies, as the number of local enterprises dissolving and suspending operations has reached a record high in recent times.

The General Statistics Office (GSO) reports that last year saw 101,700 firms either suspend their operations, or file for dissolution, representing an increase of 13.9% compared to the previous years.

To help enterprises overcome this challenging period, the Government has launched a series of bailout packages aimed at exempting and reducing taxes and fees, extending land rental payments. It has also introduced monetary and credit support packages with an estimated value of VND36.600 billion for local firms.

However, only 22.25% of businesses have so far received financial assistance, according to recent studies released by the National Economics University (NEU) alongside the Japan International Cooperation Agency in Vietnam (JICA).

The studies reveal 54.67% of respondents do not meet the conditions, while 25.95% of firms have yet to learn about these support policies.

Furthermore, 14.88% of enterprises say that the procedures aimed at receiving support remain complicated, barring many businesses from gaining access to support packages, claims Assoc. Prof. Dr. To Trung Thanh from the National University of Economics (NEU).

Dau Anh Tuan, head of Legal Department of Vietnam Chamber of Commerce and Industry (VCCI), says several firms have complained about the challenges faced when attempting to grasp information on support policies, along with doubts over the effectiveness of these policies on different economic sectors.

Vu The Binh, vice president of the Vietnam Tourism Association, points out that these complicated procedures serve to hinder the efficiency of bailout packages which are primarily aimed at supporting workers and businesses that are in dire need of help.

Assoc. Prof. Dr. Pham Hong Chuong, rector of the NEU, notes that the Government has taken decisive and successful steps aimed at curbing the spread of COVID-19 outbreaks in recent times, adding that proper strategies are vital in order to improve the national economy’s resilience and avoid falling into recession.

Experts have underline the need to maintain macroeconomic stability, keep inflation and interest rates low, ensure the stability of exchange rates, and improve the local investment climate through strictly monitoring public investment and effectively implementing measures to swiftly revive the economy.

Alongside short-term solutions for coping with the COVID-19 pandemic, Assoc. Prof. Dr. Nguyen Khac Quoc Bao of the HCM City University of Economics suggests the Government should implement long-term solutions to achieve sustainable development in the post-COVID-19 pandemic.

"The government should devise economic recovery plans to accelerate the country’s socio-economic development and help the economy improve resilience in order to avoid external shocks due to unpredictable factors like COVID-19 pandemic in the future,” emphasises Prof. Dr. Bao.

Moreover, local businesses have been advised to manage their cash flow in an effective manner to help maintain liquidity, optimise costs, cut down inefficient investment, and take the full advantage of supporting policies from the Government.

Simultaneously, local businesses should also be active in applying digital platforms and new models in commercial, production, and business activities, while diversifying their markets and expanding into fresh investment and capital mobilisation channels, suggest economists. These strategies are of critical importance for local firms as they adapt and develop sustainably in the post-pandemic period, say the economists.