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VITAS responding about additional supporting policies to those affected by Covid-19

17/03/2021 04:46 PM

Responding to Official Letter No. 1040/BKHDT-TH dated February 26, 2021 by Ministry of Planning and Investment on evaluating the impact and effectiveness of promulgated policies and proposing additional supporting policies and solutions. To supplement those difficulties caused by the Covid-19 epidemic, the Vietnam Textile and Apparel Association (“VITAS”) would like to extend our following opinions:

1.      Evaluating impact and efficiency of promulgated supporting policies 

From the beginning of 2020 up to now, the Vietnamese and world economies have been heavily affected by the Covid-19 pandemic. In order to help businesses (enterprises), workers (employees) and people overcome difficulties caused by the epidemic, the Government has issued many supporting policies including financial, credit and social security support packages, specifically: 250 trillion VND package of credit support, 180 trillion VND to extend tax and land rental payment, 62 trillion VND for social security, 16 trillion VND to support businesses paying work stoppage wages to their employees, etc. The authorities from central to local level have issued nearly 100 documents to implement such support packages.

The above-mentioned policies are evaluated as very timely, having a positive impact to meet the expectations of businesses and people. In particular, a number of policies have been implemented effectively such as reducing land rental by 15% for 2020, reducing electricity bills, exempting and reducing interest rates, rescheduling debt repayment schedule, extending principal payment, maintaining debt groups, extending payment periods of land tax, value-added tax, retirement and death funds

However, many policies are hardly accessible among businesses and employees given too strict and unfeasible criteria. For example, the suspension of payment to the retirement and death fund and the termination of payment of trade union fees must meet the criteria of reducing from 50% employees participating in social insurance or more or the employee being supported with only 1.8 million VND/month when taking unpaid leave, postponing the labor contract from 1 consecutive month or more, provided that businesses have no revenue or the financial capacity to pay salary. That means only businesses which are either closed or bankrupt can access the support package. This is not consistent with businesses' efforts to find ways to prevent employees from being laid off.

After VITAS a number of other industry associations submitted a petition, the Government lowered a number of criteria to allow more accessibility among businesses, such as: removing request on businesses to prove the Covid-19 impact on their accounting statements; self-declaration and accountability among businesses upon approaching policies allowing to restructure debt repayment period, extend principal debt, exempt or reduce interest rates, maintain debt group classification; more favorable loan conditions for work stoppage wages among employees are more favorable; conditions for work stoppage wage payment to the retirement and death allowance fund reduced from 50% to 20% among employees participating in social insurance (including employees who have to stop working, postpone labor contracts, agreements on unpaid leave), etc.

According to research reports and surveys among some expert groups, only about 20% of businesses facing difficulties received support packages, the rest 80% could not access due to many reasons such as not meeting the conditions, failing to grasp the necessary information or complicated process and procedures. In addition, most support packages only has effective period up to 31 December 2020, while the Covid-19 pandemic situation is complicated, prolonged and unpredictable.

2.      Proposal on additional supporting policies and solutions to those facing difficulties caused by the Covid-19 pandemic

Currently, the business community health in general and the textile and garment businesses in particular are at the least optimistic level and very fragile. Vietnam's textile and garment industry in 2020 will only reach USD 35.06 billion, down 9.82% compared to 2019 ($ 38.9 billion) and still poor in 2018 (USD 36.26 billion). Statistics in the first 2 months of 2021, export turnover is estimated at 5.9 billion USD, up 7.1% over the same period in 2020. If the epidemic situation is not getting more complicated, it is expected that the whole industry in 2021 will reach about 38 billion USD increased by 8.3% compared to 2020, but not equal to 2019. Therefore, the State should offer more support packages to businesses and employees to overcome difficulties, maintain and develop production. Specifically:

- It is suggested that the State continue to utilise resources from unused support packages (about 20% only) to support businesses and employees with more accessible conditions and prolong the support period at least until the end of 2021 (for example, continue to reduce land rent, electricity and water charges, deferred payment of VAT, corporate income tax, debt freeze, debt rescheduling, debt restructuring, and extension of payment to retirement and death fund among businesses facing difficulties until the end of 2021, etc.)

- It is suggested the Vietnam General Confederation of Labor to reduce the percentage of employees participating in unemployment social insurance so that enterprises can stop paying trade union fees, at least as well as the Government has adjusted conditions among enterprises to suspend payment into retirement and death fund (Resolution 154/NQ-CP). At the same time, payment extension should be allowed till end of 2021.

- It is suggested the National Assembly to promptly include in its agenda to amend the Trade Union Law (which should have been implemented in 2020) and consult to reduce the rate of trade union fees payment to a maximum of 1% (instead of 2% as currently) and set a minimum amount of 90% of the trade union fee to take care of employees’ living standards.

- Regarding a policy on reducing road charges and BOT fees, especially, it is suggested that Hai Phong city continue lowering seaport infrastructure charges in the coming time and Ho Chi Minh City to not deploy the collection of infrastructure fees from July 1 /. 2021 as expected.

- It is proposed to the Government to have a general management solution to realize the dual goal of “fighting against epidemic and maintaining production” in order to avoid the recent situation upon which a province’s epidemic, neighboring localities promulgated very different policies, causing difficulties among businesses in goods circulation among localities.

- It is proposed that Government, Ministries and branches to intervene in order not to increase the unusual shipping price and the shortage of empty containers is occurring.

- It is proposed that Government not reconsider the adjustment of the regional minimum wage in 2021. It is recommended to maintain the proposal of National Wage Council which has been approved by the Government.

Attached file: Official Letter No.30/2021/VITAS-CS

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