Prime Minister Nguyen Xuan Phuc last week stated that great efforts must be made to reboot the economy with a new momentum, in a bid to reach an economic growth rate of more than 5% in 2020.
“To this end, we must beef up five key breakthroughs, including attracting foreign direct investment, boosting exports, increasing public investment, securing private investment, and expanding local consumption,” PM Phuc stressed.
The serious consequences of the ongoing COVID-19 global pandemic have prompted the government to forecast a new growth rate, instead of the 6.8-7% rateinitially planned by the National Assembly. In the first quarter of 2020, the economy grew only 3.82% year-on-year.
In order to facilitate private investment, it is expected that within the week, PM Phuc will sign and enact new incentives for investors and enterprises under aresolution of the government on tasks and solutions for eradicating difficulties for production and business in Vietnam.
Under the existing draft resolution, the government will use its power to exempt all license taxes for household businesses affected by COVID-19. If these businesses have already paid this tax in 2020, they will be exempted next year.
A 50% reduction for registration fees will be applied to automobiles assembled or produced locally in 2020, so as to stimulate local consumption.
A delay in VAT payments until December 31, 2020 will be applied to materials, goods, and services in the sectors of aviation, garment and textiles, footwear, and beverages. Moreover, a six-month reduction of 30% for land leases will be given to production and business establishments negatively impacted by the COVID-19 pandemic.
There will also be an extension for export tax paymentsand personal income tax until December 31, 2020 for those tax amounts arising in March 2020.
Furthermore, special immigration procedures will be given to foreign experts, managers, and technicians working at business and investment projects in Vietnam, so that these projects can proceed smoothly. No discrimination against foreigners working and living in Vietnam is allowed, according to the draft resolution.
Besides these solutions, the government will also, amongst several other proposals, propose the National Assembly reduce 50% of corporate income tax for small- and medium-sized enterprises and co-operatives within 2020.
PM Phuc also underscored public investment as a new momentum for boosting economic growth.
“It is very important that all public investment capital for 2020 is disbursed as soon as possible,” he noted.
According to the Ministry of Finance, total available public investment capital for this year is about VND700 trillion ($30.4 billion), which is 2.2 times higher than the VND312 trillion ($13.56 billion) figure of last year.
In the first four months of this year, about VND89.3 trillion ($3.9 billion) was disbursed, equal to nearly 19% of the initial plan assigned by the prime minister, up 30% year-on-year and also up 25% against the sum disbursed in the first quarter of the year.
The government has also just agreed on a plan to shift eight expressway projects into public investment, from their initially-proposed format of public-private partnerships. The plan will be submitted to the NA this summer for approval. After getting the green light from the legislature, these projects will begin construction this year.
These eight projects, which are parts of the the Eastern Cluster of the North-South Expressway project, include Mai Son-National Highway No.45 (63 km), National Highway No.45-Nghi Son (43km), Nghi Son-Dien Chau (50km), Dien Chau-Bai Vot (50km), Nha Trang-Cam Lam (29km), Cam Lam-Vinh Hao (91), Vinh Hao-Phan Thiet (106km), and Phan Thiet-Dau Giay (98km).
For example, at present, the first stage of the Phan Thiet-Dau Giay section running through the south-central province of Binh Thuan and the southern province of Dong Nai has cost over VND14.36 trillion ($624.35 million). It has been assigned to be invested under the build-operate-transfer format, one of the relevant investment PPP models. Of the capital, state-funded capital is VND2.48 trillion ($107.8 million) under the prime minister’s approval. The project is expected to be constructed within 36 months. Some contractors involved include Castalia Limited New Zealand, Ernst & Young Solutions LLP (Singapore) and PricewaterhouseCoopers Private Limited (India).
Ho Chi Minh City reported that in the first quarter of 2020, it disbursed nearly VND1.6 trillion ($69.5 million), up over 60% year-on-year. This year, the city needs to disburse VND33.94 trillion ($1.47 billion).
Hanoi also reported that in 2020, it will assign VND37-40 trillion ($1.6-1.74 billion) for public investment. If all the money is disbursed on time, the city will have hundreds of new infrastructure projects. This will help facilitate better performance of enterprises and create more employment.
According to the General Statistics Office (GSO), the boosted disbursement of public investment will fueleconomic growth.
Under the GSO’s calculations, if public investment climbs by 1%, it will help attract more private investment capital by up to 0.92%, and will facilitate an increase in GDP of an additional 0.06 percentage points.
The World Bank also calculated that if Vietnam increases public investment disbursement by 10%, it will help raise the ratio of public investment relative toGDP by another 1.5%. This will help significantly compensate for GDP losses caused by this year’s difficulties.
According to government Resolution 30 released in March, in the near future,, the government will invest inmany types of infrastructural projects, in conjunctionwith private investment.
The projects include expressways of 4,000-4,500km connecting major economic
hubs nationwide, seaports in the north, central and southern regions, as well as
railways, waterways, and airports. Total investment capital may amount to many
billions of US dollars.
According to a fresh survey of over 12,600 enterprises nationwide by the MPI, 85.7% of respondents have been hit by COVID-19, with different sectors suffering different levels of hardship including industry-construction (86.1%), service (85.9%), and agro-forestry-fishery (78.7%).
PM Phuc has assigned the Ministry of Planning and Investment to thoroughly study the second-quarter and first-six month economic situation and then devise different schemes on revising national socio-economic goals for 2020. The schemes must be reported to the government and the prime minister by the end of June2020.
