VietNamNet Bridge – The bailouts worth tens of trillions of dong sound very imposing. However, they are still insufficient enough to rescue businesses.
Huge bailout turns to make nothing to businesses
A report by the Ministry of Finance said that 6500 businesses have resumed their production thanks to their own efforts and the government’s support. The figure proves to be too small if noting that 50,000 businesses have got dissolved or bankrupted so far this year as reported by the Ministry of Planning and Investment.
Economists have every reason to come to the conclusion that the bailouts would not be sufficient enough to revive the enterprises which are on the verge of bankruptcy.
According to Vu Dinh Anh, a well-known economist, the government allows 190,000 businesses delaying their VAT tax payment, so that they can have more working capital to maintain production.
This means that businesses would have 11 trillion dong more in capital, a huge sum of money. However, if noting that every business would only have 60 million dong more, one would understand that the little money would not help much.
“What can businesses do with just 60 million dong? Meanwhile, 60 million dong is just for the tax payment delay, not the tax exemption,” Anh said.
Besides the VAT payment delay, enterprises also can delay the corporate income tax payment, totaling 3 trillion dong. This means that every business would have 43 million dong more in capital.
“Will businesses spend their time to follow the complicated procedures just to enjoy the tax payment delay?” Anh questioned.
The bigger bailout is the one on exempting or reducing excise for salt and fisheries households, worth 12 billion dong. However, if noting that up to 45 million households would be the beneficiaries of the bailout, the 12 billion dong sum is worth while, because every household would have 276,000 dong only.
A National Assembly’s Resolution released in June 2012 said businesses can enjoy the 30 percent corporate income tax reduction, totaling 7 trillion dong.
The Ministry of Finance has reported that 6500 billion dong worth of tax of the plan has been implemented. However, it has not said how many businesses have benefited from the tax reduction.
If the sum of money has been divided to hundreds of thousands of businesses, the 6500 billion dong sum is just a modest support.
The Ministry of Finance has announced some thousands of businesses have revived, while tens of thousands of new businesses have been set up. However, when commenting about the figures, Dr Cao Sy Kiem, Chair of the Small and Medium Enterprises’ Association, said it might happen that unprofitable businesses got dissolved and then returned to the market under the new names.
Nghiem Tien Sy, Deputy General Director of GP Bank, has noted that 30 percent of businesses have in the “standby mode,” 40 percent of businesses are in the danger, while 30 percent are still “okay” in the eyes of the bank, which means that the 30 percent of businesses still can run at 70 percent of the designed capacity.
How serious is the current problem?
No one can give the exact answer to the question. Regarding the figure about the bank bad debt, Anh said the officially released figure is 220 trillion dong, but no one thinks this is the true, while they believe that the actual figure would be much higher.
Statistics agencies say the purchasing power has nearly got exhausted. However, the consumer price index (CPI) still increased by 6.8 percent in the last 10 months (it was 4.7 percent in the same period of 2011), which means that the consumption has been very good. Why do businesses still go bankrupt?
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