Support policies for Covid-19-stricken enterprises in Vietnam
On realizing that business and production activities are badly impacted by Covid-19, the State has put forward a lot of policies aimed at supporting enterprises to overcome this difficult situation. In addition to the tax support policy, the following article will provide information on the latest policies to remove difficulties for businesses.
1. Reduction of 10% of electricity retail price for production and business sectors
This is a new policy to support businesses facing difficulties due to Covid-19 in Official Dispatch 2698/BCT-DTĐL dated April 16, 2020.
In particular, for the retail price of electricity for manufacturing and business sectors: Discount 10% of the retail price of electricity specified in Decision 648/QD-BCT dated March 20, 2019 in the peak hours, normal hours and off-peak hours.
For the wholesale price of electricity in rural areas, the wholesale price of electricity in dormitories and residential areas, the wholesale price of electricity for a trade-service-daily life complex will be reduced by 10% of the electricity wholesale price applicable to grades 1 to grade 4 of the living cost; reducing 10% of electricity wholesale for other purposes in Decision 648/QD-BCT.
For the wholesale price of electricity of industrial parks, the wholesale price of electricity to markets, a reduction of 10% of the electricity wholesale price compared to the electricity wholesale price table in Decision 648/QD-BCT.
2. Financial support
From the onset of the epidemic outbreak, the Prime Minister issues the Directive No. 11/CT-TTg dated March 4, 2020 regarding urgent missions and measures to relieve business and production difficulties with the aim of ensuring social security in response to the Covid-19 epidemic.
In this document, the Government authorizes the State Bank of Vietnam to direct credit institutions to provide adequate and timely funds for business and production activities, enhancing administrative reform, shortening the duration of processing of loan applications, increasing client’s capability of accessing loans; taking timely action to apply support measures such as debt rescheduling, lending interest relief, debt group non-reclassification, fee reduction, etc. with regard to clients in difficult situation due to the Covid-19 epidemic (the credit bailout worth about 250,000 billion dong as the first support package).
3. Temporary suspension of contributions paid as social insurance premiums to the pension and death benefit fund
Vietnam Social Security issues the Official Dispatch No. 860/BHXH-BT dated March 17, 2020, providing guidance on the temporary suspension of contributions to the pension and death benefit fund for those affected by the Covid-19 epidemic until the end of this June or December, and exemption from payment of late payment interest.
According to this document, businesses providing services, such as passenger transportation, tourism, accommodation, restaurant and other special industries, that are in a difficult situation due to the Covid-19 epidemic, leading to incapability of temporarily offering work to their social insurance-protected employees that account for at least 50% of total labor present before such temporary suspension, or a loss of more than 50% of total value of assets (except land) incurred due to the epidemic as provided in clause 1 of Article 88 in the 2014 Law on Social Security, or clause 1, 2, 3 and 4 of Article 16 in the Decree No. 115/2015/ND-CP dated November 11, 2015 and Article 28 in the Circular No. 59/2015/TT-BLDTBXH dated December 29, 2015, will have access to the temporary suspension of contribution to the pension and death benefit fund.
In addition, Social Security authorities will not carry out the specialized inspection of social insurance contributions, or the inspection of the compliance with the laws on social insurance, health insurance and unemployment insurance at enterprises affected by the Covid-19 epidemic if they are not suspected of committing any violation during the period of such temporary suspension.
4. Extension of deadlines for payment of trade union dues
Vietnam General Federation of Labour issues the Official Dispatch No. 245/TLD regarding extension of the deadlines for payment of union dues for enterprises afflicted with the Covid-19 epidemic.
According to this document, production and business entities stricken with the Covid-19 epidemic will have access to an extension of the deadline for payment of union dues for the first 6 months to June 30 this year.
Enterprises afflicted by Covid-19 are defined as enterprises that have their social insurance-protected employees accounting for at least 50% of total employees compulsorily participating in social insurance programs temporarily leave their work.
If these enterprises continue to face difficulty because the Covid-19 epidemic does not become less by the aforesaid deadline, then the deadline will be extended to December 31, 2020.
5. Interest and fee exemption or reduction granted according to internal rules and regulations of credit institutions
State Bank of Vietnam has recently promulgated the Circular No. 01/2020/TT-NHNN, regulating the rescheduling of debt repayment, interest or fee exemption, reduction or non-reclassification of debt by credit institutions and foreign bank branches due to adverse impacts of the Covid-19 epidemic.
According to this document, credit institutions and foreign bank branches may, at their discretion, decide to grant exemption or reduction of interest or fees prescribed in their internal rules and regulations with respect to outstanding debts incurred from credit facilities (except corporate bond purchase and investment) to the following borrowers:
- Borrowers whose obligations to repay principal and/or interest due during the period from January 23, 2020 to the day immediately following the ending date of the period of 3 months starting from the date of Prime Minister’s announcement of termination of the Covid-19 outbreak; and
- Borrowers who are incapable of repaying principal and/or interest debts by maturity dates under terms and conditions of lending contracts or agreements due to decreases in their revenue and income caused by the Covid-19 outbreak.
6. Employer’s entitlement to loans used for paying employees wages and salaries during the period of their temporary suspension of work
Recently, the Government has promulgated the Resolution No. 42/NQ-CP regarding measures to support people stricken with the COVID-19 pandemic. According to this Resolution, if an employer in a financial situation has managed to pay at least 50% of their employee’s wages and salaries during the period of their employees’ temporary suspension of work as provided in clause 3 of Article 98 in the 2012 Labor Code from April to June this year, they will have access to an unsecured loan equaling 50% of the prescribed region-specific minimum pay rate per an employee at maximum, calculated on the basis of the actual wage payment time length which is not longer than 3 months, at the 0% interest rate with the maximum maturity of 12 months from Vietnam Bank for Social Policies. This loan is used for paying the remaining part of the employees’ wages or salaries and disbursed on a monthly basis to affected employees.
According to Thuvienphapluat