Vietnam News

Hundreds of million USD to rescue the economy

Category: Vietnam News

By Vietnamnet | 26 December 2012

Stretch of tax, not charging the personal vehicle fees yet, significantly reducing car registration fees, pumping capital into banks and rescuing the real estate market are the solutions to save the economy, announced by the Government on December 25.

The draft resolution on removing difficulties for business, reducing inventory and bad debt was presented by Deputy Prime Minister Hoang Trung Hai at the online conference of the central and local governments on the implementation of economic development tasks and budget for 2013.

The two groups of measures that are given priority by the government are to reduce inventory, remove difficulties for enterprises and resolve bad debt.

The first group of measures focuses on reducing the cost of production for businesses and helping them sell products and access to capital. Firstly, tax and fee policies will be adjusted. Accordingly, the government will apply a 6-month extension of corporate income tax and value added tax for small and medium enterprises and housing development firms.

According to Deputy Prime Minister Hoang Trung Hai, these measures will contribute to job creation – a problem that Vietnam must be very careful in this period, though the unemployment rate is not high.

Other measures consist of reimbursement of environmental protection tax, not collecting the fees on personal vehicles, reducing registration fee for 10-seat cars from 20% to 10% in the first time and 2% in the second time, reducing 50% of land rent in 2013-2014 to organizations, households and individuals, allowing investors of licenced projects to pay land use fees according to the progress of selling apartments, lasting up to 24 months.

These solutions are worth about VND31 trillion ($1.48 billion) and tax cuts, reduction of land rent of about VND3 trillion ($150 million).

The government will also reduce the output VAT for the sale, lease, lease-purchase of social housing, slashing corporate income tax on these activities in order to create conditions for people to own houses and for businesses to solve the inventory of construction materials. The measures are also expected to contribute to revolve capital, deal with bad debt and increase revenue.

Regarding credit, the interest rates will be reduced further to be in line with inflation. Solutions to support agriculture and rural areas, small and medium enterprises, the producers of goods for export and the supporting industries will be applied.

The State Bank of Vietnam will spend VND20- VND40 trillion (over $950 million-$1.9 billion) to refinance at reasonable interest rates, a maximum term of 10 years to support the state-owned commercial banks to lend these objects. Around VND10 trillion ($476 million) will be allocated for solidification of canals, construction of rural roads…

The third group is the solutions to save the real estate market. Specifically, housing projects will be checked, real estate firms will be helped restructure business and management, researching to early establish new financial institutions as housing saving fund and house re-mortgage agency to create a refinancing channel for real estate.

In terms of bad debt, the Resolution also requires positive reviews, loan classification, implementation of remedial measures and the State Bank is assigned to fulfill the bad debt settlement scheme to submit to the Politburo.