Covid-19 could bankrupt 50 pct of Vietnamese enterprises: VCCI

By Pham Van April 9, 2020 | 03:44 am PT

If the Covid-19 crisis prolongs, as many as 50 percent of Vietnamese businesses could go under, a VCCI survey has found.

Many shops are closing due to Covid-19. Photo by Giang Huy.

Many shops have downed shutters because of the Covid-19 crisis. Photo by VnExpress/Giang Huy.

Survey results show that in such a scenario, 30 percent of Vietnamese enterprises will survive for three months at maximum, and 50 percent for six months.

The survey, carried out by the Vietnam Chamber of Commerce and Industry (VCCI), also found that nearly 35,000 businesses have withdrawn from the market in the first three months of the year.

"This is a record number. For the first time in decades, the number of businesses leaving the market is greater than the number of new ones," the VCCI report on the survey said.

Of the surveyed enterprises, nearly 85 percent said their consumption markets have narrowed and 60 percent complained about the lack of capital and cash flow. Meanwhile, 43 percent said they would have to reduce their workforce because there was not enough work, and 82 percent expected their revenues to fall over last year.

More than 75 percent of the respondents said they would have to downsize their workforce, with about 10 percent saying they have to effect a 50 percent cut. Less than one percent of businesses said they were likely to increase the number of employees.

Millions of workers are at risk of losing their jobs in the coming months, the report noted.

VCCI Chairman Vu Tien Loc said misunderstandings among some local authorities are affecting businesses adversely. Some localities are not allowing the circulation of goods and raw materials, and suspending manufacturing and construction activities, he added.

To provide relief, "it is necessary to immediately postpone the payment of VAT, corporate income tax, personal income tax, social insurance and trade union fees," Loc said.

He also proposed that the government enacts policies to exempt and reduce payment of taxes, social insurance, fees and other charges.

The report said businesses are recommending lowering interest rates to about 4-5 percent on VND loans and 2-3 percent on USD loans for businesses affected badly by the Covid-19 crisis.