DRAFT RESOLUTION TO SUPPORT BUSINESSES AFTER COVID-19 PANDEMIC

The draft resolution contains measures related to tax, loans, labour, import & export, incorporation and business promotion that will support businesses and individuals to cope with the negative impact of the Covid-19 pandemic. This further to measures that have already been taken, such as the ones set out in Decree 41.

24 May 2020

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LEGAL UPDATE

Following the direction of the Prime Minister in Announcement No. 154/TB-VPCP dated 12 April 2020, the Ministry of Planning and Industry (MPI) in cooperation with other Ministries, central and local authorities, enterprises and industrial associations has drafted a resolution. This resolution contains certain targets on how to resolve difficulties for manufacturing and trading businesses, to accelerate the state budget disbursement, and to guarantee a safe and secure environment in the context of the Covid-19 pandemic.

On 9 May 2020, the MPI published the latest updated draft resolution (Draft Resolution) which sets out the main responsibilities and tasks of the Government, the National Assembly, each ministry and specialised authority to achieve the targets.

The Draft Resolution is expected to be enter into effect shortly to support Vietnamese society in general and enterprises in particular to overcome the difficulties resulting from the Covid-19 pandemic.

In this update, we will set out the most notable points of the Draft Resolution .

1. General - Government Level

Under the Draft Resolution, the Government will implement solutions to solve difficulties for manufacturing and trading businesses and support the entities affected by the Covid-19 pandemic. These solutions will include, among others, support and incentives related to land rent, loan guarantee fee and interest, taxation and labour. This in addition to Decree 41/2020/NC-DP (Decree 41) which entered into force on 8 April 2020.[1]

The Government will also prepare solutions to attract investment capital and advance the implementation and disbursement of state investment capital. Furthermore, the Government will request the National Assembly amongst other things to approve legislation related to environment protection tax, water exploitation license fees, and the Law on Construction as well as the plan on investment with state budget capital.

To reach the targets Ministries, central and local authorities will be responsible to implement certain solutions which we set out below.

2. Loans

2.1 General

The State Bank of Vietnam (SBV) will instruct credit nstiitutions to decrease the interest rate for existing and new loans to support enterprises and residents. Moreover, the SBV will advance the deployment of credit programs and preferential interest loan products. It will also instruct commercial banks to facilitate enterprises in obtaining new loans, a loan repayment reschedule, interest reduction and exemption as well as maintaining the debt classification.

2.2 Small and Medium Enterprises

As a special support for small and medium enterprises (SMEs), the interest rates applied by the Social Policy Bank and Small and Medium Enterprises Development Fund for direct and indirect lending will be reduced by 2% and the loans will be for a period of 3-6 months. The MPI will deploy such lending policy and ensure that the implementation will be prompt and support only SMEs impacted negatively by the Covid-19 pandemic.

3. Taxation

The Ministry of Finance (MOF) will monitor and evaluate the implementation of Decree 41 on the extension of the tax filing period. The MOF will report and propose to prolong the deferral period from the current 5 months under Decree 41 to a longer period and to add other taxes and businesses entitled to the deferral.

4. Land Rent

In addition to the possibility to defer land rent payment as per Decree 41 enterprises that are leasing land directly from the State under the form of annual rental payment and that are impacted by the COVID-19 pandemic will likely be entitled to 15% discount of 2020 land rent. Again, the implementation will be monitored by the MOF.

5. Import and Export

The MOF will cooperate with the competent authorities to accelerate the customs clearance procedure and medical check for imported and exported means and goods.

6. European Union Vietnam Free Trade Agreement [2]

The MOF will also be in charge to proactively draft a Schedule of preferential export tariffs and special preferential import tariffs (Schedule) to create a favourable route for enterprises in Vietnam implementing the European Union Vietnam Free Trade Agreement from the date it comes into force, which will likely be in June or July. The MOF will collect opinions of the other Ministries and central authorities under abridged procedures so that the Schedule can be promulgated and implemented in a timely manner upon the EVFTA being enforced. The EVFTA will be another way to support enterprises after the negative impact of the COVID-19 pandemic.

7. Business Promotion

The Ministry of Industry and Trade (MOIT) will be responsible to ensure that there are sufficient input materials for the manufacturing and trading businesses. Furthermore, it will concentrate on the commercial promotion of products that suffered from export suspension or order cancelling due to the pandemic. In particular, it will focus on seeking new markets and take advantage of free trade agreements, especially the EVFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.[3]

The MOIT is also in charge of speeding up the use of information technology in commercial activities as to connect e-commerce and traditional business forms;launching campaigns to advance domestic consumption, expand domestic market, and support manufacturing and trading businesses.

8. Labour

8.1 Entry

In order to guarantee compliance with regulations on preventing and fighting pandemics by the manufacturing and trading activities of enterprises, the Ministry of Public Security will cooperate with the Ministry of Defense and the Ministry of Health to apply a special entry procedure for the foreign employees being experts, enterprise managers, or highly-skilled technicians working in foreign-invested projects in Vietnam. In this way, foreign employees will be able to enter Vietnam to work after they have successfully passed the 14 days’ quarantine period.

8.2 Extension of or New Work Permits

The Ministry of Labour, Invalid and Social Affairs will instruct the affiliated departments to:

- extend the term of work permits of foreign experts, managers and technical employees who are working in enterprises affected by Covid-19; and

- issue new work permits to foreign experts, managers and technical employees in replacement of foreign employees who are unable to get back to Vietnam.

At the same time, the provincial People’s Committees are delegated to proactively coordinate with each other and immigration authorities to consider granting permission to foreign employees to enter Vietnam and implement concentrating quarantine measure. The local authorities will implement health monitoring measures with respect to foreign employees working in their localities upon completion of concentrating quarantine.

9. Enterprises Incorporation

The MPI will cooperate with relevant Ministries and authorities to draft a Decree amending regulations to reduce steps of the enterprise incorporation process.

10. Attract Investment Capital

To attract investment capital, the Ministries and central and local authorities are requested to accelerate the process of reviewing and approving investment projects. They should also create the necessary conditions to attract new investment; and develop investment promotion activities in compliance with the regulations on prevention and fighting of epidemics .

Contact Information

Should you have any questions, please feel free to contact our lawyers at the below email addresses.

Mark Oakley / Managing Partner
mark.oakley@acsvlegal.com

Phuong Huynh / Senior Associate

phuong.huynh@acsvlegal.com

© 2020 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

Download pdf: Draft Resolution to Support Businesses after Covid-19 Pandemic


[1] See for more information our update on Decree 41.

[2] See for more information our update on the EVFTA.

[3] See for more information our update on the CPTPP.

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