On January 11, Vietnam’s highest legislative body National Assembly approved an economic support package worth nearly VND350 trillion ($15.4 billion) for the period 2022-2023, to support businesses and people affected by the COVID-19 pandemic.
The information page of the National Assembly of Vietnam said that the resolution on fiscal and monetary policy to support the “Socio-economic recovery and development program” has the goal of “recovering and rapidly developing business activities, promoting growth drivers, prioritizing a number of important industries and fields, and striving to achieve the goal of the period 2021 – 2025: average growth of 6.5-7% per year, public debt targets are below the warning level.”
The state-controlled media reported that 424/426 delegates voted in favor of this resolution. The resolution was passed on the last working day of the extraordinary session which lasted nearly 5 days.
This stimulus package includes measures to reduce value-added tax by 2% (reducing from 10% to 8%), cutting lending rates by 0.5-1.0% and increasing infrastructure investment as well as allowing the application of some specific mechanisms.
This package also includes about VND6.6 trillion in housing rental support for employees who are renting, staying in, and working in industrial parks, export processing zones, and key economic areas.
“The impact of the COVID-19 pandemic over the past two years has severely affected all aspects of socio-economic life; Production and business activities of enterprises, people’s lives, and workers face many difficulties, the economic recovery speed is still slow, and there is a risk of missing the beat with the world economy, said NA’s Chairman Vuong Dinh Hue on January 11 in the closing session.”
Reuters news agency quoted Mr. Hue as saying that businesses and people are facing many difficulties due to the pandemic, while bad debts in the banking system are at risk of increasing.
The resolution allows maximum use of VND46 trillion from other legal financial sources to import vaccines, therapeutic drugs, and medical equipment and supplies for the prevention and control of the COVID-19 epidemic. At the same time, the resolution allows investment of more than VND113 trillion in infrastructure.
In addition, the resolution allows increasing the state budget deficit in the two years 2022 and 2023 by an average of 1-1.2% of GDP per year, which means the overspending can reach a maximum of VND240 trillion.
The resolution took effect on January 11, stating that the government must “ensure that there is no exploitation of policies, group interests, losses or waste.”
Previously, at the opening session on January 4, Mr. Hue said that wasteful use of this VND350 trillion support package would be “at fault to the people” because “after all, it is the tax money of the people.”
“Rich countries have directly distributed money to people. We do not have the resources to distribute cash like that, but the tax reduction policy will help achieve two goals, both sharing the burden for the people and stimulating the economy,” said the top legislator.
Vietnam has so far recorded more than 1.91 million COVID-19 infections, including 34,531 deaths.