City unveils $518m aid package for small enterprises

October 02, 2020 - 08:10

HCM City is set to roll out a second COVID-19 aid package worth VNĐ12 trillion (US$517.64 million) exclusively for small and medium-sized enterprises (SMEs).

HCM City has announced a second aid package worth US$518 million to support small and medium-sized enterprises. — Photo

Lê Minh Tấn, director of the city Department of Labour, Invalids and Social Affairs, said that preferential loans would be offered to employers to maintain production, retain workers and ward off bankruptcy with priority given to micro and small-sized enterprises.

“Unlike the previous package under the Government’s Resolution 12, the second package will provide SMEs with easier access to preferential credit, and not require a 50 per cent cut in payroll or fall in revenues [to qualify].

“Instead, businesses can borrow to maintain their production and [retain] employees if their revenues declined by just 20-30 per cent from the fourth quarter of 2019.”

The package would involve the active participation of commercial credit institutions, he said.

The city’s credit institutions had loans outstanding of VNĐ2.38 quadrillion ($102.5 billion) as of the end of August, an estimated 3.68 per cent up for the year, the lowest rate in many years. But the State Bank of Vietnam (SBV) said cash is still being pumped into key areas of the economy.

Short-term loans provided to the city’s five priority sectors (agriculture and rural development, production of goods for exports, small- and medium-sized enterprises, supporting industries, and high-tech enterprises) were worth VNĐ176.26 trillion as of the end of August.

On the central bank’s instructions to offer relief to pandemic-hit companies, credit institutions gave 240,407 firms in the city loans worth VNĐ583.15 trillion.

As stipulated by the SBV, the banks reduced interest rates, rolled over debts and did not classify overdue debts owed by affected businesses as bad.

Nguyễn Hoàng Minh, deputy director of the SBV’s HCM City office, said 230,700 borrowers had so far benefited from these policies as of the end of June.

Interest rates had been cut on loans worth over VNĐ49.97 trillion given to nearly 17,420 borrowers, and new soft loans worth more than VNĐ270.42 trillion were offered to over 44,600 pandemic-hit customers.

In addition, around 168,670 borrowers have had their loan payment deadlines extended, he said.

The banking industry would continue to focus on efforts to resolve challenges faced by businesses based on guidelines issued by the Government, the central bank and the city People’s Committee, he added.

Speaking at a recent meeting, Nguyễn Thành Phong, chairman of the People’s Committee, said the city would announce specific policies to help enterprises and industries heavily affected such as travel, restaurants, hotels, and transport- and tourism-related services.

More than 21,000 city businesses have suspended operations and laid off a large number of employees, he said.

“The top priority is to help businesses maintain production and avoid bankruptcy, and prevent more workers from losing jobs.”

Small and medium-sized enterprises, which account for 98 per cent of all enterprises, have been seriously impacted, he said.

Services, which account for more than 60 per cent of the city’s economy, have been hit hardest, especially tourism and accommodation. 

Jobs protected

Tấn said his department would take whatever measures needed to safeguard people’s jobs and incomes.

More than 327,000 people were laid off in the first half, he said.

Tourism and other services were the hardest hit with some 4,400 enterprises being affected and 100,000-120,000 jobs being lost.

To protect workers, the department has set up working groups to support businesses and ensure employees are treated in accordance with legal provisions, he said.

In March city authorities approved a support package targeting poor families and 600,000 workers and teachers at private pre-schools who had lost their jobs. 

Prime Minister Nguyễn Xuân Phúc earlier approved a relief package worth over VNĐ62 trillion ($2.7 billion) to benefit around 20 million people nation-wide, with a focus on workers who lost jobs or incomes and businesses affected by the pandemic.

According to city authorities, 90 per cent of 8,400 enterprises facing difficulties are eligible for the VNĐ62 trillion package. — VNS