An employee works in a silk company in Lâm Đồng Province, which is struggling to operate amid COVID-19 to meet export order. — VNA/VNS Photo Nguyễn Dũng

As Việt Nam heads closer to the controlling the pandemic with increasing vaccinations in big cities across the country, Prime Minister Phạm Minh Chính has asked ministries and authorities to immediately prepare steps for economic recovery and development.

Associate Professor Dr Trần Đình Thiên, former director of the Việt Nam Institute of Economics talks to Nhà Đầu Tư online magazine about recommendations to support businesses for post-pandemic recovery.

What needs to be taken into account to achieve the dual goal of pandemic control and economic development?

The first thing we need to change is peoples' mindsets on the pandemic. It should not conflict with the market economy, which is open and ensures the flow of goods and cash.

The “closure” we are implementing is harmful for the market economy. It also raises costs for businesses, making them stagnant. We need to change our perception about the pandemic and start to think of living safely with COVID-19.

We also need to reconsider mass testing. The current testing strategy is unaffordable. Given the buying power of people in the context of decreasing income and low employment, the financial pressure of mass testing is almost unbearable.

What are your recommendations?

Besides continuing to cut costs for businesses (interest rate cuts and tax reduction), it is necessary to offer further support because they are very weak now. Recent surveys revealed that businesses are in quite a desperate situation now. The Government should consider the support for businesses in a way that all are entitled for the aid.

It is also necessary to relax financial pressure and these measures must be in place for a certain period of time post-pandemic. Incentives should not stop right after the pandemic ends or when we achieve herd immunity. Businesses need time to recover and should be entitled to incentives for a certain period of time to be able to recover.

The duration for which the incentives are applied should depend on the capacity of the Government, the timing when the pandemic is controlled and the health of businesses. The duration must long enough for them to recover.  

Could you elaborate more on the support for businesses?

Accessing capital is a matter of life and death for businesses. They need to be provided with capital to make a recovery. We have seen a dire need for capital. Lack of finance is a "deadly" matter for businesses, which will affect bank systems and put the economy at high risk. Therefore one of the priorities should be to ensure businesses have access to capital. 

On the other hand, these businesses are very weak and are considered a high risk, making banks reluctant to offer them loans. Many businesses want to recover but do not have capital and are not eligible to borrow money. As the number of these businesses is increasing, it is crucial to have measures to support them, otherwise the risk for the economy will increase rapidly. 

The Government needs to have an assurance fund for businesses and needs to set up a guarantee fund for businesses. This requires the State to step in so lending conditions can be relaxed and businesses will have access to capital more easily.

Which fields will see the greatest recovery?

I support the idea of living safely with COVID-19 and the point of fully vaccinating people is to protect them from risks. The first step to prepare for the recovery is to classify areas based on the risk level. Provinces and cities that have the potential to make great post-pandemic recovery should be prioritised in vaccine distribution so they can open early. These include Đà Nẵng City, Nha Trang City and Phú Quốc Island City. We give priority for those that can make recovery quickly. 

It is also important to analyse the situation of businesses, to find out which sector has good potential of recovery and how many businesses in that sector are able to recover as well as identify businesses that need support to maintain the supply chains. This needs to be very specific, not general. — VNS