On December 3, the National Financial Supervisory Commission released a report analyzing the economic situation in Vietnam and asking the government to consider reducing the interest rate by 8 percent per annum, while controlling ceiling rates on loans for business enterprises.
According to the National Financial Supervisory Commission, there are three main ways to reduce the interest rate immediately.
First, government bonds tend to decrease at the end of the year.
Second, inflation is being controlled at the rate of less than 8 percent. Thus, the difference between the interest rate on deposits and inflation rate is virtually zero.
In addition, the risk of deposits to be withdrawn from the banks is not big enough as other business channels such as gold, securities, real estate are also in difficulty.
Thirdly, the current exchange rate is stable, the US dollar ratio in commercial exchange has been significantly reduced and the stockpiling of foreign hard currencies is no longer considered by people a tool for saving money.
The Commission argued that to reduce interest rates is considered a prerequisite and specific action to help businesses to get through difficulties.
At present, the number of businesses dissolved and suspended in November continues to rise and shows no signs of stopping.
According to the report of the National Financial Supervisory Commission, the maintaining of high interest rates (over 15 percent per year) for a long time (over 30 months) had negative impact on enterprises.
In related news, Deputy Prime Minister Vu Van Ninh yesterday told the media that the government will soon ask the National Assembly to reduce corporate income tax to below 25 percent.
This message was delivered by Mr. Ninh at the Business Forum, which took place on December 3 in Hanoi.
Before that, the Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc, as well as representatives of many domestic and foreign enterprises had repeatedly asked the Government to adopt more measures to limit tax exemption for enterprises.
They especially emphasized the requirement to reduce corporate income tax from the current 25 percent to 20 percent to encourage investment.
Aware of the difficulties of enterprises, the government should propose to the National Assembly to reduce corporate income tax at the appropriate level in 2013, said Dep. PM Ninh.
“At the same time, the authorities will take measures to review and remove some taxes, fees to ease difficulties for enterprises.” Ninh stressed.
Although it has been mentioned for a long time, but this is the first time the government made a specific effort towards the reduction of corporate income tax. According to VCCI, corporate income tax in Vietnam at 25 percent is highest in the region, which affects the competitiveness in attracting investments. The current tax rate in Thailand is 23 percent, while Japan, South Korea and Taiwan (China) apply 17 percent tax rate for small and medium enterprises.
Besides the above issues in this forum, Deputy Prime Minister Vu Van Ninh also made many commitments to domestic and foreign investors about State enterprise reforms, cost management, improvement of labor quality, administrative formalities, etc.
The Deputy PM also confirmed the steadfast goal of Vietnam in the short and long term to restructure the economy, but in the immediate future Vietnam will focus on macro-economic stability and maintaining reasonable growth.
"The government always pays attention to businesses and understands the difficulties of enterprises and investors", the Deputy Prime Minister added.