Vietnamese legislators said the government should not play it safe when it comes to rescuing local businesses, calling for stronger support than a relief package which they criticized as a mere token.
The VND29-trillion (US$1.4-billion) package, including a 30 percent corporate tax cut and a six-month extension for sales taxes, will not help bail out companies that have already shut down, Deputy Nguyen Ngoc Hoa said.
The package does not mean anything to businesses which have no taxes to pay, Hoa told other members of the National Assembly at a meeting in Hanoi Thursday.
Nguyen Hong Son, also chairman of the Hanoi Business Association, said only around one third of companies in Vietnam will benefit from these measures while many others that are on the verge of bankruptcy will not get any significant help.
Economist Tran Du Lich said the government needs to order banks to increase lending in spite of whatever risks they may incur.
When banks try to protect themselves and stop offering loans, businesses will be in even deeper trouble and the number of closures will surge, he said.
"The signs of an economic slowdown are very clear now," Lich said, adding that the country is unlikely to achieve its growth target of 6-6.5 percent this year.
More than 17,000 companies halted production or shut down in the first four months of 2012, up 9.5 percent from the same period last year, according to a report from the government to the National Assembly. The economy expanded 4 percent in the first quarter.
Deputy Than Duc Nam said instead of just extending value-added tax payments, the government should cut the tax to boost consumption.
"Cutting or abolishing taxes in 2012 will reduce revenues for the state budget and affect spending plans. But if there are no strong measures to prevent bankruptcies and economic slowdown, tax revenues will be hit much harder in 2013," Nam said.
Like us on Facebook and scroll down to share your comment