Vietnam put in place a fiscal stimulus package that it valued at 8.6 percent of gross domestic product early this year in a bid to boost economic growth, projected to reach 5.2 percent, the slowest in a decade.

Measures included tax exemptions, reductions and deferments for businesses, and an interest rate subsidy program, under which eligible businesses received 4-percent subsidies on short-term loans.

But representative Pham Thi Loan from Hanoi said most local businesses have survived the downturn on their own strength, not on stimulus benefits.

Around 95 percent of businesses in Vietnam are small to medium-sized and most of them are household operations, Loan said. “As many families have their own security funds, they managed to bail themselves out.”

Nguyen Thi Nguyet Hong, also representing Hanoi, said the loan subsidy program had created unfair competition as only a small part of the business community benefited from the subsidies.

Tran Minh Man from Long An Province said the government needed to explain why so many beneficiaries of the subsidies were state-owned businesses.

By the end of September, total outstanding loans under the subsidy program were about VND405 trillion (US$22.7 billion). State-owned businesses accounted for 16 percent of the figure, which Man said was a high ratio considering there were less than 2,000 state companies in the country.

In its recent review of 2009 national budget allocations, the National Assembly Finance and Budget Committee said that it would be necessary to continue fiscal stimulus measures next year as the economy was still in recovery mode.

However, the stimulus next year should be more concentrated, focusing mainly on economic reforms to ensure stable economic growth, the committee said.

Phung Quoc Hien, chairman of the committee, said Tuesday that although the interest rate subsidy program had helped bail out many businesses this year, it should wrap up at the end of this year.

Tran Du Lich, deputy head of the HCMC delegation, said Thursday the interest rate subsidies needed to be withdrawn next year as “they are only first aids, not real remedies”.

Source: TN, Agencies