Briefing
Vietnam spotlight - COVID-19
Business updates
- World Bank suggests that Vietnam economy could grow about 4.9% in 2020, about 1.6 percentage points lower than previous forecast. The hardest-affected sectors would include tourism and manufacturing due to supply chain disruptions. Source: Voice of Vietnam
- Banks requested to reschedule the 2020 annual shareholder meeting due to Covid-19. The State Bank of Vietnam requests credit institutions to have an appropriate form of organisation or to postpone the time of the organisation, ensuring strict prevention and control of Covid-19 in the context of a complicated developments of the epidemic. Source: Intellasia
- Banks are not allowed to pay cash dividends to alleviate COVID-19 impact. The State Bank of Vietnam requires commercial banks to reduce and tighten operating costs to alleviate the growing concerns over the impact of COVID-19. Lenders are not allowed to pay cash dividends to their shareholders to focus resources to slash lending rates on current and new loans. Source: Vietnam Investment Review
- Almost all public companies have decided to postpone annual general meeting of shareholders (AGM) due to coronavirus. At law, an AGM must be held within 4 months from the end date of a financial year. However at the Board’s request, this time limit can be extended but not beyond 6 months from the end date of the financial year (e.g. 30 June 2020). Any postponement of the AGM is subject to with the local DPI’s approval. For a public company, the DPI approval is required to be publicly disclosed to the SSC and on the company’s website. Further information, please read Customs News
- Toyota Motor Vietnam suspends its vehicle production from March 30. TMV said the outbreak of COVID-19 had impacted all aspects of business, from economy to society, including the automobile industry. Toyota dealers in Hanoi have temporarily closed showrooms and workshops in accordance with the direction of the Government and the Hanoi People Committee in order to prevent the outbreak from spreading. Source: Vietnamnet
- Hyundai suspends car assembly factory in Vietnam. TC Motor, an assembling and distributing company belonging to Hyundai, is to temporarily suspend production from April 1-15 due to the growing impact of the novel coronavirus. Source: ASEM Connect
- Honda Vietnam suspends production due to COVID-19. Honda Vietnam has become the fourth automaker in Việt Nam to suspend production and assembly of cars and motorbikes over the concerns of COVID-19. The suspension will take place for two weeks. Source: Vietnam News
- Two Vietnam provinces want rice export ban lifted. The Mekong Delta provinces of Kiên Giang and Long An have asked the Government to reconsider its temporary ban on rice exports, saying it would discourage farmers from growing the autumn-winter crop this year. Source: The Star
- Visa and NextPay sign MoU to promote cashless payments in Vietnam. NextPay and Visa will be working together on developing economic potential across 63 provinces and cities nationwide by providing the market with innovative payment methods and services. Source: Vietnam Investment Review
- Airlines to stop carrying passengers to Vietnam from 1st April. The Ministry of Transport has asked airlines to stop carrying passengers to Vietnam as from 00:00 of April 1 until the end of April 15 as part of measures to curb the COVID-19 pandemic. Source: Vietnam Investment Review
- Vietnam on April 1 implemented strict social distancing rules nationwide for 15 days to curb the spread of COVID-19. The measures include self-isolation and restricting people from leaving homes except for food and medicines. The gathering of more than two people is also banned while also keeping a distance of two meters when outside. Factories, businesses and service establishments producing and providing essential goods are allowed to remain open but must follow strict health guidelines. Source: Vietnam News
- Vietnam cuts air, road transportation to curb Covid-19. Vietnam has suspended all inbound flights, cut down drastically on domestic flights and halted passenger road transport including taxis until April 15. Source: Vnexpress International
- Vietnam aims to contain COVID-19 within one month. The Government will take more drastic actions to contain the spread of the COVID-19 pandemic in the next one month. The PM stressed it is a must to ensure the necessary growth rate and major economic balances. Source: Voice of Vietnam
Government measures to support businesses
- Extending deadline for paying tax, exempting penalty tax of late payment for enterprises suffering from Covid-19. The General Department of Tax issued official correspondence 897/TCT-QLN dated 3 March 2020 requesting provincial tax departments to extend the deadline for paying tax and exempting penalties for the late payment of tax in accordance with the Law on Tax Management and guidance documents. Cases entitled to extend the deadline for tax payment include companies suffering physical damage that directly affects production due to natural disasters, fires and unexpected accidents in accordance with Circular 156 of the Ministry of Finance. Source: Customs News
- Official 1064 of the Ministry of Labour, War Invalids and Social Affairs guides payment of wages and benefits for employees during work suspension due to Covid-19 pandemic. Because a number of enterprises have to suspend their operation or scale down, numerous employees have been suspended from work due to various reasons such as: (i) foreign employees who are not allowed to return to work during the pandemic; (ii) employees who have to be quarantined as requested by competent authorities; (iii) employees who are suspended from work because their employers or departments are suspended since other employees are not allowed to return to work as requested by competent authorities; (iv) employees who are made redundant because their employers are facing supply shortages or market reductions and have to scale down. Payment for employees during work suspension is as follows:
- Option 1: Suspension pay shall be determined in accordance with Article 98 of the Labor Code, with consideration taken of the causes of work suspension (at the employer’s or employee’s fault or for an objective reason).
- Option 2: For employees who are suspended due to direct impacts of Covid-19 pandemic such as: (i) employees who are not allowed to return to work as requested by competent authorities; (ii) employees who are suspended from work during quarantine as requested by competent authorities; (iii) employees who are suspended from work because their employer is being quarantined or other employees in the same enterprise or department are being quarantined or not allowed to return to work, the suspension pay shall be provided in accordance with Clause 3 Article 98 of the Labor Code (the pay shall be agreed upon by both parties but must not be lower than the region-based minimum wages prescribed by the Government).
- Option 3: Enterprises that cannot provide adequate employment due to supply shortages or market reductions may temporarily reassign the employees against their employment contracts in accordance with Article 31 of the Labor Code. In case an employer is not able to pay the suspended employees due to prolonged work suspension, they may reach an agreement on suspension of the employment contracts in accordance with Article 32 of the Labor Code. Employers that have to scale down can arrange employment in accordance with Article 38 or Article 44 of the Labor Code.
- Vietnam will provide US$1.3 billion relief package for corona-hit vulnerable people. Under the plan, people out of work, self-employed people, and household businesses forced to suspend operation could receive up to VND1 million (US$42.63) per month, while social beneficiaries and revolutionary contributors are entitled to VND500,000 (US$21.32) per person per month. In the short term, people could receive financial support in three months starting April while the government would continue to review the situation to adopt further measures. Meanwhile, for workers with labor contracts who are forced to take unpaid leave or face wage reductions, the support would be around VND1.8 million (US$76.74) per person per month in the next three months. Source: Hanoi Times
