Briefing

April 17 2020

Vietnam Spotlight - Covid 19

Business updates

• Vietnam’s GDP in the first quarter of 2020 rose by 3.82 per cent. Source: Vietnam Investment Review
• Vietnam Government extends social distancing for at least one week in 28 localities. Source: Vietnam Government Portal
  • High-risk localities consist of 12 provinces and cities namely Ha Noi, Lao Cai, Quang Ninh, Bac Ninh, Ninh Binh, Da Nang, Quang Nam, Binh Thuan, Khanh Hoa, Ho Chi Minh City and Tay Ninh, and Ha Tinh. For the above localities, social distancing will continue until April 22 or April 30 depending on the specific situation.
  • Social distancing is also extended to April 22 for 15 localities in the second group, namely Binh Duong, Can Tho, Dong Nai, Ha Nam, Hai Phong, Kien Giang, Nam Dinh, Nghe An, Thai Nguyen, Thua Thien-Hue, Soc Trang, Lang Son, An Giang, Binh Phuoc, Dong Thap, and Ha Giang. 
  • Social distancing measures will be loosened in other areas of the country allowing some industries and businesses to resume operations from April 16. Businesses that provide entertainment services and tourism sites are still not be allowed to resume operations. 
• Essential services allowed to open during social distancing time. The Government office explained that social distancing measures do not constitute a stringent lockdown. Factories and production units, traffic and construction sites, organisations supplying essential goods and services – food, medicine, oil and gas, utilities, energy, banks, treasury offices, stock trading floors, and other services directly related to banking activities and businesses – notaries and lawyers are all allowed to be open. Post offices, logistics services, funeral services and healthcare services can also still operate. Source: Vietnam News

Hanoi has issued a stricter list of nine essential businesses allowed to open: (i) general food supermarkets, (ii) commercial centres (with only supermarkets and hospitals allowed), (iii) markets, (iv) convenience shops and mini markets, (v) grocery stores, (vi) pharmacies, (vii) healthcare services, (viii) bank services, (ix) petrol, gas and fuel distributors. Source: Vietnam Government Portal

• Vietnam’s Prime Minister approved the resumption of rice exports, with a volume of 400,000 tons of rice in April. Source: The Saigon Times 
• Electricity price cuts to ease Covid-19 burden. The government has agreed to a proposed electricity price discount of 10 percent for the months of April, May and June. Source: VnExpress International 
• Mobile money. The State Bank of Viet Nam is completing a mobile money pilot project and will submit it to the Government for approval this month. Source: Bizhub
• Mask export restrictions lifted. The Prime Minister has lifted a cap on medical mask exports and medical equipment protection and local producers can benefit from rising demand abroad. Source: Vietnam Times
• Vietnam to stop exporting COVID-19 treatment medicines from April 16. The Drug Administration of Vietnam requires all local drug manufacturing, exporting and importing firms to suspend the export of drugs used in the treatment of COVID-19 from April 16. Source: Vietnam News
• Supply chain is heading to Vietnam. The disruption in the global supply chain caused by the virus outbreak is leading businesses to diversify their manufacturing portfolios geographically, instead of being overly reliant on one market. Source: Vietnam Investment Review
• PetroVietnam proposes restriction of oil imports. PetroVietnam has proposed restricting or temporarily halting the import of petroleum as aviation and transport are frozen due to the prolonged coronavirus outbreak. Source: Vietnam Investment Review

Vietnam - Covid-19 regulatory response (updated)

Deferrals of VAT, CIT and land rental payments

The government issued Decree 41/2020/ND-CP dated 8 April 2020, with immediate effect, on deferral of VAT, CIT and land rental payments for businesses impacted by COVID-19. Enterprises entitled to payment deferrals include, among others, those operating in agriculture, forestry, fishery, food processing, textiles, construction, transportation, warehouses, real estate, hospitality and catering, tourism, education, medical services and entertainment. In addition, credit institutions and branches of foreign banks providing support to customers affected by the COVID-19 pandemic shall also be entitled to payment deferrals under this decree. In general, payment deferrals are as follows:

• For VAT: 5-month extension for payments in respect of the tax period of Mar-June 2020 for enterprises declaring VAT on a monthly basis, or of the first and second quarters for enterprise declaring VAT on quarterly basis;
• For CIT: 5-month extension for payments in respect of CIT for 2019 and provisional CIT amounts for the first and second quarters of 2020; and
• For land rental: enterprises leasing land from the state and paying land rental on a bi-annual basis are entitled to a 5-month extension from 31 May 2020 in respect of the first payment for 2020.

Enterprises are required to submit an application to the tax authorities no later than 30 July 2020 in order to be entitled to such extensions.

Emergency support package

On 9 April 2020, the Government issued a Resolution with a three-month emergency response package for the period starting April through June. 

Pursuant to this Resolution, employers affected by COVID-19 can borrow from the Vietnam Social Policy Bank at 0% interest over 12 months to pay salaries to their employees. Furthermore, employers and employees affected by COVID-19 will also temporarily be exempt from their obligatory contributions to the retirement and survivors’ fund (part of the Government-sponsored insurance programme).

Under the resolution, employees who take unpaid leave and those who have their labour contracts suspended for at least one month will receive 1.8 million VND (77 USD) each month.

Corporate – operations

In the light of Directive 16 of the PM dated 31 March on social distancing, many public companies have postponed annual general meetings of shareholders (AGM) due to the Covid-19 pandemic.  At law, postponing an AGM may need to be notified to the competent government authorities such as the provincial Department of Planning and Investment or the SSC. Public companies that have appropriate digital technology to organise AGM online will not be affected by Directive 16 on social distancing.

Banking – loan restructuring

In Circular 01/2020/TT-NHNN dated 13 March 2020, the State Bank of Vietnam (SBV) instructed commercial banks to delay, extend, and reschedule debt payments as well as reduce interest rates and fees for customers impacted by Covid-19.

Banking – interest rates

The SBV adjusted certain interest rates starting from 17 March 2020.  The reductions depend on how the loans are categorised.

Banking – operations

In Directive 02/CT-NHNN, the SBV requested credit institutions to follow the SBV's instructions and guidance to support customers affected by Covid-19, establish business plans in response to complicated developments of the epidemic. In addition, credit institutions are not allowed to pay cash dividends for the time being.

Securities-related fees

The Ministry of Finance issued Circular 14/2020/TT-BTC dated 18 March 2020 to exempt certain fees, such as fees for listing and registration, and to reduce certain other fees by 10%-50% for services such as securities custody, derivative transactions and position management. These exemptions and reductions are applicable until 31 August 2020.

Payment of wages and benefits for employees during work suspension due to Covid-19 pandemic. 

Official Correspondence 1064 of the Ministry of Labour, War Invalids and Social Affairs. Because a number of enterprises have to suspend their operations or scale down, numerous employees have been suspended from work for various reasons. 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 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.

Visa/work permit suspension

Directive 18 of the Government Office dated 21 March 2020: Vietnam temporarily suspended the entry of all foreigners into Vietnam except for (i) certain foreign affairs personnel, (ii) experts, (iii) corporate managers and (iv) high-skilled workers. Foreign experts, corporate managers and high-skilled workers have to obtain COVID-19 negative certificates issued by their home country and approved by Vietnam prior to their arrival. They will be subject to tight quarantine at their place of residence while in Vietnam. In addition, the issuance of work permits for foreign employees has also been temporarily suspended.

Social insurance contributions

On 17 March 2020, the Social Security Authority issued Official Letter 860/BHXH-BT on the suspension of contributions to retirement and survivorship funds for enterprises in difficulty due to COVID-19. This suspension is applicable to enterprises in passenger transport, tourism, accommodation, restaurant and other special industries experiencing difficulties due to COVID-19, which fall under either of the following circumstances:

1. Enterprises cannot provide work for employees, in which the number of employees who are subject to social insurance contribution but must be temporarily suspended from working is 50% or more of the total number of available employees before the business suspension; or
2. Enterprises suffer losses greater than 50% of the total value of assets due to COVID-19 (excluding land use right value).

Such enterprises are eligible to suspend contributions until June 2020. If the COVID-19 pandemic has not been alleviated by the end of June 2020, the enterprises can continue suspending contributions until December 2020. After the suspension period, employers and employees still have to make payment for such period, but without having to pay interest on late payments.