Measures needed to boost business optimism

Illustrative image (Photo: VNA)

Hanoi - Business optimism is at its lowest in over a decade, with only 27% of enterprises planning to expand operations over the next two years, according to a survey by the Vietnam Chamber of Commerce and Industry (VCCI).

Vu Minh Quan, director of Hanoi DVC Joint Stock Company, said while there have been signs of economic recovery, it will take some time for most businesses to go back to pre-COVID 19 production levels.

Nguyen Van Than, chairman of the Small and Medium Enterprises Association, said market participation has been declining and entrepreneurial spirit is waning. In January 2025, as many as 58,300 enterprises exited the market and the ratio of new businesses per exit fell to 1.2 — a stark contrast to the pre-COVID ratio of 1.5.

According to the Ministry of Planning and Investment, there are currently 940,000 active enterprises, falling short of the target of one million by 2020 and 1.5 million by the end of the year.

In Vietnam, micro-enterprises account for about 69% of all businesses and small enterprises around 25%, with medium-sized and large enterprises representing 3.5% and 2.5%, respectively.

In view of these challenges, Than said measures are urgently needed to help businesses recover and accelerate growth, especially given the Government’s targets for the next few years. The chairman urged the Government to make changes to the Corporate Income Tax Law to reduce the tax burden for the SME sector, bolstering revenue and supporting reinvestment in production and trade.

"The Law on Supporting SMEs provides for a temporary lower corporate income tax rate for SMEs, yet no specific policy has been implemented to enforce this provision,” he noted.

Currently, the draft amended Corporate Income Tax Law under review by the National Assembly proposes a rate of 15% for enterprises with revenue under 3 billion VND (117,700 USD) and 17% for those with revenue between 3 billion VND and 50 billion VND (1.96 million USD).

He said this proposal does not fully reflect reality, as most enterprises with revenue under 3 billion VND are unprofitable. Moreover, the proposal appeared to cover only a segment of the SMEs within the country.

As for monetary policy, he expressed hope for measures to encourage banks to expand future asset-backed lending.

"At present, only about 30–35% of SMEs can access bank loans using their existing collateral, and only a few banks provide even modest loans based on future assets. If businesses could secure such loans, they would gain access to substantially larger funds,” he said.