Businesses get access to non-interest loan package

non-interest loan package, Vietnam Bank for Social Policies, COVID-19 pandemic, non-interest loan package, Vietnam Bank for Social Policies, COVID-19 pandemic, Banking,
A representative of the Vietnam Bank for Social Policies gives a loan disbursement contract to an employer in the central province of Quang Binh. — VNA/VNS Photo

Forty businesses have received money from the Government’s non-interest loan package of VND62 trillion (US$2.7 billion) to pay salaries to nearly 1,200 employees who have stopped working due to the serious impacts caused by the COVID-19 pandemic.

The firms have received more than VND6 billion in total from the Vietnam Bank for Social Policies, making them the first businesses to avail of the package.

The bank was assigned to disburse the Government’s loan package for employers to pay salaries for workers in May, however, it had failed to do so due to the strict conditions.

To help businesses access the loans, the bank recently simplified conditions to make employers eligible for a loan when their employees, who hold social insurance cards, must stop work for at least one consecutive month from April 1, 2020, to December 31, 2020.

The businesses’ revenue in the first quarter of this year decreased by 20 per cent compared with the fourth quarter of the last year.

The loan term is negotiated by the bank and employers, with a maximum of 12 months. The overdue debt interest rate is 12 per cent per year.

Customers are not required to provide loan guarantees.

Nationwide branches of the Vietnam Bank for Social Policies have been working with customers to complete procedures for disbursement. The disbursement will be carried out on January 31, 2021.

The VND62 trillion package is the first of its kind the Government has offered to support people affected by the COVID-19 pandemic.

The Ministry of Labour Invalids and Social Affairs (MoLISA) recently proposed the Government provide a second package of VND18.6 trillion to help businesses develop production and business, and employees to borrow preferential loans to restore and maintain jobs.

Beneficiaries include small- and medium-sized enterprises, co-operatives and business households, with priority given to small and micro enterprises (less than 10 employees), co-operatives, household businesses and workers in rural areas.

The estimated loan amount for production and business establishments is VND2 billion, and VND100 million for workers. The zero interest rate will be for 12 months.

Nguyen Thi Lan Huong, the former Director of the MoLISA’s Institute of Labour Science and Social Affairs, told VnEconomy online newspaper that the targets and beneficiaries must be defined clearly in the second package.

“The most important thing is that all the victims of the COVID-19 pandemic will access the policy," she said.

“The struggling enterprises will be confirmed by the enterprise-based localities’ authorities, while the struggling workers will be confirmed by authorities of their working places,” Huong said.

She said the policies of the second package needed to be fulfilled so all people who were missed in the first package must be included in this one.

“This is a package of support, not investment. The goal of the relief during this difficult period is to ensure minimum conditions to save workers and businesses,” she added.

The third-quarter macroeconomic report of the Institute for Economic Research and Policy (VEPR) showed the policy of directly supporting employees had not shown effectiveness in practice. As of mid-August, only more than 16 million people from different groups of workers received support from the first package, with VND17 trillion disbursed, accounting for 19 per cent of people in need. — VNS

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