Vietnam needs stimulus package to alleviate coronavirus impact, ministry says

Vietnam must work out a stimulus package this month to help businesses cope with a coronavirus epidemic that is expected to keep the economy from achieving a target of 6.8% growth this year, the planning ministry said on Wednesday.

The virus outbreak has killed more than 1,100 people in China, Vietnam’s largest trading partner, and the southeast Asian nation confirmed another case on Tuesday, taking its total to 15.

“The epidemic has caused widespread impacts, disrupting global supply chains,” the planning and investment ministry said in a statement submitted to the government.

“Vietnam has an open economy and shares a long border with China, so the impact (on Vietnam) will be significant.”

Vietnam’s central bank should offer credit support for small- and medium-sized enterprises and farmers hit by the virus, it said, such as interest rate cuts and deferred loan repayment.

The finance ministry should consider cutting taxes and delay tax payment and land rent payment for certain affected businesses, it added.

It urged that the measures be submitted to the government for approval in February.

Vietnam’s hardest hit industries include tourism, transport, electronics, agriculture and insurance, the ministry said.

Vietnam’s growth in gross domestic product this year would be 6.25% if the epidemic was contained within the first quarter, and 5.96% if it was contained in the second quarter, it added.

Inflation would be 4.86% this year if the epidemic was contained within the second quarter, it said, which would frustrate a target of keeping inflation below 4%.

The epidemic has cost Vietnamese airlines about 10 trillion dong ($430 million) in lost revenues following travel curbs between Vietnam and China, the government has said.

It could also wipe $5.9 billion to $7.7 billion from Vietnam’s tourism earnings in the next three months as international travellers stay away.

By Khanh Vu & Phuong Nguyen – Reuters – February 12, 2020