Services and small businesses facing severe hardships

(09/07/2021) - After more than a month of undergoing social distancing, individuals and organizations in the services sector in Ho Chi Minh City are facing immense difficulties and are in need of urgent support.

The most severely affected people are those who provide non-essential services and have had to shut their shops or small businesses in an effort to curb the spread of the Covid-19 pandemic in this fourth wave.

Small businesses affected

When people refer to Ho Chi Minh City they are actually visualizing a busy and bustling city that never sleeps, with well-lit streets in downtown area where customers browse small shops for a wide array of products and services in rows of shops along the streets. However, now the fear of the Covid-19 pandemic looms large across the entire city as authorities have had to impose strict social distancing regulations to contain the pandemic.

On 31 May, Ho Chi Minh City began to impose the Prime Minister's Directive 15 all throughout the city for two weeks, but then extended this to another two weeks after the situation did not improve. However, later the situation worsened even further, and on 19 June, city authorities issued Directive 10 to tighten regulations which called for closure of street markets and suspending all public transport. The spread of the disease was still serious by 28 June, which then forced the city officials to call for stricter social distancing measures for an indefinite period of time.

With so many services suspended, almost all shops, restaurants and coffee shops along Nguyen Trai Street in District 1 are now shuttered and closed. In front of some of the shops are even sign boards that read 'For Lease'. However, there are no takers for these premises. The famous Dong Khoi Street, which provides the best and most expensive products in Ho Chi Minh City, also has many shuttered shops these days. Smaller streets like Mac Thi Buoi, Nguyen Thiep and Ngo Duc Ke are in the same situation as Dong Khoi Street and Nguyen Hue Street, which were both once crowded with customers before the pandemic.

Ms. N.D, an owner of a cosmetic shop in Mac Thi Buoi Street, says on her Facebook page that the situation is most serious for dealers who have to lease premises and are struggling to pay interest on loans from banks. She says that some house owners have lowered the rent by 20% to 30% this year, and by even 50% this month. Actually, many house owners have tried to share the difficulties with lessees during this hard time, but closure of shops have made their businesses suffer significantly.

Besides streets, also trading centers, like Takashimaya Trading Center in District 1, are very quiet these days. The once very bustling Ben Thanh Market, an important symbol of Ho Chi Minh City, is now under tightly closed doors. Ben Thanh Market usually has lots of popular shops selling various things like cosmetic products, jewelry items, clothes, flowers and fruit, but now the small shop dealers have no choice but to close their business and try and live through these bad times.

So many streets in other parts of Ho Chi Minh City are in the same situation. Ho Van Hue Street in Phu Nhuan District, Quang Trung Street in Go Vap District are all very quiet now. Tan Binh Market, one of the major markets in the city, is very quiet with closed shops. If there is an open shop, it probably is one of the takeaway eateries. When the Covid-19 pandemic first broke out, individuals and organizations in the tourism and hospitality industry were the hardest hit. Now, the pandemic has spread widely and still not successfully curbed, therefore scores of services and businesses have been severely and drastically affected.

Lack of information

The Covid-19 pandemic has badly hurt companies, small household businesses and scores of workers. A large number of companies and household businesses have been closed for several weeks now. A few days ago, the People's Committee of Ho Chi Minh City proposed a VND 886 bn relief aid package for pandemic affected people. As proposed, each vendor at a Grade-1 market would receive VND 300,000 a month; at a Grade-2 market it would be VND 210,000 a month; and at a Grade-3 market it would be VND150,000 a month. This assistance would be provided for six months, beginning in early July. Additionally, each household business in affected areas would get VND 2 mn immediately, in accordance with Directive 16.

However, the biggest problem for companies, household businesses and dealers are taxes and interest on bank loans. Businesses and individuals who delay payments of taxes or interests are fined and listed as bad debtors. Companies that have had their restaurants or party or event halls closed for more than a month have still to pay taxes. While dealers and vendors at markets who have not done much business recently have received no specific information about any lower taxes.

Many household businesses have had to close their shops, but they have not received any information about any tax reduction or exemption. Speaking to Saigon Investment, Ms. Thuy, an interior furniture household business owner in District 7, said she closed her shop for two weeks, but now does not know when she can open it again, and she has not heard of any tax reduction or exemption. She has asked a tax collection officer and was told that the taxation division does not work with household businesses now because of social distancing. Ms. Thuy said they closed their shops as required by regulations, but now they need to go and complete procedures for request to consider tax reduction or exemption from the appropriate authorities.

Tax reduction has been proposed for household businesses that have had their shops closed due to social distancing. The Taxation Department of Ho Chi Minh City said that Decision No.22/2020 by the Prime Minister stipulates a 15% reduction of land rent for companies with business activities suspended for 15 days or more. However, no such guideline has been issued up until now. There have been no directives so far on how to support household businesses.

Therefore, the Taxation Department of Ho Chi Minh City has suggested that city authorities provide support for household businesses who have had to close their shops for a month, by allowing such household businesses not to pay taxes for that month, and to have their taxes halved if their businesses are closed for 15 days. Reportedly, the taxation divisions of districts are receiving requests from closed businesses, and will consider their cases and provide them with tax reduction or exemption as stipulated by regulations.

The fourth wave of the Covid-19 pandemic has hit companies and businesses so badly that most of them have gone totally bankrupt. Serious investigation needs to be conducted now in order to provide the right companies and individuals with the right assistance. Actually, the first package of relief aid from the Government was quick, but it was not so helpful for the right companies and individuals.

Nobody can tell how many companies and household businesses will have gone bankrupt by the time the pandemic is successfully contained. However, companies should make their own arrangements and plans too to survive and save their businesses too, instead of just passively waiting for outside assistance to come forth.

Thanh Lâm