The government plans tax cuts and financial incentives to boost growth and stave off the crisis. Proposal will go to National Assembly by the end of the month. Ministry data show that 17,735 businesses shut down or cut production. In April, the Consumer Price Index saw its lowest rise. The price of rice drops.

Hanoi (AsiaNews/Agencies) - The government of Vietnam announced a plan to cut corporate taxes and offer businesses incentives to boost growth and stave off a recession. In the past few months, thousands of plants had to close-not as many as in Europe-and the economic crisis could affect the Southeast Asian nation with a major impact on employment. Meanwhile, the Consumer Price Index (CPI) in April had its lowest rise in five years, at 0.05 per cent.

According to the Ministry of Planning and Investment, 17,735 businesses shut down or halted operations in the first four months of the year. That is up 9.5 per cent from the same period last year. More than 5,000 of these companies were wholesalers or retailers, the ministry said.

The State Bank of Vietnam on Friday announced that it would cap lending rates at 15 per cent for exporters, agricultural businesses, and small and medium-sized enterprises.

Various factors explain the latter's problems: higher debt load, lower profits, declining exports because of the world's financial crisis, declining industrial output and a morose domestic real estate market.

The government plans to present its tax relief package to the National Assembly to help manufacturing and trade. The package includes a 30 per cent cut (US.4 billion) in corporate income tax for small and medium companies and businesses. Businesses will also be allowed to delay value-added tax payments for April, May and June by six months.

Government sources are eager to point out that the new rescue package will not spark inflation. The General Statistics Office reported that the April CPI was the lowest in five years at 0.05 per cent for annualised 10.54.

As many as 8 out of 11 groups of goods and services used to calculate the index saw prices rise by less than 1 per cent. The index includes food, tobacco, clothing, drugs and health care products.

Rice prices also dropped by 1.69 per cent because of higher inventories.

The April gold price index dropped 2.62 per cent over the previous month, but the trend is upward, 15.89 per cent over a year ago.

• vietnam
• economy
• crisis
• inflation
• rescue
• package