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December 4, 2008

Vietnam to spend $1bn to spur investment, consumption

Vietnam's government promised on Wednesday to spend about $1 billion to spur investment and consumption and said it wanted to lower taxes to help businesses as it sought to fend off an economic slowdown, reported Reuters.

The country battled runaway inflation and a widening trade deficit for much of the year by tightening monetary policy and curbing lending, but officials have become increasingly worried that the global credit crisis could drag down growth.

The investment plan, outlined in a report about a cabinet meeting, came one day after the government revealed what will be the central bank's fourth benchmark interest rate cut in six weeks, to take effect on Friday.

"The focus is now on immediate measures to prevent an economic slowdown and a stagnant production and business environment," the government report quoted Minister of the Government Office Nguyen Xuan Phuc as saying.

"The government will set aside about $1 billion to boost investment and consumption," it said without giving details.

The government also asked the Finance Ministry to consider which taxes could be reduced to help businesses.

Later, the state-run news Web site Vietnam Net quoted the Prime Minister Nguyen Tan Dung as saying corporate income tax would be cut by 30 percent, apparently across the board, in the fourth quarter of this year, and by the same amount just for companies in difficulties next year.

The government was also considering delaying the taxation of income from equity investments until the end of next year, the Web site VNExpress reported quoted Finance Minister Vu Van Ninh as saying.

Vietnam's economy grew at a rate of 8.48 percent last year, but the latest government estimate for growth this year is 6.7 percent. At the beginning of the year, it expected growth of up to 9 percent.

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