Deficit higher than expected Viet Nam's State budget deficit was estimated to hit VND92.39 trillion (US$4.35 billion) in the first half of this year, equal to 57 per cent of the annual plan set by the National Assembly, the Ministry of Finance (MoF) announced at a conference held on Friday in Ha Noi.   Workers at NamThai Son Import-Export JSC in northern Hai Duong Province produce export packaging. Tax exemption policy helps ease pressure on enterprises but causes State budget deficit. Addressing the conference, which reviewed the ministry's performance in H1 and plan for H2, head of MoF's Administrative Office Nguyen Duc Chi reported that the country's total budget collection in H1 reached VND356.52 trillion ($16.58 billion). The sum, he said, was an equivalent to a 4.5 per cent rise against the same period last year, meeting 43.7 per cent of the annual target. He also reported that domestic collection only met 43.3 per cent of the yearly target - the lowest level seen at this stage in the past four years. The country's total expenditure in the period surged 7.5 per cent from last year, reaching VND448.91 trillion ($20.88 billion) and meeting 45.9 per cent of the annual target. Of this amount, spending for socio-economic development and administrative management rose 11.6 per cent against the same period last year, while payment for foreign aid was up 2.8 per cent year-on-year. The ministry estimated that this year's State budget collection would be cut by VND17.613 trillion ($819.2 million) due to tax exemptions and extensions. The decreased figure for next year was estimated at roughly VND17.580 trillion. To support businesses throughout the economic slowdown, the finance ministry has extended and reduced corporate income tax (CIT), value added tax (VAT), environmental protection tax and land lease fees for a number of firms. Chi said that the Government's measures to support production and business had allowed more than 40,520 new firms to be set up in the first half of the year, raising the number of firms in the country to 457,343, up 9.5 per cent over the same period last year. Among the newly-established firms, 249 were State-owned firms, 542 foreign invested firms and 39,732 private firms. He said this was a good signal in the context of the economic slowdown, adding that the number of newly-established firms was up 1.2 per cent against May. Chi also reported that the number of firms ceasing operation during the first half of the year was 24,931, of which 202 were State-owned and 269 were foreign invested. For the second half of the year, Chi said that the finance ministry would continuously coordinate with other relevant ministries and agencies to study and map out suitable tax policies to help boost production and increase the competitiveness of firms and their products. "Together with better controlling to avoid tax fraud, the Ministry of Finance will focus on removing difficulties for businesses, helping them deal with inventories and non-performing loans, enlarging markets and increase production and business," he said. The ministry will also quickly finalise this year's expenditure plan on infrastructure construction, investment capital and Government bond capital to bolster consumption, helping producers remove inventories. The ministry said that it was planning to resolve non-performing loans by reviewing the policies of the Bank for Social Policy and the Bank for Development of Viet Nam. Restructuring the State Capital Investment Corporation and the Debts and Assets Trading Company were also a step in the right direction, as was the foundation of the Viet Nam Asset Management Company, the ministry added. The ministry also expected to speed up the restructuring process of State-owned firms through privatisation and streamlining related procedures and policies. Source: VNS