Images of deserted markets and closed stores circulate on Vietnamese social media – not the result of a pandemic, but as the visible impact of a government policy.
In recent weeks, the Vietnamese government has launched a scanning campaign to suppress counterfeit goods and enforce a new tax collection regime. The main objectives were small businesses.
The Prime Minister published a directive on May 24 urging all levels of government to “intensify the fight against counterfeit goods”. The government has also introduced decree 70, forcing small businesses to install electronic cash registers linked directly to the tax authorities.
The steps seemed reasonable, to tighten protections on intellectual property and evolve towards greater equity in tax collection which could stimulate state revenues.
But there have been negative consequences because many store owners have chosen to close their activities rather than complying with government measures.
The authorities across the country are launching surprise raids on small businesses to apply new regulations, targeting everything, from companies focused on social media to household market suppliers. Companies that are unable to provide documents proving the origin of their goods are faced with penalties.
The sudden and aggressive application sent shock waves in the small business community, which caused a wave of mass closings while the owners of panicked stores closed their doors to protest or in fear.
“I will do my store, I cannot continue like this!” A bloody store owner in Ho Chi Minh City, the main shopping center in Vietnam, says in a self-filmed video where she talks about the effect of new politicians. The video, which shows dozens of closed companies, was later published on Facebook and attracted more than 3 million views.
Local officials of the Nghe Center-Center province say that 80% of the local market stores have closed, highlighting the extent of the disturbance.
Family companies are the cornerstone of the Vietnam economy, representing 39% of all jobs and contributing approximately a quarter of the country's GDP, according to official government data.
The mass closure of household companies is expected to wreak havoc on the economy, disturbing local job and supply chains across the country.
Although the campaign against counterfeit goods has aroused the fear of small businesses, it is the application of a new tax regime that feeds the most resentment in the business world.
As part of the old system, small businesses paid a fixed monthly amount known as the alleged tax, calculated by the authorities on the basis of the income reported by business owners.
But this is not the only burden they face. There are other “unofficial” payments which are considered the cost of business in Vietnam, where corruption is deeply rooted.
A grocery owner in Ho Chi Minh -Ville told Radio Free Asia that he had to hand over an envelope with 2.5 million Vietnamese Dongs (or US $ 100) to local officials who run the market – and it is even before he was visited by the police.
“The police fall from time to time – sometimes asking a few hundred thousand (Dong), sometimes taking things without paying, saying that it is a” gift from the store “. Whenever their agencies start travels, training sessions or attend congresses, they call us and ask us to “contribute”, said the store owner, who, in common with other businessmen, RFA spoke for this article, asked for anonymity for security reasons.
A businesswoman operating on one of the main wholesale markets in the capital Hanoi told RFA that “tax evasion is a matter of survival” for many store owners. Loaded by regular bribes to local officials, she said that the only way to keep her store afloat and avoid increasing prices is to get around taxes.
In response to the wave of small businesses, the media managed by the State described the owners of stores as greedy and irresponsible, accusing them of having chosen to close rather than to fulfill their tax obligations. These reports have largely ignored the underlying issue of chronic corruption.
“Before demanding the transparency of small businesses, the government should first clean its own house, starting with local police,” the owner of the grocery store in Ho Chi Minh City said.
Translated and written by Truong Son. Edited by Mat Pennington.