## 1. Gross Profitability, by Industries, Ownership Types and Sizes

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---

### I. INTRODUCTION and Objectives
- COVID-19 expected to sharply lower growth in Vietnam and weigh on corporate balance sheets.
- Contact-intensive sectors (e.g., hospitality, entertainment, retail), and low value-added manufacturing have seen significant contraction in domestic and external demand, producing liquidity shortages and potential solvency stress if recovery is protracted.
- Pre-crisis corporate vulnerabilities:
  - NFC sector’s debt was rising.
  - NPLs in the banking system—while declining—remained high.
- Early policy responses:
  - Fiscal: deferral of tax obligations; cuts in electricity prices and other quasi-fiscal measures.
  - Monetary: traditional policy rate cuts and targeted easing measures.
  - Financial sector: time-bound moratoriums on loan repayments and interest rate deferrals.
- Objective bullets:
  - Assess corporate sector vulnerabilities prior to COVID-19 and cross-country comparisons.
  - Identify firm characteristics with heightened default risk and labor-market implications; analyze upstream/downstream spillovers.
  - Examine extent to which fiscal and financial measures ameliorated liquidity and balance-sheet risks using a quantitative simulation.

### Key findings (summary)
- Vietnam’s corporate sector, dominated by SMEs, entered the crisis with relatively weak balance-sheet positions.
- SMEs, particularly domestic private firms in contact-intensive sectors, were much less profitable than regional peers, indicating cash-flow problems and weak debt-servicing capacity.
- SMEs accounted for a sizable share of employment of informal workers, who are at higher risk of job losses or wage cuts.
- Larger firms were more profitable but much more leveraged by regional standards.
- Immediate policy response alleviated potential liquidity shortages, helping firms survive the initial shock.
- As crisis progresses, support must be reconfigured to address pockets of vulnerability and rising insolvency risks.
- Robust recovery hinges on improving firm productivity and facilitating resource reallocation.

### Organization of the paper
- Section II: brief literature review.
- Section III: data and methodology.
- Section IV: assessment of pre‑COVID vulnerabilities and cross-country comparison.
- Section V: implications of COVID-19 and impact assessment of policy measures.
- Section VI: concludes.

### Data coverage (selected)
- Orbis Database: over 488,446 observations for Vietnam in the cross-country sample.
- Confidential Vietnamese Enterprise Survey: covers 517,806 registered firms; representative across industries, sizes, ownership types, and locations.

### Survey note
- "The intensity of containment measures peaked in March and April in Vietnam, and restrictions on movement and business operations were gradually relaxed from May onward as infections fell."

---

### Pre‑COVID corporate vulnerabilities (detailed findings)
- Profitability and heterogeneity:
  - Gross and operating profitability in Vietnam were significantly lower than ASEAN-5, China, and Korea, particularly among SMEs and micro firms (less than 10 employees).
  - Larger FDI firms were much more profitable and comparable to Asian peers; SOEs were more profitable than private domestic enterprises controlling for size.
  - High‑tech manufacturing (electronics, electrical equipment) had higher gross and operating profitability; service sectors dominated by SMEs were less profitable.
- Liquidity and leverage (pre‑crisis):
  - Available cash stock could only cover around 2 months of operating expenses on average; median cash coverage in hardest-hit sectors (restaurants, travel, textiles) is less than 2 months.
  - Median leverage (debt-to-equity) was about 0.3 (debt-to-asset = 0.23).
  - Micro and small firms relied mostly on internal funding and were much less leveraged than similar-sized firms in other countries; large firms were much more leveraged.
- Debt servicing capacity:
  - Median interest coverage ratio (ICR = EBIT / interest payment) across Vietnamese firms was 1.3 in 2017.
  - Industries with median ICR below 1 include entertainment, hotel, and travel.
  - Pre‑COVID bank exposure: about 28 percent of corporate debt (90 percent through domestic bank loans) had ICR below 1; another 30 percent of corporate debt had ICR between 1 and 2.
  - Industries with highest share of debt-at-risk (ICR <1): entertainment 57 percent; transportation 43 percent; hospitality 51 percent.
  - SOEs: debt-at-risk 12 percent; private firms: 31 percent; FDI firms: 37 percent (notably in basic metal manufacturing).

---

### Impact of COVID-19: simulated shocks and outcomes
- Macroeconomic calibration:
  - Shocks to firms’ profitability based on sectoral turnover assumptions consistent with October 2020 World Economic Outlook country-level growth forecasts.
  - Material costs assumed adjustable in proportion to sales reductions; wages, fixed costs, interest, and debt repayments continue in the short run.
- Sectoral profit declines (simulated):
  - Hospitality, personal transportation, travel and petroleum: decline in gross profits of over 40 percent.
  - Manufacturing, retail, business transportation: around 10 percent decline in gross profits.
- Liquidity and solvency outcomes (simulated):
  - Around half of small and micro firms would face negative cash flows in the baseline simulation (noting layoffs/wage cuts could reduce this number in practice).
  - Aggregate debt in distress (post-shock): about 45 percent of the debt would be in distress, compared to 28 percent before the COVID-19 shock.
  - Hardest-hit sectors (hospitality, travel, entertainment): debt-at-risk increases from 50 percent to 80 percent in the simulation.
  - Corporate sector remains vulnerable to further demand shocks; significant upstream and downstream spillovers exist across industries via input-output linkages.
- Labor market implications:
  - Firms with weak balance sheets employed a sizeable share of workers; nearly half of those workers were in informal working arrangements.
  - Assuming decline in firm earnings is absorbed by cutting employment, around 28 percent of current employees could be laid off.
  - Petroleum and service industries face the most significant layoffs or working-hour declines, followed by transportation, travel, hospitality, entertainment; textiles and electronics also face sizable downsizing or wage cuts.

---

### Quantitative sensitivity (selected values from Table 1)
- Baseline (pre-shock) by firm size:
  - Micro: median firm ICR = 1.10; share of firms ICR<1 = 43.7; share of debt ICR<1 = 50.0; share of debt ICR<2 = 76.3.
  - Small: median firm ICR = 1.31; share of firms ICR<1 = 28.2; share of debt ICR<1 = 32.7; share of debt ICR<2 = 69.4.
  - Medium: median firm ICR = 1.48; share of firms ICR<1 = 23.4; share of debt ICR<1 = 27.7; share of debt ICR<2 = 65.3.
  - Large: median firm ICR = 2.31; share of firms ICR<1 = 20.4; share of debt ICR<1 = 24.7; share of debt ICR<2 = 51.4.
- Adverse shock scenario (post-shock) by firm size:
  - Micro: median firm ICR = 0.36; share of firms ICR<1 = 68.0; share of debt ICR<1 = 63.9; share of debt ICR<2 = 79.9.
  - Small: median firm ICR = 0.74; share of firms ICR<1 = 62.9; share of debt ICR<1 = 53.9; share of debt ICR<2 = 75.6.
  - Medium: median firm ICR = 0.95; share of firms ICR<1 = 52.8; share of debt ICR<1 = 44.2; share of debt ICR<2 = 70.7.
  - Large: median firm ICR = 1.43; share of firms ICR<1 = 39.2; share of debt ICR<1 = 37.9; share of debt ICR<2 = 55.9.

---

### Role and simulated impact of policy measures (assumptions and outcomes)
- Measures implemented early 2020 include:
  - Tax deferrals, VAT/CIT/land rental payment deferrals, social security contribution deferrals, electricity price cuts, debt moratoria, interest rescheduling, incentives for banks to provide credit or new loans.
- Simulation assumptions on policy effects:
  - Tax deferrals reduce firms’ tax burden by half.
  - Electricity price subsidy reduces electricity-related payment by 10 percent.
  - Social security deferral relieves social security contribution for firms that would lay off more than 50 percent labor in the crisis.
  - Financial policies reduce firms’ interest payment obligation by 50 percent.
  - Policy support is simulated as time‑bound and affects financial health only in 2020.
- Simulated outcomes with policies:
  - Combined measures could help cover nearly half of the shortfall in total cash flows.
  - Debt moratoria and financial measures (new loans) contribute most to lowering the liquidity gap.
  - Policy support could bring the share of debt-at-risk of default back to the pre-crisis level and significantly reduce vulnerable debt (ICR <2).
  - Potential employment layoffs could be lowered from 28 percent to 18 percent when accounting for workers employed by firms kept illiquid-but-viable due to policy support.
- Caveats:
  - Simulation does not account for actual program take-up rates by sectors and firms; results could overestimate policy effectiveness.
  - Analysis is static and does not address banking-system second-round effects.

---

### Policy implications and recommendations
- Short-to-medium term:
  - Continue time-bound support to illiquid but viable firms until recovery is on firmer ground to prevent severe liquidity-driven insolvencies and economic scarring.
  - Maintain measures that directly alleviate debt service burdens (debt moratoria, interest rescheduling, targeted new lending) given their large simulated impact on liquidity gaps.
- Medium-to-long term:
  - Gradually replace emergency liquidity support with policies focused on corporate restructuring and resolution to address solvency problems and reallocate resources efficiently.
  - Improve SME access to finance, technology, and market access; reduce reliance on retained earnings and fixed-asset collateral requirements.
  - Reduce onerous post-registration bureaucracy to encourage formalization, investment, and economies of scale.
  - Enhance training and higher education quality to support entrepreneurship, innovation, and productivity growth.
- Structural priorities:
  - Address resource misallocation and economic duality that underpin dispersion in balance-sheet conditions by size and ownership.
  - Strengthen resilience by facilitating resource reallocation and improving labor skills to support a robust and sustained recovery.

---

### Annex highlights — Selected cross-country and Vietnam-specific statistics
- Cross-country summary statistics (2018; assets in 100,000 USD; observations total 507583):
  - Total assets: 22.02 mean; 1.58 median.
  - Fixed assets: 9.32 mean; 0.00 median.
  - Equity: 9.64 mean; 0.84 median.
  - CVI: 0.10 mean; 0.10 median.
  - ICR: 85.25 mean; 1.12 median.
  - EBIT / Assets: -0.14 mean; 0.00 median.
  - Gross profits / Assets: 0.28 mean; 0.04 median.
  - Leverage ratio: 0.32 mean; 0.19 median.
  - Current ratio: 8.17 mean; 1.98 median.
  - Days cash on hands: 65.08 mean; 10.72 median.
  - Observations total: 507583.
- Vietnamese Enterprise Survey (2017; total firms 517,806):
  - Ownership: Over 95 percent domestic private; 4 percent with foreign financing; SOEs <1 percent.
  - Firm size: Large (>200 employees) 2 percent; Medium (>50 employees) 5 percent; Small and micro dominate.
  - Sector composition: Services 80 percent (Retail 40 percent; Construction 13 percent; Hospitality 3.5 percent; Transportation 6 percent; Travel 1 percent); Manufacturing and mining 15 percent.
  - Employment: Manufacturing hires 50 percent of employees; private firms hire 60 percent; FDI firms account for 30 percent.
  - Shares: Service sectors account for more than half of total sales and assets; large private firms account for 50 percent of sales; SOEs account for 18 percent of total sales and 30 percent of total assets.
- Annex 3 median indicators (selected by sector/ownership/size):
  - By ownership medians:
    - SOE: ROA 11.22; ROE 30.40; EBIT Ratio 3.58; Interest Coverage Ratio 3.33; Debt at Risk 12.07.
    - Private: ROA 8.27; ROE 15.31; EBIT Ratio 0.16; Interest Coverage Ratio 1.24; Debt at Risk 31.61.
    - FDI: ROA 17.94; ROE 39.29; EBIT Ratio 1.36; Interest Coverage Ratio 2.27; Debt at Risk 37.12.
  - By firm size medians:
    - large: ROA 15.14; ROE 44.72; EBIT Ratio 3.24; Interest Coverage Ratio 2.31; Debt at Risk 24.69.
    - micro: ROA 6.26; ROE 10.03; EBIT Ratio 0.00; Interest Coverage Ratio 1.10; Debt at Risk 49.96.
  - Overall average medians: ROA 8.46; ROE 15.76; EBIT Ratio 0.17; Interest Coverage Ratio 1.26; Debt at Risk 28.69.

---

### Annex survey (National Economics University of Vietnam, April 2020; ~700 firms) — reported impacts and responses
- Immediate impacts (percent of responded firms):
  - Sharp decline in revenue to cover business costs: 60.3 percent.
  - Under-scale production: 53.6 percent.
- Firm responses:
  - lay off workers: 34.1 percent.
  - ask to take unpaid leaves: 34.4 percent.
  - cut wages: 32.6 percent.
  - operational expense cut: 63.9 percent.
  - reduce scale of business: 42.5 percent.
  - change business model: 12.8 percent.
  - pause business: 32.7 percent.
  - other: 5.3 percent.
- Scenario projections if outbreak lasts until end-year:
  - 38 percent of firms reported they would go bankrupt.
  - 36 percent would have to suspend their business.
- Firm-type vulnerability notes:
  - FDI firms likely more immune due to parent-company support.
  - SOEs are the most vulnerable to bankruptcy if outbreak is prolonged.

### Annex on policy measures implemented (selected measures)
- Fiscal measures:
  - Deferral of VAT and CIT and land rental payment for 5 months for affected firms.
  - Deferral of social security contribution (up to 12 months) for affected firms and workers if firm employment falls below 50 percent.
  - Up-to -10 percent cut (for 3 months) in electricity prices for industrial and service enterprises.
  - CIT incentive scheme for micro and small enterprises from July 1.
  - Cuts in various fees and charges; extension of exemptions/reductions of environmental protection tax on gasolines.
- Monetary and financial measures:
  - Policy rates cut three times by 50-100 bps; short-term deposit rates cap by 25-30 bps; short-term lending rates cap for priority sectors by 50 bps.
  - VND 300 trillion credit support package (voluntary) to provide new loans at lower interest rates by 0.5-2.5 percent vs. pre-COVID.
  - Interest reduced or exempted for 464 thousand clients between March and Mid-Aug.
  - Rescheduled/restructured loans for 265,000 clients with outstanding loans of VND 310 trillion (3.6 percent of total system outstanding loans) between March to mid-August.
  - VPSB loans with SBV refinancing (VND 16 trillion) to provide zero-interest-rate loans for affected firms that maintain employees on payroll.

*Source: wpiea2020260-print-pdf*

### 1. Gross Profitability, by Industries, Ownership Types and Sizes _____________________________ 7

### 1. Gross Profitability, by Industries, Ownership Types and Sizes _____________________________ 7

### I. INTRODUCTION
- The COVID-19 shock is expected to sharply lower growth in Vietnam and weigh on corporate balance sheets.
- Contact-intensive sectors (e.g., hospitality, entertainment, retail), and low value-added manufacturing, in particular, have seen a significant contraction in domestic and external demand.
- As a result, corporates in these sectors are experiencing liquidity shortages, and could potentially face deeper liquidity strains and solvency stress if the recovery is protracted.
- From a macro-perspective, corporate sector vulnerabilities in Vietnam were elevated even prior to this crisis:
  - Non-financial corporate (NFC) sector’s debt was rising, leaving the sector vulnerable to a sharp fall in revenues.
  - Non-performing loans (NPLs) in the banking system—while declining—remained high.
- The authorities implemented a macroeconomic and financial package to support firm liquidity in the early stages of the crisis:
  - Fiscal policy provided “on-budget” support measures, such as deferral of tax obligations and other quasi-fiscal measures such as cuts in electricity prices.
  - Monetary policy relied on both traditional policy rate cuts and other targeted easing measures.
  - Financial sector policies supported firms through time bound moratoriums on loan repayments and interest rate deferrals, among others.
- Footnote: "The intensity of containment measures peaked in March and April in Vietnam, and restrictions on movement and business operations were gradually relaxed from May onward as infections fell."

### Objectives of the paper
- Assess corporate sector vulnerabilities prior to the COVID-19 shock and how Vietnam compares to other countries in the region and examine which sectors and firm were the most vulnerable.
- Identify the characteristics of firms that are a heightened risk of default in response to the COVID-19 pandemic and implications for the labor market; and analyze the sensitivity to adverse spillovers from upstream and downstream sectors;
- Examine the extent to which fiscal and financial sectors measures implemented to support firms have ameliorated liquidity and balance sheet risks using a quantitative simulation.

### Key findings (as presented)
- Vietnam’s corporate sector, which is dominated by small and medium enterprises, entered the crisis with relatively weak balance sheet positions.
- Small and medium enterprises (SMEs), particularly domestic private firms in contact-intensive sectors, were much less profitable than regional peers, suggesting cash flow problems and weak debt servicing capacity.
- SMEs accounted for a sizable share of employment of informal workers, which are at higher risk of job losses or wage cuts on account of the pandemic.
- Larger firms, despite exhibiting higher profitability, were much more leveraged by regional standards.
- The immediate policy response has alleviated potential liquidity shortages and helped firms survive the initial shock and prevent a more severe economic collapse.
- As the crisis progresses, the nature of support will need to be reconfigured to address specific pockets of vulnerabilities and potentially rising insolvency risks.
- A robust and sustained recovery will also hinge on improving firm productivity by facilitating resource reallocation.

### Organization of the paper
- Section II provides a brief review of the recent literature.
- Section III describes the data and methodology.
- Section IV assesses corporate sector vulnerabilities prior to the COVID-19 shock and provides a cross-country comparison.
- Section V examines the implications of COVID-19 and assesses the impact of policy measures undertaken to support firms.

*Source: wpiea2020260-print-pdf*

### Section VI concludes.

### Section VI concludes

### Key findings on pre‑COVID corporate vulnerabilities
- Recent surveys: around 80 percent of SMEs in the UK and more than 50 percent of SMEs in the US reported revenue losses on account of the COVID-19 pandemic. A Vietnamese enterprise survey reports that close to 90 percent of the firms surveyed were affected by COVID-19 to some extent; almost 60 percent of firms reported facing weaker demand and half experienced supply chain disruptions.
- Data coverage:
  - Orbis Database: over 488,446 observations for Vietnam in the cross-country sample.
  - Confidential Vietnamese Enterprise Survey: covers 517,806 registered firms; representative across industries, sizes, ownership types, and locations.
- Profitability and heterogeneity:
  - Gross and operating profitability in Vietnam were significantly lower than ASEAN-5, China, and Korea, particularly among SMEs and micro firms (less than 10 employees).
  - Larger FDI firms were much more profitable and comparable to Asian peers; SOEs were more profitable than private domestic enterprises controlling for size.
  - High‑tech manufacturing (electronics, electrical equipment) enjoyed higher gross and operating profitability; service sectors dominated by SMEs were less profitable.
- Liquidity and leverage (pre‑crisis):
  - Available cash stock could only cover around 2 months of operating expenses on average; median cash coverage in hardest-hit sectors (restaurants, travel, textiles) is less than 2 months.
  - Median leverage (debt-to-equity) was about 0.3 (debt-to-asset = 0.23).
  - Micro and small firms relied mostly on internal funding and were much less leveraged than similar-sized firms in other countries; large firms were much more leveraged.
- Debt servicing capacity:
  - Median interest coverage ratio (ICR = EBIT / interest payment) across Vietnamese firms was 1.3 in 2017.
  - Industries with median ICR below 1 include entertainment, hotel, and travel.
  - Pre‑COVID bank exposure: about 28 percent of corporate debt (90 percent through domestic bank loans) had ICR below 1; another 30 percent of corporate debt had ICR between 1 and 2.
  - Industries with highest share of debt-at-risk (ICR <1): entertainment (57 percent), transportation (43 percent), hospitality (51 percent).
  - SOEs: debt-at-risk 12 percent; private firms: 31 percent; FDI firms: 37 percent (notably in basic metal manufacturing).

### Impact of COVID-19: simulated shocks and outcomes
- Macroeconomic calibration: shocks to firms’ profitability based on sectoral turnover assumptions consistent with October 2020 World Economic Outlook country-level growth forecasts; material costs assumed adjustable in proportion to sales reductions, while wages, fixed costs, interest, and debt repayments continue in the short run.
- Sectoral profit declines:
  - Hospitality, personal transportation, travel and petroleum: decline in gross profits of over 40 percent.
  - Manufacturing, retail, business transportation: around 10 percent decline in gross profits.
- Liquidity and solvency outcomes (simulated):
  - Around half of small and micro firms would face negative cash flows in the baseline simulation, mostly in hardest-hit sectors (noting layoffs/wage cuts could reduce this number in practice).
  - Aggregate debt in distress (post-shock): about 45 percent of the debt would be in distress, compared to 28 percent before the COVID-19 shock.
  - Hardest-hit sectors (hospitality, travel, entertainment): debt-at-risk increases from 50 percent to 80 percent in the simulation.
  - Corporate sector remains vulnerable to further demand shocks; significant upstream and downstream spillovers exist across industries via input-output linkages.
- Labor market implications:
  - Firms with weak balance sheets employed a sizeable share of workers; nearly half of those workers were in informal working arrangements.
  - Assuming decline in firm earnings is absorbed by cutting employment, around 28 percent of current employees could be laid off.
  - Petroleum and service industries face the most significant layoffs or working-hour declines, followed by transportation, travel, hospitality, entertainment; textiles and electronics also face sizable downsizing or wage cuts.

### Quantitative sensitivity (selected values from Table 1)
- Baseline (pre-shock) by firm size:
  - Micro: median firm ICR = 1.10; share of firms ICR<1 = 43.7; share of debt ICR<1 = 50.0; share of debt ICR<2 = 76.3.
  - Small: median firm ICR = 1.31; share of firms ICR<1 = 28.2; share of debt ICR<1 = 32.7; share of debt ICR<2 = 69.4.
  - Medium: median firm ICR = 1.48; share of firms ICR<1 = 23.4; share of debt ICR<1 = 27.7; share of debt ICR<2 = 65.3.
  - Large: median firm ICR = 2.31; share of firms ICR<1 = 20.4; share of debt ICR<1 = 24.7; share of debt ICR<2 = 51.4.
- Adverse shock scenario (post-shock) by firm size:
  - Micro: median firm ICR = 0.36; share of firms ICR<1 = 68.0; share of debt ICR<1 = 63.9; share of debt ICR<2 = 79.9.
  - Small: median firm ICR = 0.74; share of firms ICR<1 = 62.9; share of debt ICR<1 = 53.9; share of debt ICR<2 = 75.6.
  - Medium: median firm ICR = 0.95; share of firms ICR<1 = 52.8; share of debt ICR<1 = 44.2; share of debt ICR<2 = 70.7.
  - Large: median firm ICR = 1.43; share of firms ICR<1 = 39.2; share of debt ICR<1 = 37.9; share of debt ICR<2 = 55.9.

### Role and simulated impact of policy measures
- Types of measures implemented early 2020: tax deferrals, time-bound deferrals of VAT, CIT, land rental payment, social security contribution deferrals, cut in electricity prices, debt moratoria, reducing or rescheduling interest payments, incentives for banks to continue providing credit or new loans.
- Simulation assumptions on policy effects:
  - Tax deferrals reduce firms’ tax burden by half.
  - Electricity price subsidy reduces electricity-related payment by 10 percent.
  - Social security deferral relieves social security contribution for firms that would lay off more than 50 percent labor in the crisis.
  - Financial policies reduce firms’ interest payment obligation by 50 percent.
  - Policy support is simulated as time‑bound and affects financial health only in 2020.
- Simulated outcomes with policies:
  - Combined measures could help cover nearly half of the shortfall in total cash flows.
  - Debt moratoria and financial measures (new loans) contribute most to lowering the liquidity gap.
  - Policy support could bring the share of debt-at-risk of default back to the pre-crisis level and significantly reduce vulnerable debt (ICR <2).
  - Potential employment layoffs could be lowered from 28 percent to 18 percent when accounting for workers employed by firms kept illiquid-but-viable due to policy support.
- Caveat: simulation does not account for actual program take-up rates by sectors and firms; results could overestimate policy effectiveness. The analysis is static and does not address banking-system second-round effects.

### Policy implications and recommendations
- Short-to-medium term:
  - Continue time-bound support to illiquid but viable firms until recovery is on firmer ground to prevent severe liquidity-driven insolvencies and economic scarring.
  - Maintain measures that directly alleviate debt service burdens (debt moratoria, interest rescheduling, targeted new lending) given their large simulated impact on liquidity gaps.
- Medium-to-long term:
  - Gradually replace emergency liquidity support with policies focused on corporate restructuring and resolution to address solvency problems and reallocate resources efficiently.
  - Improve SME access to finance, technology, and market access; reduce reliance on retained earnings and fixed-asset collateral requirements.
  - Reduce onerous post-registration bureaucracy to encourage formalization, investment, and economies of scale.
  - Enhance training and higher education quality to support entrepreneurship, innovation, and productivity growth.
- Structural priorities:
  - Address resource misallocation and economic duality that underpin dispersion in balance-sheet conditions by size and ownership.
  - Strengthen resilience by facilitating resource reallocation and improving labor skills to support a robust and sustained recovery.

*IMF staff analysis (Section VI concludes).*

### Annex 1. Summary Statistics of Key Variables Across Asian Countries

### Annex 1. Summary Statistics of Key Variables Across Asian Countries

### Cross-country summary statistics (Averages and medians reported for 2018; Total assets, fixed assets, and equity are reported in 100,000 USD)
- Countries covered: Vietnam, Indonesia, Malaysia, Philippines, Singapore, Thailand, China, Korea.
- Reported indicators (mean and median where shown): Total assets, Fixed assets, Equity, CVI, ICR, EBIT / Assets, Gross profits / Assets, Leverage ratio, Current ratio, Days cash on hands, Cash flow ratio.
- Selected exact figures (mean then median as provided in table format):
  - Total assets: 22.02 mean; 1.58 median; country-level examples: 6010 mean / 1460 median; 5500 mean / 1010 median; 2100 mean / 61.22 median; 50.63 mean / 1.30 median; 12300 mean / 906 median; 971 mean / 15.94 median.
  - Fixed assets: 9.32 mean; 0.00 median; country-level examples: 3590 / 704; 3560 / 428; 1280 / 4.90; 29.32 / 0.23; 7700 / 590; 554 / 4.28.
  - Equity: 9.64 mean; 0.84 median; country-level examples: 2840 / 749; 2790 / 583; 1060 / 25.15; 24.65 / 0.89; 4890 / 310; 498 / 6.45.
  - CVI: 0.10 mean; 0.10 median; country-level examples: 0.03 / 0.03; 0.07 / 0.07; 0.01 / 0.01; 0.06 / 0.06; 0.02 / 0.02; 0.13 / 0.13.
  - ICR: 85.25 mean; 1.12 median; country-level examples: 92.27 / 2.59; 994.41 / 3.35; 994.41 / 5.81; 78.61 / 3.04; 324.93 / 5.26; 22.19 / 5.80; 35.91 / 4.10.
  - EBIT / Assets: -0.14 mean; 0.00 median; country-level examples: 0.06 / 0.05; 0.03 / 0.04; 0.03 / 0.06; 0.03 / 0.03; 0.07 / 0.06; 0.02 / 0.02; 0.09 / 0.06.
  - Gross profits / Assets: 0.28 mean; 0.04 median; country-level examples: 0.22 / 0.18; 0.21 / 0.16; 1.80 / 0.123; 0.38 / 0.24; 0.46 / 0.33; 0.45 / 0.25.
  - Leverage ratio: 0.32 mean; 0.19 median; country-level examples: 0.45 / 0.45; 0.39 / 0.37; 0.41 / 0.40; 0.26 / 0.12; 0.55 / 0.56; 0.51 / 0.54.
  - Current ratio: 8.17 mean; 1.98 median; country-level examples: 2.42 / 1.49; 3.53 / 1.97; 5.78 / 1.86; 14.52 / 4.63; 2.42 / 1.72; 5.47 / 2.18.
  - Days cash on hands: 65.08 mean; 10.72 median; country-level examples: 72.49 / 30.79; 105.30 / 54.69; 144.30 / 54.69; 143.79 / 76.09; 303.71 / 110.14; 73.15 / 45.51; 15.67 / 5.19.
  - Cash flow ratio: various country mean/median entries include shown values (table entries include 1.01, 0.61, 0.29, 1.43, 1.28, 0.62 as presented).
- Observation counts:
  - Observations total: 507583.
  - Country observation breakdown snippet: 501, 952, 181, 7346, 232430, 441, 163965 (as presented).
  - Observations WBES: 996, 1320, 1115, 1335, --, 1000, 2700, 598.
- Notes: Averages and median reported for 2018. Source: Orbis. Total assets, fixed assets, and equity are reported in 100,000 USD. Observation count for World Bank Enterprise Survey (WBES) is for 2012, the most recent year.

### Key implications from cross-country statistics
- Wide dispersion across countries in liquidity (Days cash on hands) and ICR, indicated by large differences between means and medians in several cases.
- Median values often much lower than means for asset and liquidity measures, signaling skewed distributions with some very large firms.

---

### Annex 2. Overview of Vietnamese Enterprise Survey: Distribution by Firm Characteristics

### Sample composition and firm characteristics
- Total firms covered: 517,806.
- Ownership:
  - Over 95 percent of sampled firms are domestic and privately owned.
  - Only 4 percent of firms have foreign financing.
  - SOEs account for less than 1 percent of the total sample.
- Firm size distribution (share of total sample):
  - Small (less than 50 employees) and micro (less than 10 employees) dominate.
  - Large firms (>200 employees): 2 percent.
  - Medium firms (>50 employees): 5 percent.
- Sector composition:
  - Service industries: 80 percent of firms.
    - Retail: 40 percent.
    - Construction: 13 percent.
    - Hospitality: 3.5 percent.
    - Transportation: 6 percent.
    - Travel: 1 percent.
  - Manufacturing and mining: 15 percent of firms.
    - Textile: 2 percent.
    - Machinery: 1 percent.
    - Electronics: less than 1 percent.
  - Majority of manufacturing firms are in food and material industries.
- Ownership and size specifics:
  - Most private firms are either small (20 percent) or micro (75 percent).
  - Most SOE firms are either medium (33 percent) or large (40 percent).
  - Size distribution across FDI firms is more uniform (25 percent in each size category).
  - Firms with foreign financing have very little presence in the service sectors (1.5 percent on average).
  - Firms in IT, real estate, professional services have more foreign presence than average.
  - Most FDI firms are in manufacturing, led by electronics, electrical and transportation equipment, and textiles.
- Employment distribution:
  - Agricultural industries hire 3 percent of employees.
  - Manufacturing hires 50 percent of employees.
  - The rest of employees are in service industries.
  - Majority of employees are hired by private firms (60 percent); FDI firms account for 30 percent.
  - Note: possible underreporting of informal workers in smaller firms.
- Shares of sales and assets:
  - Service sectors account for more than half of total sales and assets in the sample.
  - Retail, electronics, construction, utility and transportation represent the largest shares.
  - Large private firms account for 50 percent of sales.
  - SOEs account for 18 percent of total sales and 30 percent of total assets in the corporate sector.

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### Annex 3. Summary Statistics of Vietnamese Enterprise Survey (Unit: median, percent)

### Definitions (from notes)
- ROA: gross profit ratio to total assets ratio.
- ROE: gross profit to equity ratio.
- EBIT Ratio: earning before interest and tax to total assets ratio.
- Net Profit Ratio: net profit to total assets ratio.
- Liquidity Ratio: net operating cash flow (EBIT + amortization – tax) to current liability ratio.
- Leverage: debt to equity ratio.
- Interest Coverage Ratio (ICR): EBIT to interest payment ratio.
- Debt at Risk ratio: share of debt at risk of default: ICR<1.
- M and S denote manufacturing and services, respectively.
- Source: 2017 Vietnam Enterprise Survey; IMF staff calculations.

### Median indicator values by sector, ownership, and firm size (selected rows as presented)
- By sector (median values concatenated as in table):
  - Agriculture: ROA 11.93; ROE 15.16; EBIT Ratio 1.33; Net Profit Ratio 1.13; Liquidity Ratio 2.80; Leverage 0.02; Interest Coverage Ratio 2.36; Debt at Risk 40.95.
  - Mining: 4.53; 9.46; 0.09; 0.01; 1.92; 0.59; 1.15; 10.71.
  - M/textile, apparel, leather: 8.00; 20.89; 0.17; 0.05; 0.28; 0.71; 1.22; 22.00.
  - M/electronics: 10.90; 23.86; 0.61; 0.30; 0.61; 0.88; 1.72; 21.47.
  - M/machinery: 8.80; 21.71; 0.75; 0.41; 0.75; 0.86; 1.68; 29.84.
  - M/Other: 8.34; 17.10; 0.37; 0.18; 0.36; 0.60; 1.32; 33.35.
  - S/Transportation: 10.44; 21.24; 0.24; 0.05; 0.39; 0.51; 1.06; 43.33.
  - S/Hospitality: 7.52; 9.08; -0.51; -0.58; -0.13; 0.04; 0.79; 13.72.
  - S/Entertainment: 10.35; 13.80; -0.10; -0.17; 0.13; 0.04; 0.60; 51.42.
  - S/Retail: 7.92; 9.76; -0.19; -0.20; 0.32; 0.02; -0.27; 57.26.
  - S/Travel: 9.27; 18.47; 0.22; 0.10; 0.07; 0.43; 1.25; 20.83.
  - S/Other: 6.73; 11.59; 0.07; 0.02; 0.24; 0.20; 1.38; 29.56.
- By ownership:
  - SOE: 11.22; 30.40; 3.58; 2.00; 3.28; 0.99; 3.33; 12.07.
  - Private: 8.27; 15.31; 0.16; 0.06; 0.14; 0.31; 1.24; 31.61.
  - FDI: 17.94; 39.29; 1.36; 0.71; 1.35; 0.76; 2.27; 37.12.
- By firm size:
  - large: 15.14; 44.72; 3.24; 1.54; 1.56; 1.57; 2.31; 24.69.
  - medium: 14.01; 39.82; 1.76; 0.62; 0.78; 1.42; 1.48; 27.71.
  - small: 13.65; 33.64; 0.92; 0.41; 0.38; 0.95; 1.31; 32.70.
  - micro: 6.26; 10.03; 0.00; -0.01; 0.06; 0.13; 1.10; 49.96.
- Averages row (median-like presentation in table):
  - Average: 8.46; 15.76; 0.17; 0.07; 0.15; 0.32; 1.26; 28.69.

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### Annex 4. Regional Comparison of Liquidity Coverage

### Illustrated metrics (2014 and 2018 comparisons; Sources: ORBIS, IMF Staff Calculations)
- Days of Cash at Hand (Avg. cash/daily operating expenses): country labels CH, ID, KR, MY, PH, SG, TH, VN plotted on axes 0 to 350 for 2018 and 0 to 250 for 2014 (values shown graphically in source).
- Cash Flow Ratio (Net operating cash flow/current liabilities): plotted values include range shown from -0.1 to 1.7 for 2018 and -0.1 to 1.5 for 2014 (country labels CH, ID, KR, MY, PH, SG, TH, VN).
- Current Ratio (current assets/current liability): plotted with axis 0 to 5 for 2018 and 0 to 5 for 2014 (country labels CH, ID, KR, MY, PH, SG, TH, VN).

### Key observation
- The annex presents cross-country comparisons in Days of Cash at Hand, Cash Flow Ratio, and Current Ratio showing differences between 2014 and 2018 for CH, ID, KR, MY, PH, SG, TH, VN (graphical values as presented).

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### Annex 5. Recent Firm-level Survey on the Impact of COVID-19 (National Economics University of Vietnam, April 2020; around 700 firms)

### Reported immediate impacts (percent of responded firms; figures from survey)
- Primary difficulties reported:
  - Sharp decline in revenue to cover business costs: 60.3 percent.
  - Under-scale production: 53.6 percent.
  - Production and supply chain disruptions and depressed demand: lesser extent (no exact percent provided in text).
- Firm responses to the shock (percent of total responded firms; plotted categories and values):
  - lay off workers: 34.1 percent.
  - ask to take unpaid leaves: 34.4 percent.
  - cut wages: 32.6 percent.
  - operational expense cut: 63.9 percent.
  - reduce scale of business: 42.5 percent.
  - change business model: 12.8 percent.
  - pause business: 32.7 percent.
  - other: 5.3 percent.
- Scenario projections if outbreak persists (percent, by horizon categories in chart):
  - For an extreme scenario where outbreak lasts until end-year:
    - 38 percent of firms reported they would go bankrupt.
    - 36 percent would have to suspend their business.
  - Charted scenario horizons include: until end of April, until end of June, until end of September, until end of December, with outcome categories: maintain normal operation, downsize operation, suspend operation, bankrupt (percent distributions plotted in source).
- Firm-type vulnerability notes:
  - FDI firms are likely more immune to the shock due to dependence on parent company health.
  - SOEs are the most vulnerable to bankruptcy if the outbreak is prolonged.

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### Annex 6. Key Policy Measures to Support Businesses in Response to COVID-19

### Fiscal measures (as listed)
- Deferral of consumption tax (VAT) and corporate income tax (CIT) as well as land rental payment for 5 months for affected firms.
- Deferral of social security contribution (up to 12 months) for both affected firms and workers if the number of employees in a firm falls below 50 percent.
- Up-to -10 percent cut (for 3 months) in electricity prices for industrial and service enterprises and businesses.
- CIT incentive scheme introduced for micro and small enterprises from July 1, to alleviate business difficulties amid the COVID-19 pandemic.
- Cuts in various fees and charges (water resources, construction project evaluations, road tolls, seaport charges, aviation service charges, road maintenance fees).
- Extension of exemptions and reductions of environmental protection tax on gasolines.

### Monetary and financial measures (as listed)
- Three times of policy rates cut by 50-100 bps, short-term deposit rates cap by 25-30 bps, and the short-term lending rates cap for priority sectors by 50 bps.
- Credit package: With the coordination of SBV, credit institutions (CIs) rolled out a VND 300 trillion credit support package in March on a voluntary basis. The credit package aims to provide new loans to borrowers at lower interest rates (by 0.5-2.5 percent) compared to the pre-COVID 19 interest level.
- Exempt and reduced interest rate for existing loans: Interest payments of 464 thousand clients were either reduced or exempted between March and Mid-Aug.
- Rescheduled/restructured loans: The SBV allowed CIs to reschedule/restructure loans for eligible clients, while keeping the loans in the original grading group. Between March to mid-August, CIs have restructured/rescheduled loans for 265,000 clients with outstanding loans of VND 310 trillion (3.6 percent of total system outstanding loans).
- CIs reduced transaction fees for payment transactions in small amounts (estimated total reduction of VND 1 trillion).
- Vietnam Social Policy Bank (VPSB) loans with SBV refinancing (VND 16 trillion) to provide zero-interest-rate loans for affected firms that maintain employees on payroll.

*Italic: Annex 1. Summary Statistics of Key Variables Across Asian Countries — Source PDF filename: wpiea2020260-print-pdf - Annex 1. Summary Statistics of Key Variables Across Asian Countries*

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_Source: https://www.imf.org/-/media/files/publications/wp/2020/english/wpiea2020260-print-pdf.pdf_