Below are my personal viewpoints based on a synthesis of discussions regarding support policies for private educational institutions during the Covid period.
1. Seek mechanisms to persuade or mandate landlords to reduce rent by half or grant rent exemption during this period.
Educational enterprises are the only enterprises required to close down completely during the recent period. Therefore, there needs to be a dedicated preferential and support mechanism instead of flattening policy across all other enterprises.
Many people discussed that one should not interfere in civil relations between landlords and tenants. I think differently. By now, normal civil relations no longer exist. Educational centers are required to close by government command (for whatever reason related to human lives), but then there is no reason not to mandate landlords to reduce rent during this emergency period to avoid widespread collapse. The government’s intervention in renting is no different from intervening to close down or requiring companies to pause normal production to focus on sewing face masks or making ventilators.
Please note: The most expensive fixed cost for educational enterprises right now is venue rental fees. Venue rental fees account for 20–35% of the operating costs of an educational enterprise. If an educational enterprise collapses, this is the main cause.
Some forms that can be studied:
a) Exempt corporate income tax or personal income tax for landlords leasing during this period so they can reduce rent;
b) Levy a special income tax over the coming 1 year so that landlords have an incentive to reduce rent prices;
c) Officially declare force majeure clauses so that courts cannot adjudicate during this time, aiming to create conditions for enterprises to negotiate with landlords;
d) For landlords borrowing money from banks to build, invest in, or lease out facilities for education, there needs to be a mechanism requiring banks to reduce interest rates or offer interest rate support (under the mechanism of the Social Policy Bank for Development).
2. Create conditions for small and medium-sized private educational institutions to borrow at preferential interest rates without having to pledge fixed assets as collateral.
The majority of small and medium-sized private educational institutions do not have collateral assets. The government needs to provide guarantees so that banks issue a certain credit limit. It could be equivalent to 10% of the previous year’s revenue of that educational institution. For example, if an educational institution has a revenue of 50 billion VND/year, a guarantee can be provided so that banks lend without fixed asset collateral around 5 billion VND for a maximum period of 18 months. Business owners may have to sign co-guarantees (but do NOT have to pledge assets as collateral).
This is also an extremely important mechanism because educational institutions with revenue under 100 billion VND mostly do not have much accumulated profit. 10% of revenue is equivalent to about 2–3 months of salaries and rent. This amount of money is sufficient for the enterprise to survive.
To enable this mechanism to materialize fastest, business owners may have to sign an agreement to pledge shares in the company as collateral (around 20% is appropriate) and bear legal responsibility if they do not repay this emergency loan within 18 months (via direct deductions from personal accounts, company accounts, or being listed as bad debt).
3. Propose that the Government consider granting exemption from social insurance contributions, personal income tax, and corporate income tax for 02 years for educational enterprises severely affected by the Covid-19 pandemic.
Educational enterprises are mostly small with a modest number of staff, consisting primarily of teachers. They also do not have much accumulated assets besides capital invested in renovations, leasing premises, and paying teachers’ salaries. The sole source of revenue for private educational enterprises is tuition fees. Therefore, when the Covid-19 crisis occurs, due to prolonged mandatory closure, financial reserves will deplete very quickly. Without timely support, they will certainly have to lay off teachers and close educational facilities.
The government can establish evaluation criteria for severely affected educational enterprises, such as a 40% reduction in revenue compared to the previous year’s revenue.
4. Establish immediate relief policies for the most vulnerable groups in the education sector: teachers with salaries under 06 million VND/month.
The government needs decisive and rapid policy decisions for this rescue. One of the forms that can be done is bank guarantees for people working in the education sector who have lost their jobs. In any case, there must be no requirement for collateral assets, because education workers in this segment themselves do not possess many assets.
In principle, the government is completely capable of accomplishing this issue. The government can authorize a reputable microfinance and consumer financing organization (with experience in debt collection) to implement it, as these financial organizations are very experienced in implementation and debt recovery. The government can subsidize interest rates for these organizations.
The State can provide emergency 6–12 month interest-free loans based on salaries subject to social insurance, or provide a subsidy to each teacher and staff member who is not entitled to unemployment insurance of 1 million VND/month starting from the date teaching activities were suspended.
5. Radically simplify procedures for unemployment benefits and emergency relief. A maximum timeframe should be specified, such as no more than 07 days.
Currently, state policies issued are quite good, but the procedural implementation steps are still too bureaucratic and complex. At the same time, guiding circulars have not been issued, leaving enterprises not knowing when they will be applied.
Some conditions to receive support are overly stringent and completely unrealistic. For example, one of the conditions to be rescued is having to prove that 50% of staff lost their jobs or proving a 50% loss in revenue. This condition is unreasonable because no one dares to certify it and no one knows where to obtain certification. For example, usually the ward authorities will not agree to certify as it does not fall under their jurisdiction. Besides, many enterprises are reducing salaries and reducing work hours by 30–50% or more, trying to keep staff from being terminated entirely, so doing so will not meet the requirement of a 50% reduction in personnel?
Enterprises truly do not want to violate the law, so there need to be clear and detailed guidelines, avoiding sending official dispatches only to receive generic answers where the enterprise does not know whether they will violate the law later on or not. Similar to the criteria for receiving the US government’s recent relief package, the Vietnamese government should only establish a few extremely simple criteria to enable disbursement. For example:
a) Working in the education sector;
b) Salary under 6 million VND/month;
c) Received base salary within the past 01 month.
6. Officially accept, from now on and forever after, the mechanism of online teaching.
This means officially abolishing all requirements related to facilities and geographical location that are overly stringent, which are currently already too outdated for an Industry 4.0 economy where geographical distance no longer carries much meaning.
Accepting the form of online teaching for all educational enterprises (from primary/secondary to higher education) immediately right now is a vital decision for educational enterprises. Currently, many educational enterprises hesitate and do not dare to invest in technology systems, curriculum development, and technological teaching platforms for online or blended teaching because they fear the pandemic will only last a short time, making the investment unnecessarily costly.
The government should not worry that the quality of online training will decline. This is a service, and customers will decide to accept that service according to market economy principles. Any parent who does not agree will abandon that teaching service and switch to face-to-face learning. Meanwhile, any parent or student who accepts it must pay money.
This work needs to be done urgently: If we do not invest in online training seriously right now, students will miss many learning opportunities, young people will have nothing to do, and parents will have to supervise them a lot. Students will lose an academic year. Schools and educational institutions will only invest in online teaching if, in the long term, the government officially and permanently accepts this form.
Nguyen Quoc Toan
