May 7 (Bloomberg) -- Vietnam’s stocks rallied, driving the benchmark index to a one-year high, after the government said it will cut income tax, defer sales tax payments and cap lending rates to help bolster a slowing economy.
The Ho Chi Minh City Stock Exchange’s VN Index rose 2.1 percent to 486.31, the highest close since May 4, 2011 and the best performer among Asian benchmark indexes tracked by Bloomberg today. Tien Len Steel Corporation Joint-Stock Co., a steelmaker, surged 5 percent and PetroVietnam Fertilizer & Chemical Joint-Stock Co., the country’s biggest fertilizer producer, rose 4.8 percent.
The VN index has surged 38 percent this year, the most in Asia, as the government took steps such as cutting interest rates twice in March and April to spur growth. The economy expanded at the slowest pace since 2009 in the first quarter. The stock gauge slid 27 percent last year as the government lifted borrowing costs to combat rising prices.
“The moves cheered up investors’ sentiment since it showed the government is determined to boost economic growth,” said Le Thi Hai Duong, brokerage manager at Hanoi-based BIDV Securities Co., a unit of Bank for Investment & Development of Vietnam.
Corporate income tax for small- and medium-sized companies and labor-intensive enterprises will be cut by 30 percent, Vu Duc Dam, chairman of the government office, said May 4 at a briefing in Hanoi. Businesses will be allowed to delay value-added tax payments on sales in April, May and June by six months, according to Dam.
Short-term commercial lending rates will be capped at 3 percentage points above the deposit rate limit for some sectors, according to a statement on the central bank website.
The new lending regulation will “help companies and citizens reduce borrowing costs, recover and maintain production and business operations, and support reasonable economic growth,” the central bank said.
The cost of land leases for some businesses, including those in tourism, textiles and services, will be reduced by 50 percent, according to the Finance Ministry’s website.
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