Suspended businesses rise by 50%, a worrying sign: economists
VietNamNet Bridge - More than 90,600 enterprises had to suspend operation in 2018, a sharp increase of 50 percent over the year before, which economists described as “worryingly high”.


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Vietnam wants to have 1 million businesses by 2020



The latest report from the General Statistics Office (GSO) showed that 131,000 businesses were established in 2018, a slight increase of 3.5 percent over the year before. The number of businesses which had to halt operation in the year increased by 49.7 percent.

Of the 90,600 businesses which suspended operation, 27,126 businesses registered suspension for a definite time, up by 25.1 percent, while 63,525 businesses halted operation without registration or waiting for dissolution procedures to be completed, up by 63.4 percent.

The high proportion of unprofitable businesses has raised a concern that the goal of having 1 million businesses by 2020 may be unattainable.

Of the 90,600 businesses which suspended operation, 27,126 businesses registered suspension for a definite time, up by 25.1 percent, while 63,525 businesses halted operation without registration or waiting for dissolution procedures to be completed, up by 63.4 percent.

“The sharp increase of 50 percent in the number of dissolved businesses is one of the indicators showing existing worrying problems that need thorough consideration,”  Le Dang Doanh, an economist, said.

Doanh said though the environment has improved, problems still exist, including the lack of transparency and fairness in policies to encourage enterprises to develop. 

Meanwhile, many legal provisions overlap and are contradictory, which burden enterprises and hinder their development.

FTAs and economic integration have exposed Vietnam’s enterprises’ problems. Under FTAs, foreign products have flooded Vietnam. As a result, many Vietnamese businesses have been dissolved.

A report from the National Assembly’s Economics Committee attributes the increased number of businesses leaving the market to policies on private businesses, which are considered the driving force for economic growth.

Because of the barriers, the private sector developed slowly in 2016-2018. According to the Ministry of Planning and Investment (MPI), the added value increase in the sector was 5.51 percent in 2016 and 6.23 percent in 2017.

The report from the ministry also said private enterprises decreased in scale, while the proportion of profitable enterprises remained low and the connection between private enterprises and the national economy remained limited.

“Most private businesses are small and medium size, with no significant change seen in 2016-2018,” said MPI Minister Nguyen Chi Dung.

Doanh warned that if the government doesn’t help businesses cut production costs by simplifying administration procedures, the number of dissolved businesses will continue in 2019.

Nearly 15 percent of businesses have predicted more difficulties in the first quarter of 2019 in comparison with the fourth quarter of 2018.


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Mai Lan

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