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More businesses leave than join economy

Released at: 15:11, 03/02/2015

More businesses leave than join economy

January figures show business community is shrinking.

by Hoang Huong

According to the National Business Registration Portal (NBRP) there were 6,867 newly-registered enterprises in January with registered capital of VND31.7 trillion ($1.5 billion), an increase of 0.01 per cent in numbers but a decline of 27.5 per cent in capital against last January. The number of firms dissolving their business activities, meanwhile, was 993, 3.4 per cent less than in January 2014.

The number facing difficulties and suspending their operations was 9,772, a 22.9 per cent increase year-on-year. Of these, 3,367 suspended operations for a certain term and 6,405 businesses are set to close down.

The business community is still going through a difficult period. The global economic crisis has had a strong impact on Vietnamese businesses as its economy depends heavily on exports.

The NBRP report showed that smaller enterprises are more likely to dissolve. The number of enterprises with registered capital of VND10 billion accounts for 94.2 per cent of the total, and based on better resilience and efficient business strategies, large firms tend to be more stable and sufficiently strong to cope with difficulties than small businesses. Due to flexibility, however, small-sized firms can easily to switch their business activities to new fields.

In order to drive stable development, besides resolving their intrinsic limitations the business community expects that the government and ministries will offer strong support and adopt more practical policies, such as cutting interest rates or extending credit terms to encourage investment.

The number of firms that postponed operations and then returned was 2,872 in January.

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