Jan 9, 2013

Vietnam - Desperate firms call for government lifeline

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Struggling businesses are in urgent need of government support to keep their heads above water.

The latest figures from the Ministry of Planning and Investment (MPI)’s Business Registration Department revealed that 54,261 businesses either dissolved or halted operations in 2012 compared with 53,912 in 2011.

Only 69,874 businesses were established in 2012, a 7,674 fall on 2011.
“This reflects the hardships that are clearly visible in the business community,” said Le Quang Manh, director of the Business Registration Department.

MPI chief Bui Quang Vinh also expressed concerns over Vietnam’s $284 million trade surplus in 2012.

“It’s an issue of concern, rather than something to be pleased about. For an export-based country like Vietnam, a trade surplus means local businesses are struggling, and indicates that they’ve been forced to retrench production with sharply falling demands for import of inputs,” Vinh said, adding that this would overshadow export and economic growth perspectives for the foreseeable future.

In parallel to the massive dissolution and cessation of business operations the industrial production index (IIP) only picked up 4.8 per cent in 2012 against 2011, which in itself was considered rather low against the set target of 8.5 per cent, dramatically highlighting decelerating production in the economy.

Management authorities in localities throughout the country highlighted the difficulties facing businesses in late December 2012 at an online meeting between the government and local authorities.

Chairman Vuong Binh Thanh of An Giang Province People’s Committee in the Mekong Delta said around 26,000 tonnes of processed Tra fish worth VND1 trillion ($48 million) remained unsold locally.

“Tra fish farmers have been hard hit since 2008. Businesses are in urgent need of support, because if they go bust, farmers will also be driven into a corner,” said Thanh.

Up to 1,343 businesses in agriculture, forestry and fisheries were either dissolved or halted operations in 2012 compared to 1,193 such firms in 2011. Meanwhile, just 1,191 new firms were registered in 2012, a drop from 1,574 such businesses in 2011, according to the Business Registration Department figures.

“Agriculture, forestry and fisheries are one of five areas incurring sharp declines in new business set-ups in the past year. The same situation is replicated in the construction sector, with less dramatic examples found in the property, insurance, finance and banking sectors,” said Department chief Le Quang Manh.

Approximately 475,700 businesses were active in the country by the end of 2012. However, Small and Medium-size Enterprises Association chairman Cao Si Kiem admitted that throngs of firms might have their growth derailed and have to stop operations in the coming period amid persistent economic woes.

“Increasing numbers of firms will go to the wall unless they receive rapid support from the government as they can’t continue alone anymore,” said Kiem.

Ha Nguyen | vir.com.vn

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