Vietnam - More businesses predicted to withdraw from market

In the first four months of this year, nearly 18,000 businesses dissolved or suspended operations. However, the figure could rise higher as many businesses are hedging their bets on how to deal with difficulties.

According to a report from the Ministry of Planning and Investment (MoPI) released at the regular cabinet meeting for April, the number of businesses that dissolved or suspended operations in the past four months rose 9.5 per cent over the same period last year, bringing the total to 30 per cent since the start of business renewal. There are now 463,800 businesses operating in the country remaining in operation.

The MoPI notes with deep concern that the number of newly-established businesses is falling while that of businesses scaling down or stopping operations is rising.

Another report from the Vietnam Chamber of Commerce and Industry (VCCI) on the business situation says a gloomy forecast of businesses facing many difficulties means that more will withdraw from the market in the future.

Their biggest problems are high production costs and large unsold inventories in the wake of low consumer demand in some sectors, such as real estate, construction, processing, manufacturing, trade and transport.

The MoPI has attributed the poor capacity of domestic businesses to the slow recovery of the world economy, the on-going public debt crisis in Europe and steep price hikes in crude oil. In addition, high interest rates, a strong reduction in public investment, and the frozen property market, as well as poor management, obsolete technology and scattered investment have adversely affected production and businesses activities.

For the time being, bad debts make it impossible for a number of businesses to borrow capital from banks. More than 75.3 per cent claim that this is one of the major obstacles to their operations.

The VCCI has asked the Government to support highly competitive businesses and effective project so that they can develop on the right track.

VOV

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