Hundreds of thousands of businesses disappear

Hundreds of thousands of businesses disappear

Early this year, there were approximately 700,000 registered enterprises in Vietnam. Just over 400,000 of them are operating now.

Economist Truong Dinh Tuyen, a former Minister of Trade, says that many businesses cannot survive because of the uncertainty of the macroeconomic environment. He adds that the average annual number of newly-established companies from 2009 to 2012 was only one-tenth that of the 2005-2009 period, when Vietnam was not highly affected by the global recession.

In terms of scale, Vietnamese businesses are also small compared with those of the world. Ms. Pham Thi Thu Hang, Deputy Secretary General of the Chamber of Commerce and Industry of Vietnam (VCCI), says that the number of small-scale enterprises increased from 61 percent in 2007 to 67 percent in 2012, while the numbers of small and medium-d and large-d enterprises has continually declined. The number of large-d businesses accounts for just over 2 percent of existing businesses.

In addition to the objective reasons, Tuyen points out that Vietnamese businesses are suffering from inequities between economic sectors.

Specifically, state-owned enterprises now account for 0.9 percent of the total number of enterprises, and 12.8 percent of the workforce. However, they hold 26 percent of capital and generate 32 percent of GDP.

In addition, state-owned enterprises are given favorable treatment in access to capital and land. And they do not have to pay dividends or profits to the state, unlike private companies who are responsible to their shareholders.

According to a VCCI report, the salary policy of the State enterprises is better than businesses in other sectors. However, due to a decline in revenues, for the first time in 10 years, the income of workers in the state sector decreased in 2012, from $102.6 million to VND95.6 million a year. Despite this reduction, the income of workers in state-owned enterprises is still 1.7 times higher than that of those working in the non-state sector, and 1.2 times what workers in the foreign-invested sector earn.

To address the difficulties of the business community and maintain sustainable growth, Tuyen says that the state must create a fair competitive environment among economic sectors, and determine the right role of state-owned enterprises in the market economy. At the same time, the State should have support policies for small and medium-scale enterprises.

vietnamnet