The first days of 2023 witnessed a rarely seen event: a group of 36 private investors who developed wind and solar power projects with capital of VND85 trillion lodged complaint to policymakers, saying there were many legal problems which had made it difficult to sell electricity.

And they are still facing the same problems. The wave of investment in renewable energy stopped suddenly after a four-year peak, when $20 billion worth of investment came from non-state enterprises.

This occurred with enterprises in the power sector, but there are also problems in the private sector.

Reports of the Ministries of Industry and Trade (MOIT) and Planning and Investment (MPI) on economic performance in 2023 said the national economy and businesses had faced unprecedented difficulties.

MPI’s report showed that 172,578 businesses left the market, a figure which was higher than the number of businesses joining the market (159,294), not counting the 58,412 businesses resuming their operation.

Other indexes also showed an unsatisfactory situation. The investments of the non-state sector increased by 2.7 percent in 2023, much lower than the 14.5 percent in 2019, 3.0 percent in 2020, 7.1 percent in 2021 and 8.1 percent in 2022.

The investment growth rate in 2023 was even lower than that of 2020 and 2021, when businesses were heavily impacted by the Covid-19 pandemic.

The bad situation was acknowledged by the government in its Resolution 02 released in early 2024, which said “the business community met bigger difficulties than in previous years. The number of businesses leaving the market was much higher. The capital absorption capability dropped seriously, leading to slow credit growth. exports were recovering slowly".

Many demand stimulus packages have been launched, but domestic consumption still grows slowly. This once again shows the decline in demand for investment and business, and shows enterprises’ weakened resilience.

Because of sharp falls in orders, the value of the domestic economic sector decreased by 0.3 percent to $95.55 billion, which accounted for 26.9 percent of total export turnover. 

The Purchasing Manager’s Index (PMI) of Vietnam’s production in December 2023 was 48.9 points, below the 50 point threshold for the fourth consecutive month of the year.

Though lending interest rates had decreased by the end of 2023, commercial banks still ‘had abundant money’.

The survey by the Private Economic Development Research Board (Board IV) of 2,734 enterprises found that 82.4 percent gave negative/very negative comments about the economy in the second half of 2023, and 69.1 percent gave negative/very negative comments about economic prospects in 2024.

More than 72 percent of businesses planned to scale down, suspend, or stop business in 2024. Of these, 11.8 percent of businesses plan to stop operations and be dissolved. More than 12 percent of businesses plan to suspend business, 28.2 plan to cut business scale sharply, and 20.6 percent plan to scale down business. 

Of the enterprises still operating in 2024, 58.9 percent may cut the workforce by 5 percent. As many as 16.6 percent of them said the workforce would be cut by more than 50 percent, while 60.2 percent anticipate revenue decreases, with 17.3 percent predicting a revenue decrease of over 50 percent.

Meanwhile, the General Statistics Office (GSO) reported that 5,837 enterprises suspended business and followed procedures for dissolution in April 2023, while 1,509 fulfilled the procedures. By December 2023, the figures had risen to 8,687 and 1,866, respectively.

Pham Thi Ngoc Thuy from Board IV said: “Businesses are exhausted after two years of struggling with Covid-19 and two years of facing global macroeconomic uncertainties."

Nguyen Dinh Cung, former head of the Central Institute of Economic Management (CIEM), estimated that there are nine businesses for every 1,000 people in Vietnam, which showed the thin density of businesses. Forty provinces have business density of 4/1,000 or lower, and only six localities have density of 12 or higher, including Hanoi and HCM City.

The business sector creates 15 million jobs, or 30 percent of the workforce in the economy. Two-thirds work in the fields of industry, construction and retail/wholesale; 60 percent work for private enterprises; 33 percent for foreign invested enterprises (FIEs). 70 percent of businesses are very small, 25 percent are small enterprises. 

Tu Giang