Most of the businesses fulfilling procedures for dissolution are in the fields of retail/wholesale, automobile repair, processing and manufacturing, construction, science and technology, design and consultancy service, accommodation and eatery, tourism and real estate.

According to the Vietnam Association of Small and Medium Enterprises (VINASME), up to 50 percent of SMEs have suspended their operation.

“The endurance of SMEs, which have small capital, is always very low. And their situation is getting even worse because of the social distancing policy,” said To Hoai Nam, VINASME’s secretary general, adding that many businesses are between life and death.

VCCI’s chair Vu Tien Loc commented that the figure of 35,000 businesses leaving the market within one quarter is a record high level. This is the first time in many decades that the number of businesses leaving the market is higher than the number of newly established ones.

VCCI’s (Vietnam Chamber of Commerce and Industry) chair Vu Tien Loc commented that the figure of 35,000 businesses leaving the market within one quarter is a record high level. This is the first time in many decades that the number of businesses leaving the market is higher than the number of newly established ones.

Loc cited a quick survey by VCCI as reporting that 85 percent of businesses have seen their markets shrink and 60 percent lack capital and have problems in cash flow. Up to 82 percent of businesses said their 2020 revenue would decrease compared with 2019. At least 30 percent of businesses predicted a 30-50 percent decrease, while 22 percent predicted a decrease of over 50 percent.

The survey found that if the epidemic becomes more complex, 30 percent would be able to keep their operation for no more than three months, while 50 percent said they would be able to exist for half a year.

As a result, millions of workers would lose their jobs in the upcoming months.

Meanwhile, experts believe there is no need to worry about this.

Huynh Trung Minh, a respected economist, said being dissolved or going bankrupt is unavoidable in crisis. Many businesses are easily established and dissolve when the market becomes gloomy.

He believes that other businesses that have reasonable long-term business strategies and have failsafe plans will be able to maintain operation for a certain period. Their strength plus support from the government will allow them to overcome difficulties and bounce back after the crisis.

“This happens in many countries: many businesses turn stronger after economic crises and become leading enterprises in their fields,” he said.

Dinh The Hien, another economist, warned that bankruptcy may lead to a decrease in the number of jobs, but said this is not too worrying.

“The enterprises which exist in crisis will be able to develop in a more sustainable way,” Hien said.

Mai Lan 

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