Vietnamese businesses to overcome challenges

Ho Chi Minh City and 18 southern provinces are gradually resuming business and production activities after a long time of lockdown. 

Many other provinces are also relaxing social distancing measures, causing businesses to be more optimistic about prospects.

The survey of business trends of enterprises in the processing and manufacturing industries by the Ministry of Planning and Investment shows that enterprises are more optimistic in the fourth quarter than the third quarter.

Looking at the outlook for the fourth quarter of 2021, 43.4% of businesses said that the situation would be better than the third quarter; 26.3% of participants believed that the situation would be more difficult; and 30.3% said the production and business situation would be stable.

Vietnamese businesses to overcome challenges

In the first nine months of 2021, Ho Chi Minh City had 24,491 enterprises withdrawing from the market (accounting for 27.1% of the total number of enterprises withdrawing from the market in the whole country).

At the same time, foreign-invested firms were the most optimistic with up to 79.4% of participants forecasting better or stable production and business situation in the fourth quarter of 2021. This rate in non-state enterprises and state-owned enterprises is 71.8% and 68.8%, respectively.

However, the strong outbreak of the fourth wave of Covid-19 along with strict lockdown and prolonged social distancing, especially in the third quarter has seriously affected production and business activities in many fields, especially in the southern region.

In particular, HCM City – the largest pandemic epicenter – witnessed a drop of 22.3% and 40.9% in the number of newly registered businesses and registered capital in the January-September period of 2021 in comparison with the same period of last year.

In the third quarter of 2021 alone, when social distancing was strictly enforced, the number of newly established businesses in Ho Chi Minh City was 18,400, the lowest since 2015, a reduction of 51.3% compared to the second quarter of 2021, 37.2% compared to the first quarter of 2021 and 50.1% over the same period in 2020.

The amount of newly registered capital also decreased significantly compared to the previous periods, with only VND 253,153 billion, the lowest in the third quarter since 2017, a decrease of 48.8% compared to the second quarter of 2021, 43.5% compared to the first quarter of 2021 and 65.4% down compared to the same period in 2020.

In September, Ho Chi Minh City had 594 newly registered enterprises, down 80.9% year on year, down 25.3% compared to August 2021, 4.8 times lower than with the average rate of newly established enterprises in one month of the first eight months of 2021.

The registered capital of newly established enterprises was VND 14,484 billion in the month, down 88% over the same period in 2020. Notably, the number of newly registered enterprises in the city in September 2021 was lower than the average number of business registration applications per day (661 records) of the city before the time of social distancing.

In the first nine months of 2021, Ho Chi Minh City had 24,491 enterprises withdrawing from the market (accounting for 27.1% of the total number of enterprises withdrawing from the market in the whole country).

 

The number of enterprises waiting for dissolution procedures in the first nine months of the year was 32,398 enterprises, an increase of 17.4% year on year. The number of dissolved enterprises was 12,802 enterprises, an increase of 5.9 % over the same period of last year.

The situation was similar for the provinces of Binh Duong and Dong Nai, other Covid-19 hotspots in the southern region.

Data does not reflect reality

Vietnamese businesses to overcome challenges

Vietnamese enterprises that experienced a difficult year in 2020 are facing many new difficulties and challenges in 2021.

From a national perspective, in the past nine months (January-September), the number of newly established firms was 85,483, down 13.6% over the same period in 2020. The newly registered capital in this period reached VND1,195,801 billion, down 16.3% year on year.

At the same time, the number of enterprises withdrawing from the market continued to increase, with 90,291, an increase of 15.3% over the same period in 2020.

The Ministry of Planning and Investment said that the above data may not accurately reflect the actual number of businesses withdrawing from the market because many localities implemented social distancing. Many businesses that stopped operation could not carry out procedures related to withdrawal from the market.

Vietnamese enterprises that experienced a difficult year in 2020 are facing many new difficulties and challenges in 2021.

The Ministry of Planning and Investment is working on a program on business recovery and development to help businesses and the economy restart.

Lan Anh

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