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Goal of 1 million businesses may be unattainable: economics committee

The National Assembly’s economics committee warned that the target of developing 1 million businesses by 2020 may be unattainable, especially as barriers hindering businesses still exist and the number of dissolved businesses is on the rise.
VietNamNet Bridge - The National Assembly’s (NA) economics committee, in its latest report, warned that the target of developing 1 million businesses by 2020 may be unattainable, especially as barriers hindering businesses still exist and the number of dissolved businesses is on the rise.


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Vietnam hopes it would have 1 million businesses by 2020



The same warning was given by economists after the first half of the year when only one-tenth of the enterprise equitization plan had been implemented. 

The delays in equitizing state-owned enterprises have had a negative impact on the plan to develop 1 million businesses by 2020.

A report of the business registration agency showed that the number of businesses dissolved in the first nine months of the year soared by 32.1 percent, and in the first quarter by 49 percent compared with the same periods last year.

A report of the business registration agency showed that the number of businesses dissolved in the first nine months of the year soared by 32.1 percent, and in the first quarter by 49 percent compared with the same periods last year.

A question has been raised about the high number of business bankruptcies, even though the GDP growth rate in the third quarter of the year reached a record high of 6.98 percent. The high GDP growth rate of 6.81 percent in 2017 could not create necessary and sufficient momentum for enterprises.

In 2017, the State Bank of Vietnam (SBV) reported a credit growth rate of 18.15 percent. However, small and medium enterprises (SMEs) still complained they found it difficult to access bank loans.

By the end of August 2018, the outstanding loans provided to the national economy had increased by 8.18 percent only. It is possible that a lot of capital will be disbursed in the last months of the year to fulfill the credit growth plan. If so, capital flow will go to the real estate sector, and SMEs will find it more difficult to borrow money from banks.

Commenting about the fact that SMEs make up 50 percent of GDP, analysts say the burden on the enterprises is too high.

Le Cao Doan, an economist, commented that in a healthy market economy, all enterprises, no matter whether they are state-owned, SMEs, foreign invested or private, operate in a fair and transparent environment.

In that environment, Doan said the state would just need to give a push to help connect SMEs to compete healthily with other enterprises, thus stimulating the whole business system.

Meanwhile, an analyst commented that the goal of having 1 million businesses by 2020 is irrational, and that the quality and scale of private enterprises is more important than the number of enterprises.


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