According to the Business Registration Agency, 11,536 businesses wrapped up the procedures for dissolution in the first nine months of the year, an increase of 32.1 percent over the same period last year.

In Q3 alone, 4,907 businesses were dissolved, up by 48.3 percent over Q2 2018 and by 49 percent over Q3 2017.

The increase in the number of dissolved businesses has sparked concern that the business environment is worsening. In fact, this is the result of many reasons and the market economy.

Most Vietnamese businesses and small and medium enterprises (SMEs) have problems in management capability and competitiveness.

They lack strategic vision, have bad corporate governance skills, low level of technology application and low creativity in developing products. 

Meanwhile, as Vietnam has been integrating more deeply into the global economy with many FTAs signed, businesses are put under more pressure.

However, the agency admitted that the problems in the investment environment are  hindering the development of businesses. 

Businesses have to face overlapping legal documents and meet difficulties in accessing credit and land resources.

A survey conducted by VCCI in 2018 showed that businesses find it hard to get bank loans. 

Bankers said businesses do not have necessary skills to draw feasible business plans and therefore, have low credit ratings, which make banks reluctant to provide loans. 

Meanwhile, businesses complain that banks set complicated procedures and interest rates.

The third reason cited by the agency is a technical problem. Appropriate agencies have strengthened inspection over businesses and found that many businesses stopped operation but did not make declarations to agencies. 

The General Statistics Office (GSO) at a press conference held on October 13 reported that by the end of 2017, Vietnam had 560,417 operating businesses, an increase of 11 percent over 2016.

2017 was also the year which witnessed an increase of newly set up businesses of 15 percent compared with 2016 to 126,859 businesses. Meanwhile, 60,553 businesses stopped operation, or 50 percent of newly set up businesses.

GSO’s general director Nguyen Bich Lam affirmed that business establishment and dissolution are a part of the market economy, and there is no need to worry about the death of businesses.

Lam went on to say that the proportion of businesses that have dissolved or have declared bankruptcy in Vietnam is still lower than other economies. The figures are 80 percent in New Zealand and 60 percent in the UK.

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