Business environment needs stability
Bui Anh Tuan, Deputy Director of the Ministry of Planning and Investment’s Business Registration Division, made the comment at a seminar on business development and investment in Hanoi in December 2012.
"The situation in Vietnam is not really that pessimistic as the country recorded nearly 48, 473 bankrupted enterprises in the first eleven months of the year. This is the same as the rate of from 11%-15% annual bankrupted enterprises in Japan and the US,” Tuan said.
The country is estimated to have 65,000 new businesses this year, meaning the country will still have 10,000 more operational enterprises during the year, he assessed.
However, he admitted that due to the large number of enterprises filing for bankruptcy, it has resulted in a deficiency in state budget revenues this year.
Deputy Minister of Planning and Investment Dang Duy Dong said as of November 30, cities and provinces nationwide granted business licenses to 65,091 enterprises with a total registered capital of VND418.85 trillion (over USD20 million).
The figures showed a 10% decrease in the number of new enterprises and a fall of 8.4% in terms of registered capital compared to the same period last year.
Hanoi and HCM City topped the list for having the largest number of bankrupted enterprises during the eleven-month period.
According to Tuan, there was a gradual fall in the number of new enterprises quarterly. There has been a fall in the number of new firms operating in real estate, construction and finance but more firms in healthcare, culture and tourism.
Qualities of new businesses
Many experts said that the country should honestly look at its economic situation as many enterprises were facing mounting difficulties.
Dr Cao Si Kiem, from the Vietnam Association of Small and Medium Enterprises said it was necessary to carefully assess the quality of small and medium enterprises (SMEs) in Vietnam as there were different data produced by some agencies and the public statistics were more optimistic than the reality.
Kien said that among additional 10,000 new enterprises compared to bankrupted ones, several were set up with the help of bank loans after a formerly troubled firm filed for bankruptcy. This gave some indication in terms of the quality of the new enterprises.
The situation was touched by Vice Chairman of the Hanoi Young Business Association Dang Duc Dung at the recent Vietnam Business Forum (VBF) 2012.
Dung said that many owners of enterprises that had bad debts and were blacklisted for credit had established new firms to source bank loans.
Concerning the issue, economist Pham Chi Lan said the number of newly-established enterprises simply depicted the surface of the business situation as they had yet to prove particularly profitable.
Vu Xuan Tien, Director of VFAM consultancy company, however, blamed the current difficulties faced by enterprises on inadequate business policies.
Inadequacies included a regulation that required stable enterprises that have foreign shareholders to re-register for their operations, a ban on using apartments for offices, in addition to bureaucratic and cumbersome procedures to file for bankruptcy that foster corruption, he noted.
Dr Nguyen Dai La said that banks seemed to prioritise state-owned enterprises that had over half of total outstanding loans. Meanwhile, SMEs accounted for as much as 97% of total enterprises nationwide and they are finding it hard to get bank loans.
“If a part of funding set for saving state-owed enterprises is spent for SMEs, it could help tens of thousands of enterprises survive,” La emphasised.
