Ho Chi Minh City: Business households hesitate to "develop"

	“Transforming” the business households: Not as we wish
	Business households are still "reserved" to turn into enterprise
	Many benefits on tax from transferring business household into enterprise

Illustrative photo.

Stuck on the business?

According to the Ho Chi Minh City Department of Planning and Investment, the mobilization of business households in HCM City is facing many difficulties, and the rate of business households converted to enterprises is very low compared to the target. According to statistics, till 15 March 2018, 677 business households were converted to enterprises (of which 468 business households moved up and 209 enterprises were mobilized when registering business households), reaching 3.39% of planned targets in 2018 (20,000 enterprises).

At the meeting on business management after business registration held by the HCM City Department of Planning and Investment last week, leaders of districts said that despite efforts to propagate and mobilize business households, the results are not good. The representative of Thu Duc district said that in 2017, the district was assigned to mobilize 1,492 individual business households to be converted to enterprises. Although the whole political system of the district was well propagandized, the results were not high, and only 434 households agreed to be converted, reaching nearly 30% of the planned targets. From the beginning of 2018 to the end of March 2018, no households have been transferred to enterprises, while in 2018 Thu Duc district was assigned to mobilize 1,392 households to be converted to enterprises.

Similarly, in the first 3 months of 2018, there were 8 districts in Ho Chi Minh City that did not have a business household to carry out procedures for conversion to enterprises. Among them, many districts have been assigned to reach high targets, such as Binh Tan district, assigned to mobilize nearly 1,700 individual business households into enterprises; District 3 which was assigned to mobilize over 800 households; and District 5 which was assigned to mobilize nearly 600 households.

As one of the districts having the largest number of enterprises in Ho Chi Minh City, with 2,124 business households, by the end of March 2018, in District 1, only 16 business households carried out procedures for transferring them to enterprises; District 7 had 25 enterprises converted from household businesses, while the target was 1,331 enterprises.

Difficult to reach the target

With the above results, HCM City will find it difficult to reach the target. In fact, the objective is derived from the fact that most of the households are small, simple and traditional units. Business households are worried about costs, not familiar with the need to store documents and accounting books. In addition, business households are also reluctant to change the management model due to limited knowledge, business management skills and policies related to business.

On the other hand, the tax authorities, as well as functional units, have difficulty in mobilizing, persuading business households to convert to enterprises. Till now, no documents clearly stipulate the benefits to business households. In addition, the application of taxation and administrative penalties in the field of taxation is more beneficial to business households than to enterprise businesses nowadays, which is also a reason why many business households have large turnovers, but still do not want to convert to enterprise.

Together with the target of converting 20,000 individual business households into enterprises, in 2018, the People's Committee of Ho Chi Minh City set the target of establishing 46,000 new businesses. In the first quarter of 2018, there were 8.437 newly established enterprises, an increase of 6.17% over the same period, reaching 18.34% compared to the target. Of which, there were 7 new districts with more than 500 enterprises. With this result, the completion of the target of 46,000 newly established enterprises poses many challenges for Ho Chi Minh City.

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In fact, the HCM City Department of Taxation proposed some solutions to support the development of enterprises more effectively, because the support of the tax sector now only solves the initial difficulties of the household business and start-up businesses. Meanwhile, the core for the development of business households and start-up businesses must be favorable and stable in the long-term. Therefore, State agencies should focus on building legal corridors, and long term stability for business owners to encourage them to convert to enterprises.