Vietnam gains record number of new firms in 2019

Production at the Wolong Electric Hai Phong Plant in the An Duong Industrial Park, Hai Phong City. Vietnam saw a record number of new firms opening in 2019. Photo anhp.vn

It also saw the highest average level in registered capital per enterprise in recent years, with VND12.5 billion (US$536,480), bringing the total newly registered capital to VND1.73 quadrillion ($74.2 billion) for this year.

Those figures rose by 5.2 per cent in the number of newly established firms, 17.1 per cent in total registered capital and 11.2 per cent in the average capital per enterprise year on year.

Meanwhile, 40,100 existing enterprises registered to increase capital by VND2.27 quadrillion in total for their business. Thereby, the domestic economy received total capital of about VND4 quadrillion from newly established and existing businesses this year.

GSO Director Nguyen Bich Lam said the record in newly established firms, as well as the average registered capital, was due to the Government's solutions on improving the business environment and asking ministries and localities to continue substantially reducing business conditions. Those actions have solved business difficulties of enterprises.

Therefore, besides the record number of new businesses, the nation also saw 29,400 enterprises recovering production and business this year, a year on year increase of 15.9 per cent.

The GSO also reported that a survey on business trends of enterprises in the processing and manufacturing sector in the fourth quarter of 2019 showed that 46.7 per cent of businesses had better business performance in this year's fourth quarter that the previous quarter. About 36.3 per cent of surveyed businesses had stable production and business while 17 per cent of them had difficulties in production and business.

According to the Vietnam Chamber of Commerce and Industry (VCCI), the business community believe that policies on building e-Government and developing a digital economy and development of a start-up ecosystem have initially gained positive results.

Meanwhile, a programme cutting and simplifying 50 per cent of business conditions and specialised inspections has also been implemented effectively.

The national and ASEAN one-door mechanisms have been carried out to create favourable conditions for enterprises.

Trade and investment promotion activities and market expansion have boosted Vietnamese goods and businesses to integrate into regional and global economies.

However, VCCI Chairman Vu Tien Loc said Vietnamese businesses still face many difficulties, including protectionism, trade wars between large economies and slowing growth of the global economy.

These difficulties will require the local business community to innovate and restructure.

He also proposed the Government should persist in the path of innovation, continue building a transparent and fair economic institution, fight corruption and promote development of local enterprises, especially small, medium and micro enterprises.

Nguyen Minh Cuong, principal country economist at the Asian Development Bank (ADB) said Vietnam should have multi-dimensional policies to not only facilitate large private enterprises but also help the small and medium-sized businesses as well as household businesses achieve stable development.

According to the GSO, in 2019, most important economic sectors saw growth in the number of newly established enterprises compared with 2018, including the agriculture, forestry and fishery sector (up by 9.9 per cent), industry and construction (up by 5.3 per cent), service (up by 5.1 per cent), production and distribution of electricity, water, gas (up by 50.5 per cent), logistics and transportation (up by 47.6 per cent), and processing and manufacturing (up by 6.2 per cent).

However, there were some other sectors which saw a reduction in the number of new businesses, such as finance, banking, insurance, mining, accommodation, catering, wholesale, retail, repair of cars and motorcycles and entertainment.

In 2019, there were 16,800 enterprises dissolved, a surge of 3.2 per cent compared to the previous year, while about 10,000 enterprises are completing dissolution procedures mainly due to a lack of business ability, competition and capital.

Vietnam now has nearly 800,000 operating businesses and about 1.6 million registered business households that are expected to upgrade to become businesses in the coming years.