Nealy 120,000 firms leave market in 2021 due to COVID-19 pandemic

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As many as 119,800 firms left the market in 2021, up 17.8 per cent year-on-year due to the negative impact of COVID-19, with strict blockades and prolonged social distancing especially in the third quarter, according to the General Statistics Office.

Nealy 120,000 firms leave market in 2021 due to COVID-19 pandemic
Long light bulbs are made at Rang Dong Light Source and Vacuum Flask Co in Hanoi. — VNA/VNS Thanh Tung

Among those leaving the market, nearly 55,000 firms temporarily suspended operations for a definite period, a year-on-year increase of 18 per cent, while 48,100 enterprises stopped operation pending dissolution procedures, up 27.8 per cent.

Another 16,700 completed dissolution procedures, down 4.1 per cent, including 14,800 with capital scale of less than VND10 billion (US$430,000), down 4 per cent and 211 with capital scale of over VND100 billion ($4.3 million), down 20.7 per cent.

On average, nearly 10,000 businesses withdrew from the market a month as they failed to survive the COVID-19 storm.

In 2021, the country also saw a yearly decline of 13.4 per cent in the number of newly-established businesses at 116,800 and their total registered capital also dropped 28 per cent year-on-year to over VND1.61 quadrillion.

The average registered capital of a newly established enterprise was estimated at VND13.8 billion, down 16.8 per cent compared to the previous year.

On a brighter note, the timely implementation of Resolution No 128/NQ-CP which promoted provisional regulations on safe, flexible adaptation to and effective control of COVID-19, made a great contribution to resuming domestic production, gradually creating confidence for manufacturers.

Thus, 31,400 new firms were formed in Q4 with total registered capital of VND415.3 trillion, marking respective increases of 70.4 per cent in the number of businesses and 64.1 per cent in levels of capital compared to Q3.

Meanwhile, 43,100 firms resumed their operation this year, down 2.2 per cent from the previous year.

The GSO’s survey on business trends of the manufacturing and processing industry in Q4 showed that 44 per cent of businesses said that the business situation would be better than Q3, while 34.1 per cent said the business situation would be stable.

About 24.9 per cent of enterprises forecast more difficulties in doing business than the previous quarter.

About 45.6 per cent of enterprises were optimistic about the business situation in first quarter of 2022, forecasting better business performance than Q4/2021 while 36.1 per cent of them foresaw a stable business situation.

About 18.3 per cent of businesses forecast more difficulties in doing business than in Q4 of 2021.

Vietnam has set a target of about 710,000 newly-established enterprises in the 2021-25 period, following a draft resolution on supporting and developing businesses jointly built by the Ministry of Planning and Investment (MPI), relevant ministries, sectors, agencies and localities.

Under the document, various support policies will be designed to assist businesses in recovering, expanding and improving their competitiveness. In 2025, Vietnam expects to have over 2.1 million companies.

In the period, about 10 start-ups are hoped to reach a value of over UD$1 billion, while about 35-40 per cent of total firms are expected to launch science-technology application and innovation activities, and 100 per cent of companies are hoping to access digital transformation, with 100,000 firms getting support in the field.

To this end, the MPI will give eight groups of solutions, focusing on improving the investment and business environment, expanding domestic and foreign markets, strengthening the credit access for businesses, especially those hit by COVID-19.

The ministry also proposed support in human resources development and the fostering of connectivity among enterprises so that they can join domestic and international value chains and gradually lead the chains in the next five years.

Source: Vietnam News

Most of the 100,000 businesses that have left the market in 2021 have been small and medium sized enterprises (SMEs), which has caused difficulties to millions of workers and their families.

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