The sharp increase in the number of enterprises leaving the market in January 2025 shows that the private enterprise sector, especially small and medium enterprises, still faces many difficulties. Analysis of this data also shows that there are many objective and seasonal reasons.
People do procedures at the Hanoi Department of Planning and Investment - Photo: NGUYEN KHANH
However, in this context, many experts recommend that the State needs to have policies to support businesses to stay in the market and restore production, the most important of which is to create a favorable business environment.
52,800 businesses temporarily suspended operations in January
According to the General Statistics Office, in January 2025, nearly 10,700 new enterprises were established nationwide, an increase of 6.6% over the previous month and a decrease of 30.3% over the same period last year.
In addition, nearly 22,800 enterprises returned to operation, 2.6 times higher than in December 2024 and up 65.2% over the same period last year, bringing the total number of newly established and returning enterprises in January to more than 33,400, up 15% over the same period last year.
Also in January, 52,800 enterprises registered to temporarily suspend business, up 20.2% over the same period last year. In addition, nearly 3,500 enterprises stopped operating pending dissolution procedures, 2,021 enterprises completed dissolution procedures. The number of enterprises withdrawing from the market was 58,300, up 8.1% over the same period last year.
Discussing this picture, Mr. Nguyen Bich Lam, former General Director of the General Statistics Office, said that usually in difficult years, many businesses dissolve in the months before Lunar New Year because they want a fresh start in the new year.
This phenomenon is temporary and often occurs with service businesses and restaurants. Manufacturing businesses usually do not suspend operations, only when there is a deadlock in orders and output do they suspend operations.
According to Mr. Lam, the number of more than 52,800 enterprises temporarily suspending business, most of which operate in the service sector, also shows that people's consumption demand has decreased recently. Most people are still facing difficulties, so they cut down on spending, which is clearly reflected in shopping activities during the Lunar New Year when eating out, buying flowers and ornamental plants for Tet also decreased significantly.
"However, it is necessary to see that the number of businesses leaving the market increased sharply in January, showing that the business community is still facing many difficulties. This is reflected in the PMI index (an economic index measuring the level of activity of the manufacturing and service sectors in the economy) in December 2024 at 49.8 points, and by January 2025 it had decreased to 48.9 points.
A PMI index below 50 points shows that manufacturing, processing and manufacturing enterprises are also facing difficulties due to lack of product output. An economic PMI index of 50 points shows that business activities are at a normal level. If it increases to 54 - 55 points, business activities are improving, but if it is below 50 points, business activities are still difficult. For high-growth economies, their PMI index reaches 60 points," Mr. Lam emphasized.
Workers work in a textile company in Hai Duong province - Photo: NGUYEN KHANH
Improve the business environment for domestic enterprises
According to Dr. Nguyen Minh Thao - Head of the Department of Business Environment and Competitiveness Research (Central Institute for Economic Management), if seasonal factors are ignored, the number of enterprises leaving the market in January 2025 also shows abnormalities.
Firstly, the number of enterprises withdrawing is too large compared to the number of enterprises entering the market, which shows that it is not simply a natural law of elimination but also other factors related to opportunities, business risks and other uncertain factors.
Another important point is that we talk a lot about promoting business development and creating business motivation for businesses, but reforms are still lacking. "The business environment is not really favorable for domestic businesses," Ms. Thao shared.
According to Ms. Thao, in recent years, Vietnam has been an attractive destination for foreign investors, but domestic enterprises themselves are facing many disadvantages and barriers. In addition to the trend of withdrawing from the market, some domestic enterprises are having to reduce production, this is an issue that needs attention and support for domestic enterprises to grow.
Ms. Thao also emphasized that the domestic private enterprise sector is contributing about 50% of GDP and creating the majority of jobs in the economy. If domestic enterprises cannot restore production, there can be no economic growth.
Currently, the internal capacity of domestic enterprises is inferior to that of foreign enterprises, so without the support of the State, especially creating favorable conditions for them in business, domestic enterprises will find it difficult to break out when the space is increasingly narrowing.
Need to review support policies
According to economic expert Do Thien Anh Tuan (Fulbright University Vietnam), the situation of many domestic enterprises being "sick" and having difficulty accessing land, borrowing capital, and finding markets is not new. Up to 98% of domestic enterprises are small and medium-sized enterprises, facing many difficulties in accessing resources.
Only a few large enterprises have easier access to resources. Therefore, it is necessary to create an environment of equal competition among business sectors, supporting small and medium enterprises to have the opportunity to stay in the market.
According to Mr. Tuan, in the coming time, the Government needs to have appropriate support policies to help domestic enterprises, especially small and medium enterprises, restore production and business.
For example, in the policy of reducing VAT by 2%, we are implementing it in a patchwork manner every six months. This does not maximize efficiency.
Since the COVID-19 pandemic, we have implemented 4 6-month reduction periods. If we have a good vision and implement 1 reduction period every 2 years, the effect will be very different.
For VAT support policy, the reduction is one part, the important thing is to create expectations, this factor is very important.
Still exempting 2% VAT but implementing a reduction for 1 period in 2 consecutive years will have a very different effect, the impact will be more profound, Mr. Tuan emphasized.
Many experts affirm that the sharp increase in businesses leaving the market is a sign of problems in the investment and business environment. Many policies are not really effective, sometimes the State's support has not reached businesses, so it needs to be reviewed to overcome.
And the most important support policy for the majority of domestic enterprises at this time is to create a favorable business environment. Many enterprises are entangled in land legal issues, so they cannot capitalize the land under their use rights and do not have the conditions to contribute capital for business.
If the State removes legal obstacles to land for enterprises, it will also create a large resource for enterprises. There will no longer be a situation where money is kept in projects but the bank does not accept mortgages, no one buys them, so they encounter difficulties and have to temporarily stop business.
The domestic market has not recovered as expected.
According to Dr. Nguyen Quoc Viet - Deputy Director in charge of the Institute for Economic and Policy Research (Hanoi National University), the data on enterprises withdrawing in one month does not reflect the exact trend because there are many causes and objective factors influencing it.
Mr. Viet said that looking at the whole year of 2024, the macro economy grew quite well but the business situation still faced many difficulties. In the whole year of 2024, the number of enterprises withdrawing from the market was still very large, about 197,900 enterprises. The positive point is that by the end of 2024, the number of enterprises returning to the market increased sharply, with 233,400 newly established enterprises returning to the market in the whole year.
But this does not confirm that businesses have recovered as domestic businesses depend heavily on the domestic market. Although the domestic market has recovered more than in 2023, it has not yet achieved the desired recovery.
This shows that the domestic business sector still faces many difficulties and needs strong support policies from the Government this year.
Mr. Hoang Quang Phong (Vice President of Vietnam Federation of Commerce and Industry - VCCI):
Small businesses need support with premises and capital.
In the context of economic restructuring, small and medium enterprises have to restructure their production and business activities. Therefore, some enterprises naturally withdraw from the market, but there are also enterprises that proactively arrange and withdraw from the market.
Besides, the international market is facing many difficulties, domestic small and medium enterprises have low competitiveness and they cannot maintain the old business model.
In the immediate future, there needs to be timely support solutions to maintain the current business momentum and maintain the number of employees working in the enterprise. This is a challenge for many enterprises today.
The sharp increase in the number of businesses leaving the market in January is not really a cause for concern. It is an indication that state management agencies need to create a more favorable investment and business environment, support businesses to improve their competitiveness, and accelerate digital transformation.
To support small and medium enterprises to stay in the market, in the coming time, localities need to support investment in industrial parks and industrial clusters for small and medium enterprises, helping them easily access production and business premises. On the other hand, it is necessary to improve the operational efficiency of the fund to support small and medium enterprises.
In the past, some enterprises have accessed this support fund, but most have not. Most small and medium enterprises have limited capital and weak resilience. Some enterprises have to restructure after a few months of establishment. Therefore, it is necessary to promote the effectiveness of this fund to support them to stay in the market.
What does the General Statistics Office say?
People come to do procedures at the Ho Chi Minh City Tax Department in early 2025 - Photo: TTD
What does the General Statistics Office think about the number of enterprises withdrawing from the market in January 2025? Ms. Nguyen Thi Huong, Director General of the General Statistics Office, analyzed the noteworthy points.
According to Ms. Huong, the total number of newly established and resuming enterprises in January reached more than 33,400, an increase of 15% over the same period in 2024 and an increase of 77.5% over the previous month.
Of which, the number of newly registered enterprises in the month reached nearly 10,700, with a total registered capital of nearly VND 94,100 billion and a total registered number of employees of more than 81,500, down 30.3% in the number of enterprises, down 39.3% in registered capital and down 22.3% in the number of employees compared to the same period last year.
In terms of scale, the additional registered capital of operating enterprises in January increased sharply, reaching more than VND 367,200 billion, 2.6 times higher than the same period in 2024.
This reflects positive expectations for economic development and the confidence of businesses operating in the market in the Government's flexible and proactive economic management policies, including controlling inflation, stabilizing the macro-economy, promoting recovery and development of production and business.
Most newly established enterprises are small in scale, under 10 billion VND, mainly in the service sector with nearly 8,000 enterprises, accounting for 75.1% of the total number of newly established enterprises, 23.9% (2,500 enterprises) in the industrial and construction group, 1% in the agricultural, forestry and fishery group (113 enterprises).
Enterprises withdrawing from the market in January mainly had small capital sizes under 10 billion VND and most had a short operating time of less than 5 years.
Regarding the cause, Ms. Huong said that along with objective reasons regarding the world economic context and the internal capacity of domestic small and medium enterprises, the main reason leading to the decrease in the number of enterprises entering and re-entering the market, while the number of enterprises withdrawing increased, is seasonal, because January 2025 coincides with the Lunar New Year. The same phenomenon also occurred in January of previous years.
Many businesses do not choose to register at the beginning of the fiscal year and before Tet due to the nature of their production and business activities. In addition, many businesses choose this time to temporarily suspend operations and reorganize or switch to other industries and fields.
On the other hand, besides newly established enterprises, there is always a certain rate of dissolved and bankrupt enterprises due to competition, elimination and inevitable purification in the market. This withdrawal situation shows the flexibility and sensitivity of enterprises, quickly changing their operating models to better meet and better suit the new requirements of the market.
This is also an opportunity for businesses to develop new, higher quality business ideas, improve competitiveness and market development, especially in the context of increasingly deep integration as it is today.
The current business environment still has many challenges. These are barriers in terms of industry and business conditions that are hindering operations and increasing compliance costs, reducing the investment and business motivation of enterprises.
The number of enterprises withdrawing from the market in January shows a normal movement following the general trend of the economy, but this is also a warning signal that further research is needed to find fundamental solutions to promote fast, sustainable and effective business development.
Mrs. Nguyen Thi Huong
Source: https://tuoitre.vn/can-chinh-sach-ho-tro-doanh-nghiep-noi-bam-tru-thi-truong-20250208085755845.htm
Comment (0)