Economic vitality coursing through heart of businesses

With a high number of companies entering or re-entering the market for the first time in 2022, can the portrait of business registrations in 2023 be described as being infused with fresh vitality?

Deputy Minister of Planning and Investment Tran Duy Dong

The government’s measures on socioeconomic recovery and development are a highly appropriate remedy to assist in the economic recovery of enterprises.

Notably, the National Assembly, the government, and the prime minister’s strong will to assist our economy in quickly overcoming obstacles to growth has boosted the confidence of both businesses and people.

The excellent recovery momentum in the first quarter of 2022 had a widespread impact on the economy. After that, April was the month with the most significant number of newly founded businesses ever. Last year, a record of over 148,500 businesses entered the market, an increase of 27.1 per cent compared to 2021. In addition, the number of firms resuming operations last year was noteworthy at over 59,800 companies.

These records were reached by the business community despite uncertainties as an aftermath of the Russia-Ukraine situation, the rising price of oil and basic products, supply chain disruptions, and global inflation.

Furthermore, investment and trade fell, the signals of a worldwide economic crisis were increasingly apparent, Vietnam’s primary export markets shrank, and the economic development of other nations slowed.

Nevertheless, does it seem that many obstacles have not diminished for the business sector as 2023 begins?

In the past couple of years, the economy and companies have become much less resilient. This is mirrored in part by the fact that the average registered capital of businesses fell, and the registered capital of newly founded businesses decreased and slowed in the last months of 2022, reaching its lowest level ever. The number of businesses leaving the market rose in comparison to the previous year.

The business community remains strong in entrepreneurial spirit and has faith in the direction and administration of the government, as well as the recovery of the market and economy in 2023. This is shown by poll findings for a survey carried out on the National Business Registration Portal between November 29 and December 20.

According to the survey, just over half of businesses questioned want to boost production and business, and the same amount believes their production and business environment will improve in 2023. However, a large percentage of businesses continue to face obstacles.

There are 84.7 per cent of enterprises participating in the survey that are experiencing difficulties, primarily the rising cost of input materials and labour (51.8 per cent of selected enterprises), market access, customer search, transportation (48.7 per cent), decreased purchasing power, inventories (44.1 per cent), and access to capital (38.7 per cent).

Firms discussed the difficulty in obtaining loans. Some 43 per cent of businesses say that lending interest rates are expensive, while 35.8 per cent believe that loan processes are cumbersome and time-consuming. Just over one-third do not have access to the state’s interest rate assistance packages, while 31.7 per cent of businesses lack collateral.

A few businesses feel that the difficulty in gaining access to financing stems from internal factors. This demonstrates that, although businesses and individuals perceive the government’s efforts to accompany and assist them through the difficult period of recovery and development, stronger support is still required, particularly from banks and credit institutions.

What remedies will be required this year to ensure an effective methodology for the economy’s recovery and to enhance business confidence?

In past years, reforming the corporate environment has been a requirement and a focal point of emphasis. Many organisations predict that our nation’s economy will be considerably more demanding in 2023.

As a result, initiatives to change and improve the business climate should be prioritised and become more achievable, while enforcement activities should be strengthened.

To improve the business environment efficiently, the entire governmental system must continue to pay greater attention to reform, boost economic growth, increase competitiveness, overcome deficiencies that generate hurdles for businesses and individuals, and assist business development and rehabilitation.

Particularly, there should be a methodology to incentivise innovation and creativity among officials and civil servants performing official duties, motivate more substantive interaction and exchange activities with citizens and companies, and immediately resolve the difficulties of business as opposed to merely listening to problems.

Individuals and corporations will undoubtedly see the government’s efforts to follow and promote the economic recovery, which will inspire more confidence.

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