Evaluation necessary to ensure business development

The National Assembly Economic Committee (NAEC) last week urged the government to carry out surveys, detailed assessments, and compile accurate statistics on the number of operational enterprises and their performance, including tax payments.

Evaluation necessary to ensure business development, illustration photo

This is crucial for enabling the government to devise appropriate policies for socioeconomic development, the committee noted.

“In addition, the government needs to provide clearer reports on how it has and will carried out policies to support businesses, especially after Typhoon Yagi recently wreaked havoc on enterprises, particularly in agricultural production and tourism services,” the committee said.

According to the NAEC, business activities remain under significant pressure, with the number of businesses exiting the market surpassing those newly entering or re-entering.

Data from the General Statistics Office (GSO) showed that in the first nine months of this year, nearly 121,900 enterprises were newly established, with registered capital amounting to $48.27 billion.

However, during the same period, nearly 87,000 businesses temporarily suspended operations, marking a 14.7 per cent increase compared to the same period last year. Meanwhile, almost 61,500 enterprises halted operations and were awaiting dissolution, up 33.4 per cent on-year, and 15,400 firms completed dissolution procedures, representing an annual increase of nearly 19 per cent. On average, about 18,200 businesses exited the market each month.

“The ratio of enterprises withdrawing from the market compared to those entering the market in the first nine months of 2024 stood at 89.7 per cent, higher than the 79.3 per cent recorded for the whole of 2023,” said Vu Hong Thanh, Chairman of the NAEC. “This ratio in the years from 2019 to 2023 sat at 50.3, 56.8, 74.9, 68.7, and 79.3 per cent, respectively.”

A GSO survey conducted in Q3 of over 6,000 manufacturing and processing businesses nationwide identified the key factors affecting production and business activities in the first nine months of this year. These included low domestic market demand (53 per cent), low international market demand (31.6 per cent), financial difficulties (27.5 per cent), and high lending rates (21.2 per cent).

The NAEC also highlighted that Typhoon Yagi severely impacted Vietnam’s manufacturing sector in September, with heavy rains and floods causing production delays, supply chain disruptions, and temporary business closures.

As a result, production output, new orders, purchasing activities, and inventories of input goods all declined. The Purchasing Managers’ Index fell to 47.3 points in September, down from 52.4 in August, ending a five-month period of expansion in production conditions.

According to the Ministry of Planning and Investment, the total estimated economic damage from Typhoon Yagi and its residual effects is around $3.3 billion.

“The government should promptly update the data on damages caused by natural disasters, especially Typhoon Yagi in 26 northern provinces, and introduce effective short- and long-term solutions to respond to such disasters without compromising socioeconomic development for 2024 and beyond,” the NAEC urged.

The government views enterprises as a key pillar of economic growth, which stood at 6.82 per cent for the first nine months of the year. It targets a full-year growth rate of 6.8-7 per cent.

Minister of Planning and Investment Nguyen Chi Dung stated that the government will implement a range of solutions to stimulate the economy. “Fiscal and monetary policies will be coordinated alongside other measures. Efforts will focus on addressing bottlenecks and easing difficulties for businesses, prioritising economic growth, maintaining stability, controlling inflation, and ensuring the economy’s key balances,” Minister Dung said.

The 2018 Law on Supporting Small- and Medium-sized Enterprises provides the national framework for policies supporting innovative firms and startups, but its implementation has been limited.

While the government has introduced policies to support such enterprises in areas such as taxation, access to finance, innovation, and value chain development, programme budgets remain small, and uptake of these programmes has been low, according to the Organisation for Economic Co-operation and Development.

Additionally, some aspects of the law have not been fully enforced. For example, Article 18 offers tax exemptions and reductions for investors, but the implementation of this article has been hampered by the lack of detailed corporate income tax regulations, according to the World Bank.

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