Upbeat signs in business development: data expert

July 05, 2024 | 10:38
(0) user say
Phi Huong Nga, head of the Industry and Construction Statistics Department under General Statistics Office (GSO), elaborates the positive signs and hardships in the current development landscape, and the proposals to scale up support for business development.

Would you brief us on some positive signs in business development in the first half of this year?

Looking closely on business development in the second quarter (Q2) and first half (H1) of this year, we have realised many positive points.

Many upbeat signs in business development: Expert (translated)
Phi Huong Nga, head of the Industry and Construction Statistics Department, GSO

Accordingly, the number of firms making an entry and a comeback in H1 amounted to 119,600, setting a record for the period from 2019-2024 and higher than those taking an exit.

Besides this, the rate of businesses making an entry and comeback to the market over those taking an exit reached 108.4 per cent in H1 of this year, compared to less than 81 per cent in Q1.

Second, the Purchasing Managers' Index (PMI) surpassed 50 points in four out of five months, which reflects expansion in local production in the year to date.

A survey conducted by the General Statistics Office (GSO) in June showed that 73.5 per cent of surveyed firms reported that they had better and more stable business results in Q2 of this year compared to Q1.

Third, the processing and manufacturing index in H1 expanded 8.5 per cent; the consumption index grew 10.8 per cent on-year; and the stockpile ratio in H1 averaged 77 per cent, showing a sharp drop compared to one year ago.

The rate of manufacturing units securing new orders in Q2 was higher compared to Q1 and tends to further pick up in the successive quarters.

Looking at the number of businesses exiting the market, it is clear that the business landscape is still fraught with difficulties. What are your thoughts on this?

In H1, more than 110,300 businesses exited the market, up 10.3 per cent on-year; and the total volume of supplemental capital to the local economy shed 7.7 per cent.

Average capital scope for an enterprise also tended to go down.

Along with this, during 2017-2022 the capital size for each firm surpassed $416,600, dropping to $383,300 in 2023 and 2024.

There are diverse reasons leading to such scene, such as difficulties in finding new customers and new business solutions, financial stress, and lack of capital, among others.

Another factor dampening business performance is augmenting trade restrictions from other countries, causing supply chain disruptions.

Policy revisions by other countries, coupled with more stringent production requirements, are testament to the increasingly rigorous division and select process; without embracing active changes and taking measures for adaption, businesses could hardly survive and develop.

In addition, Vietnam’s major trading partner China, posts lower growth than expected, affecting global trade rebound, particularly to the economies who are its strategic trading partners, including Vietnam.

What proposals has the GSO made to further aid business development?

To support businesses to make entry and comeback to the market, we propose the government, the prime minister, state competent agencies and localities further mitigate pressures relevant to input costs for production and business activities. For example, 47 per cent of surveyed firms want further reduction of lending rates, arguing that the current lending rates are still too high.

In addition, over 29 per cent of surveyed firms proposed further trimming of lending conditions and procedures.

Regarding the policies on tax and fees, up to 31.2 per cent of surveyed firms wanted further revisions to existing policies to more suitable levels fitting firms’ current health.

Still no VAT hike proposal to aid business development Still no VAT hike proposal to aid business development

The amended VAT Law is set to be submitted for approval next month with new content, yet the common tax rate is still proposed at 10 per cent to help businesses through current turbulent times.

ESG becoming mandatory criteria for sustainable development of business ESG becoming mandatory criteria for sustainable development of business

Environmental, social, and governance factors are increasingly becoming a prerequisite component in the investment decision-making process of many investors, with an initiative offered by the Ministry of Planning and Investment.

Agribank ramps up efforts to spur business development Agribank ramps up efforts to spur business development

State lender Agribank is exhibiting flexibility through a raft of preferential credit programmes, which are tailored to diverse customer groups and supporting business development.

By Manh Bon

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional