Vietnam saw surge in new businesses in January

This upward trend was also evident in the re-entry of businesses into the market, with 27,335 enterprises making a comeback in the first month of 2024, reflecting a 5.5 per cent increase on-year and surpassing the average influx rate by more than 1.3 times for the period between 2018-2023.

The General Statistics Office's (GSO) had anticipated a modest 2 per cent rise in new business for the entire year, targeting approximately 162,500 entities. With these January figures, an optimistic rebound of around 68,000 businesses is expected, signifying a 16 per cent growth, thereby injecting an additional 230,500 enterprises into the national economy in 2024.

These projections draw on the previous year's business registration dynamics and both the global and local economic outlook. Vietnam's economic recovery trajectory remains positive, bolstered by an anticipated impact of policies enacted in 2023. Key economic drivers such as private, foreign, public, and state-run investment, consumer spending, tourism, and exports are all expected to see growth.

However, the broader global economic climate holds latent risks, including geopolitical tensions and inflation management in developed economies. Despite a slowdown in inflation rates and stringent monetary policies are likely to persist in several major economies.

Vietnam faces challenges from the slow and fragile recovery of its primary trade and investment partners, characterised by low growth and weak consumer demand, amidst a rise in protectionist measures and adverse global conditions. These factors are poised to impact Vietnam's manufacturing, industrial, trade, and investment endeavours.

The projection for 2024 suggests a continued increase in business withdrawals from the market compared to 2023, albeit at a markedly lower rate than the pandemic-induced exodus, with an expected 3.5 per cent rise, equating to roughly 178,000 businesses, including about 10 per cent undergoing dissolution.

To overcome these hurdles and leverage opportunities for swift and sustainable growth, the GSO recommends a series of strategic measures for government and sectoral action.

Key recommendations include the government maintaining an active, flexible, and effective monetary policy alongside a targeted and prudent fiscal strategy. It also emphasises enhancing investment growth drivers, including state budget investments in critical national infrastructure projects and leveraging public investment to stimulate private investment, while efficiently mobilising foreign direct investment, particularly large-scale, high-tech foreign investment.

Additionally, the government is advised to refine legal and regulatory frameworks to improve the effectiveness of law enforcement and vigorously pursue administrative and regulatory simplification to foster digital transformation.

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