The Hanoitimes - It is hard for the Vietnamese government to achieve the target of having one million operational firms by 2020 because the number of firms going bankrupt is almost the same as the number of new ones, experts warned.
According to Dau Anh Tuan, head of the Vietnam Chamber of Commerce and Industry (VCCI)’s Legal Department, Vietnam has a high number of newly-established enterprises, but the number of enterprises that have to shut down isn’t low.
Tuan cited a report from the General Statistics Office as saying that the total number of new firms set up in the first five months of this year was more than 52,000 and the number of firms that resumed operation after ceasing was some 66,000. Meanwhile, the number of firms dissolved and ceased operation in the period was 39,000.
Some 160,000 firms must be set up annually to reach the target
It meant that Vietnam saw 10 new firms set up while six dissolved and ceased operation in the period, Tuan said.
Besides, Tuan added that private enterprises still face many unfavorable business conditions, for example stricter requirements on workshop area, specialized equipment, management personnel and capital in some fields than those applied to foreign-invested counterparts.
In addition, management agencies tend to require greater budget contribution by the private sector, thus tax continues to be a burden on private enterprises, he said.
Echoing Tuan, Vo Tri Thanh, director of the Institute for Trademark and Competition Research Strategies, also said that it would be very hard to have one million firms in operation by 2020 as planned.
There are currently over 600,000 enterprises operating in the country, meaning that the country will need to create some 400,000 new firms in the next two and a half years, or 160,000 firms annually, to reach the one million firm target by 2020, he said.
Government takes actions
Nguyen Huu Luong, deputy director of Ha Noi Small and Medium Enterprise Support Center, said that the target of having one million businesses by 2020 is tough, and requires determination and supports from all ministries, sectors and regions, to create the appropriate business environment and a revolution in Vietnam’s start-up business sector.
To meet the target, the government has so far issued Resolution 35 to support and develop companies, which has required all ministries and sectors to make considerable efforts to remove business barriers and improve the investment environment, to reduce the administrative obstacles facing businesses.
Ministries have so far cut and simplified 738 business regulations by the end of the first quarter of this year. More than 1,968 business regulations and 500 circulars and decrees are also planned to be abolished or simplified this year to achieve the goals under Decree 19/2018.
Decree 19/2018 was issued in January and the third consecutive of its kind adopted by the government, aimed to smoothen the business environment.
However, according to experts, new reforms should aim to not only reduce barriers, but to also create positive institutional changes and effective policies to promote the business community.
Nguyen Hoa Binh, chairman of Peacesoft Company, said that Vietnam's policies are constantly changing while its business environment and legal regulation often lack consistency and transparency, which have led businesses and investors to face many risks.
Pham Thi Thu Hang, director of the VCCI’s Institute for Enterprise Development, said that businesses, especially private enterprises, will be key drivers of economic growth in 2018.
According to Hang, the country’s internal problems, such as a lack of access to the latest technologies, are also affecting the development of companies. The productivity, efficiency and competitiveness of the economy have improved, but have not advanced to the required levels, and only a breakthrough will create the appropriate conditions.