Economic Sector

Last updated: Monday, April 22, 2019


Business Number Rises, Scale Remains Small

Posted: Tuesday, September 25, 2018

The General Statistics Office (GSO) held a press conference on September 19, announcing the national business survey and statistics in 2017. The report showed that Vietnam now has 517,900 enterprises, including 10,100 large-scale enterprises, an increase of 29.6 per cent, and 507,860 small and medium-sized enterprises (SMEs), up 52.1 per cent over January 1, 2012. The latter accounts for 98.1 per cent of the business community.

Quick growth in business number
According to the report, the economy had 517,900 enterprises as of January 1, 2017, including 505,100 active entities and 12,860 entities in the process of starting operations. By scale, the country had 10,100 large enterprises, up 29.6 per cent or nearly 2,300 units, from January 1, 2012, accounting for 1.9 per cent of the business community. Meanwhile, SMEs accounted for 507,860 or 98.1 per cent of the total, up 52.1 percent compared with January 1, 2012. Of the sum, medium-sized enterprises were counted nearly 8,500, up 23.6 per cent, accounting for 1.6 per cent; small enterprises were 114,100, up 21.2 per cent and accounting for 22 per cent; and microbusinesses totalled 385,300, up 65.5 per cent and accounting for 74.4 per cent. Notably, the share of SMEs rose 6 percentage points over 2012 while the share of their workforce decreased by 0.8 percentage points, indicating that their size is shrinking.

By sector (data as of January 1, 2017 versus January 1, 2012), the number of service companies rose most with 57.1 per cent and their workforce expanded by 31.5 per cent. Specifically, wholesalers, retailers and repairers increased most with 69,200 units and employed 375,00 workers; and enterprises engaged in science and technology rose by 17,300 and hired 85,000 workers. Mining companies decreased by 57 and their labour force shrank by 25,800 people. Enterprises involved in producing and distributing electricity, gas, hot water, steam and air conditioning increased by 287 but their workforce reduced sharply by 66,600 people. Agricultural enterprises counted up by 1,100 units while the workforce fell by 1,100 people.

An SOE pays most tax on average
According to business data in 2016, a State-owned enterprise (SOE) paid the most tax, VND104 billion on average, much higher than VND18 billion paid by a foreign direct investment (FDI) enterprise and VND1 billion by a non-State enterprise. Tax and other obligation payments of large-scale enterprises accounted for 67.5 per cent; small businesses accounted for 19.4 per cent; and medium and micro enterprises contributed the rest. By scale, a large-scale enterprise paid VND57.8 billion; a medium enterprise paid VND8 billion; and a microbusiness paid VND122 million.

By ownership structure, SOEs tend to decrease in scale as well as business performance, said Mr Pham Dinh Thuy, Director of the Industrial Statistics Department under the General Statistics Office. In contrast, non-state and foreign-invested enterprises have gradually increased in size and contributed significantly to growth. Specifically, the share of SOEs fell from 1.01 per cent to 0.53 per cent in the past five years, their labour force shrank from 15.3 per cent to 9.8 per cent, their capital reduced from 32.7 per cent to 27.7 per cent, and their revenue fell from 26.2 per cent to 16.5 per cent. “This tendency is in line with the general policy of the Party in the SOE equitisation,” he said.

Although the number of SOEs is on the sharp fall as a result of equitisation, they still attract much capital for production and business. As of January 1, 2017, this sector attracted VND8,400 trillion (US$365 billion), 1.72 times higher than 2012. Basic indicators of the non-state sector counted in 2016 included: The share of non-State enterprises was 96.7 per cent; and the share of employees, capital, revenue, profit before tax and tax payment accounted for 61.2 per cent, 53.5 per cent, 55.9 per cent, 26.4 per cent and 38.7 per cent.

Answering the question about the possibility of achieving the target of 1 million enterprises in 2020, Mr Pham Dinh Thuy explained that, from now to 2020, we must have at least 120,000 new enterprises a year to fulfil this ambition. On average, given that about 10,000 units go bankrupt a year, we must have 130,000 new entities annually. In 2016-2017, we had only nearly 120,000 new units a year. If this situation continues, we will not be able to deliver on the goal. But, the economy still has more than 5.14 million business households, of which 2.3 per cent are eligible to become corporate entities. We also need more solutions and incentives to inspire successful business start-ups to have one million enterprises as expected in 2020.

Nguyen Thanh

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