Economic Recovery: Joint Efforts of Government and Businesses Needed

Specifically, Vietnam had 19,323 new business establishments with a registered capital of VND87,798 billion (US$4.2 billion) in the third quarter of 2013, down 16.7 per cent in business registrations and 23.1 per cent of capital over the second quarter. In the first nine months, the country had 58,231 new business establishment registrations with a gross investment capital of VND281,359 billion (US$14 billion), up 10.8 per cent in establishment registrations but down 21.6 per cent in registered value from the same period of 2013. However, the nation also witnessed 6,742 completed corporate bankruptcies in the nine-month period, down 2 per cent year on year.

 

However, the number of corporate establishments registering to halt operations still rose 12.8 per cent over the same period of 2012 with approximately 35,717 cases. Thus, from January to September, 42,459 companies were dissolved or suspended operations, signally extremely complex developments ahead. Companies, especially small and medium ones, are in extreme difficulty and fraught with bad debts, growing inventories, inaccessibility to capital sources, and profitability. Banking, financial, insurance, construction, real estate, agriculture, forestry and fisheries companies were among the hardest hit.

 

In reality, regulatory policies and activities of the Government and joint efforts of the business community have started to take effect and provided the foundation for enterprises to overcome difficult times and achieve economic recovery in the near term. According to the 2013-14 Global Competitiveness Report issued by the World Economic Forum (WEF), Vietnam moved up five notches to secure the 70th position among 148 countries and territories surveyed. The progress was mainly the result of Vietnam’s slightly improved macroeconomic environment, which was ranked 87th, moving up 19 places. The quality of the country’s transport and energy infrastructure systems improved also, jumping 13 places to 82nd. Vietnam also advanced in the goods market efficiency index to 74th, up 17 positions. According to another survey by the auditing and business consultancy firm Grant Thornton, Vietnam ranked seventh in the world in terms of economic growth potential and 4th within emerging Asia-Pacific economies.

 

According to Dr Nguyen Minh Phong, despite more positive economic signals, enterprises and authorities still need to double their efforts and business support policies to expand sales in the event of limited domestic consumption (purchasing power expanded just 5 per cent in the first eight months of the year) and slashed export prices of some agricultural staples.

 

At the monthly cabinet meeting for September 2013, Prime Minister Nguyen Tan Dung asked authorities to support enterprises to solve difficulties and step up production and business activities in order to maintain GDP growth at 5.4 per cent. He said: “Every minister with his/her State management powers must create every favourable condition for enterprises to cope with difficulties, seek more exports and dominate the domestic market. Successful prevention of contraband and counterfeit goods will boost domestic production and increase employment." He also asked the State Bank Governor Nguyen Van Binh to take effective measures to deal with corporate bad debts, accelerate credit growth, prevent and reduce new bad debts. According to experts, with active support from the Government and constant efforts of enterprises, the economy is expected to hasten recovery in the last months of the year.