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VietNamNews

Business closures pass 26,000

Update: July, 03/2012 - 10:45

HCM CITY — Unable to cope with difficulties caused by the global economic crisis, 26,340 Vietnamese businesses have suspended operations or shut down in the first six months of 2012, a year-on-year increase of 5.4 per cent, the General Statistics Office (GSO) says.

According to figures released by the GSO in Ha Noi last Friday, the number of enterprises dissolved, 4,105, marked a year-on-year increase of 35.4 per cent, showing businesses were finding it increasingly difficult to survive in the current environment.

In June 2012, 4,110 firms declared bankruptcy or suspended operations. Of these 610 were dissolved.

Of the 11,329 foreign-invested enterprises, 232 firms (two per cent of the total number of registered FIEs in the country) have temporarily suspended operations, 696 enterprises (6.3 per cent) are about to be dissolved because of losses or changes in the investment environment.

In addition, 92,700 other private firms have "disappeared." Nguyen Bich Lam, deputy head of GSO, said these companies were founded for "invoice selling" and have never paid taxes.

Some 1,000 other FIEs, including nearly 800 from HCM City, have also "dispappeared," he said.

About 23,000 State-owned enterprises (SOEs) have suspended operations while over 30,000 other SOEs could be dissolved.

Lam said SOEs, which are most "vulnerable" in the current state of economic turmoils, needs more support from the Government.

As of 1 January 2012, enterprises that temporarily suspended operations in several provinces and cities amounted to 10 to 20 per cent of the total number of registered firms – 19.4 per cent in Soc Trang, 19 per cent in Can Tho and 15.8 per cent in Hai Duong.

Lam said 70 per cent of these enteprises reported losses, 28 per cent cited insufficient capital and nearly 15 per cent said they could not sell their stock.

Over 35 per cent of the enterprises said they were unable to cope with interest rates of over 19 per cent. Nearly 90 per cent of them said they can accept interest rates on loans of less than 15 per cent.

According to the GSO, 27 per cent of surveyed interviewed said high interest rates are the biggest challenge facing their business; 19.5 per cent blamed high inflation and economic changes; 17.4 per cent cited difficult access to capital; 9.7 per cent, high transportation costs; 7 per cent, unstabe electricity supply and another 7 per cent, macroeconomic policices.

Meanwhile, the HCM City Department of Labour, Invalids and Social Affairs has reported that over 4,800 HCM City-based businesses reduced their work force in the first four months of 2012.

According to the results of a survey conducted recently by the department, over 16,700 workers from the construction, chemicals, mechanics and service sectors have been sacked.

The survey also revealed that the workers were sacked because their employers faced bankrupcy, disintegration, suspension of operations and other difficulties due to the economic crisis.

In addition, many other businesses have had to reduce the work hours of their employees due to a shortage of orders for their production and processing lines. — VNS

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