According to the General Statistics Office in 2018, a record was set for both the establishment and temporary suspension of business operations. Nationwide, 131.275 new businesses were registered, while 90.651 businesses temporarily suspended operations.
This includes 27.126 businesses that registered for temporary suspension of operations; 63.525 businesses that temporarily ceased operations without registration or are awaiting dissolution; and 16.314 businesses that completed dissolution procedures.
Business dissolution and restructuring
Mr. Bui Anh Tuan, Deputy Director of the Business Registration Management Department, stated: Of the 18.795 businesses awaiting dissolution, 18.100 had ceased operations in previous years and were classified as awaiting dissolution after the business registration agency, in coordination with the tax authorities and other relevant agencies, implemented a data review and cleaning plan in 2018. If we subtract the 18.100 businesses awaiting dissolution due to the review, there were 45.425 businesses that ceased operations without registration or were awaiting dissolution in 2018, an increase of 16,9% compared to 2017.
Additionally, there are 44.730 businesses that have ceased operations but have not complied with regulations on dissolution or cessation of activities, such as being unreachable or no longer operating at their registered address. This list was determined based on an agreement between the business registration agency and the tax authority.
As for the 27.126 businesses that registered for temporary suspension of operations, these were typically for portfolio restructuring, a temporary break before seeking new business opportunities, or businesses operating seasonally. These businesses that temporarily suspended operations have also shown a tendency to resume activity. Evidence of this is that in reporting periods, the number of businesses resuming operations is often equal to or greater than the number of businesses registering for temporary suspension. For example, in 2018, 34.010 businesses resumed operations, a 28,6% increase compared to 2017 and the highest level in the past five years, exceeding the number of businesses registering for temporary suspension by 6.884.
Rising from a gloomy state.
According to representatives from the Business Registration Management Department, there are many reasons why businesses withdraw from the market, such as: businesses are not adequately prepared before entering the market, the limitations of small and medium-sized enterprises have not been fundamentally addressed, competitiveness is not high, innovation capacity is low, and although the business environment has improved to support businesses, the barriers have not decreased.
Of the businesses that dissolved or ceased operations, 52.946, accounting for nearly 50%, were less than 3 years old. The majority were small businesses with capital under 10 billion VND. This group of businesses is highly flexible, adapting to market demands very quickly, and is also the sector that can easily shift its business direction when facing difficulties.
2018 also marked the fourth consecutive year with the highest number of newly established businesses and registered capital in history, with 131.275 new businesses and registered capital reaching VND 1.478.101 billion, showing consistent growth in both the number of businesses and registered capital. This is also a positive sign demonstrating investor confidence in the promising business environment.
According to Deputy Prime Minister Vuong Dinh Hue, with the picture achieved with The goal is to have 1 million businesses. Achieving effective operation in 2020 is a major challenge. To meet the set goals, the immediate priority is to reduce the number of businesses that have ceased operations and are awaiting dissolution by 30-40%.
Currently, the government has assigned a project to convert individual business households into enterprises with convenient support, especially a simplified accounting system for recording revenue and expenses for micro-enterprises and allowing tax agents to provide tax advice to micro-enterprises and business households… to encourage individual business households to convert into enterprises.
