Responding to expectations from National Assembly deputies regarding the goal of having 1 million businesses by 2020, Minister of Planning and Investment Nguyen Chi Dung stated that this target is achievable in the near future.
1 million businesses in 2020
According to government data, in the first nine months of 2018, the number of businesses increased by 2,48% compared to the same period in 2017. This included 96.611 newly registered businesses, with a total additional registered capital of 2,85 trillion VND injected into the Vietnamese economy. On average, each business received 10 billion VND in capital, representing a 3,8% increase compared to the same period.
However, while over 96 new businesses were registered, 23.053 businesses registered for temporary suspension of operations during the same period, an increase of 24,62% compared to the same period last year. The number of businesses temporarily ceasing operations without registration or awaiting dissolution was 50.050, an increase of 62,2%; and the number of businesses completing dissolution procedures was 11.536, an increase of 32,05%.
Opinions from delegates
According to Mr. Tran Van Tien, Deputy Head of the Standing Delegation of the National Assembly of Vinh Phuc Province and Member of the National Assembly's Economic Committee, the issue of business dissolution was raised. Specifically, in the first nine months of 2018, the total number of newly established businesses increased by only 2,8%, the number of businesses temporarily ceasing operations increased by 48,1%, and the number of businesses dissolving increased by 32,1%. Thus, for every 100 businesses created, 77 cease operations or dissolve. Concerned about this situation, Representative Tran Van Tien requested the Government to clarify the reasons why the number of businesses ceasing operations and dissolving is increasing so rapidly, while the Government is determined to implement administrative reforms and strive to improve the investment and business environment for enterprises. Therefore, the goal of reaching 1 million businesses is achievable.
Sharing the same view, delegate Vu Tien Loc (National Assembly delegation of Thai Binh province) also agreed that this is a very challenging goal.
Representative Vu Tien Loc stated that with the rate of new business establishment slowing down and over 5 million household businesses not wanting to grow (not yet converting to enterprises), this sector contributes up to 30% of GDP. According to him, the bottleneck here is the lack of a suitable accounting system and tax policy for small and micro-enterprises to ensure that these businesses are not at a disadvantage compared to large enterprises and are treated fairly.
According to the explanation, Minister Nguyen Chi Dung pointed out four reasons:
– According to the law of elimination
– The Law of Competition
– Weak businesses will be eliminated from the market.
– New and good businesses will survive and thrive.
Furthermore, access to production inputs such as capital, land, labor, technology, and logistics costs is very difficult. Therefore, it is inevitable that businesses, after a period of ineffective operation, will have to withdraw from the market. Mr. Dung stated that there are currently 702,000 operating businesses, so an additional 300,000 new businesses need to be established in the next two years. To achieve this number, the Government will implement more solutions to support business development in the near future.
Furthermore, to support these household businesses in transitioning to enterprises, the Government is tasking the Ministry of Finance with developing a plan to provide accounting services and electronic invoice accounting agency services to these household businesses, facilitating their easier conversion to enterprises.
Minister Nguyen Chi Dung believes that the target of 1 million businesses by 2020 is achievable.
