Vietnam's new firms tiptoe into market in January-May with capital down 25.3 pct-Xinhua

Vietnam's new firms tiptoe into market in January-May with capital down 25.3 pct

Source: Xinhua| 2023-05-30 23:22:46|Editor: huaxia

HANOI, May 30 (Xinhua) -- Applications to start new businesses in Vietnam fell 1.6 percent in the first five months of the year from a year ago, while the registered capital by new firms slumped 25.3 percent over the period to almost the dip of the COVID-19 pandemic, official figures showed.

About 61,900 new companies entered the market in the January-May period with a registered capital of 568.7 trillion Vietnamese dong (23.9 billion U.S. dollars), which inched up just 2 percent from the same period in 2020 during the early stages of the pandemic, according to the latest data released by the General Statistics Office (GSO).

New businesses dipped their toes into the market as the average registered capital by each company during the first five months of the year slumped to 9.2 billion dong (387,989 dollars), or the lowest level since 2017, said the GSO.

The Vietnam Chamber of Commerce and Industry last month found that business growth, in terms of profitability and scalability, has dropped to the lowest level since the COVID-19 pandemic struck in 2020.

As the country recovered from restrictions on travel and disruptions to trade from the pandemic, the sector of restaurant and accommodation services grew the most by 16.3 percent year-on-year to 2,859 new companies in the first five months, the data showed.

Meanwhile, the real estate sector suffered the largest decline of 61.4 percent over the period to 1,744 new firms, followed by manufacturing, logistics and utility services, said the GSO.

The number of companies that had previously ceased operations resumed their activities in the January-May period shrank 7.4 percent to about 33,000, which extended the downward trend from the year-on-year fall of 6.2 percent in the first four months of the year.

In the period, 88,000 companies were reported to withdraw from the market, including those that shut down temporarily and those that closed their doors for good, up 22 percent a year ago, official statistics showed.

Credit availability is among the top challenges for local companies, cited by 55.6 percent of businesses questioned by the Vietnam Chamber of Commerce and Industry.

The Ho Chi Minh City Business Association found that 43 percent was reeling from high loan interest rates, 40 percent struggling to access bank credit, and 38 percent facing procedural obstacles to borrowing.

Besides, the decline in lending growth was attributed to a lack of demand as the economy grew slower amid a slump in exports, contracting manufacturing sector as well as weakening domestic consumption.

According to the central bank, as of April 20, the credit growth in the banking system was up 2.57 percent from the end of last year, lower than the growth of 6.42 percent in the same period a year ago.

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