According to data provided by the Business Registration Management Agency (Ministry of Planning and Investment), the average rate of enterprises registering to temporarily suspend business operation for the first nine months in the period 2015-2019 was 21.9%.
However, the latest report released by this agency shows that the number of enterprises registering to cease operation in the first nine months of this year has increased to 81.8% over the same period last year, reaching nearly 38,630 businesses.
This is the sharpest 9-month increase between 2015 and 2020, and 3.7 times higher than the average growth rate for the past five years, showing the persistent impact the Covid-19 epidemic on every business activity in Vietnam.
The dramatic increase in the number of companies temporarily suspending operation indicates that there is a “purification” taking place in the business community. In particular, the number of under-five-year-old enterprises suspending their business operation was 19,294, accounting for about 50%, while the number of enterprises that have operated for more than 10 years leaving the market was 8,648, accounting for 22.4%. This shows that no company, even well-established ones, is exempt from the negative impact of the Covid-19 pandemic.
In addition, compared to the same period last year, the number of businesses in many sectors temporarily suspending operation has increased sharply. Specifically, according to the Business Registration Management Agency, the number of real estate companies leaving the market was 1,103 companies, which is an increase of 161.4% over the same period last year. The figure for education and training sector was 745, an increase of 129.9% over the same period last year.
Notably, the rate of small-scaled enterprises suspending operation used to be higher than that of large-scaled ones, however, the opposite has been true in the context of the Covid-19 outbreak.
Besides, according to this agency, in the first 9 months of this year, there were 27,588 enterprises temporarily suspending operations to dissolve, among which there were 337 multi-billion companies (accounting for 1.2%, increasing by 4.7% over the same period last year).
On top of that, in the past 9 months, there have been 12,089 enterprises completing dissolution procedures, of which there were 192 hundred-billion worth enterprises (accounting for 1.6%, up 15.7% over the same period last year). The fields that witnessed a high increase in the rate of dissolution were real estate, electricity, water, gas production and distribution, and education & training with a 50.3%, 39.6% and 26.5% increase respectively over the same period last year.
Generally, for the first 9 months of 2020, there were more than 78,300 enterprises withdrawing from the market, including nearly 38,630 enterprises registered to temporarily suspend operation, 27,588 enterprises awaiting dissolution, and 12,089 enterprises completing dissolution procedures. Thus, according to the Business Registration Management Agency, on average, there were 8,701 enterprises leaving the market each month, which is an increase of 27.2% compared to 2019.
Notably, the total registered capital and the number of employees of these companies were really huge. VND 1,026 million billion is believed to be the total registered capital of companies that have left the market, and as a result, it is estimated that more than 627,750 people have become jobless.
Specifically, the number of enterprises that registered to temporarily suspend operation in the first 9 months of 2020 had a total capital of VND 280,293 billion, and the total registered employees of these companies was 277,180. The total registered capital of enterprises waiting for dissolution was VND 587,638 billion, while that of dissolved enterprises was VND 158,832 billion.
Source: thesaigontimes, MPI
