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New companies established in Vietnam amid the pandemic

New companies established in Vietnam amid the pandemic

Wednesday 18, 08 2021
Amid the ongoing pandemic, there are still new companies established in Vietnam. However, their operation is met with challenges.

New companies in Vietnam

In the first half of the year, nearly 67,100 new companies entered the market, up 8% year-on-year despite two outbreaks in January and April.

According to data from the Business Registration Administration (under the Ministry of Planning and Investment), this number is the highest in the first six months of the year so far.

April outbreak

Some localities hardest hit by the April outbreak still grew in the number of new companies. For example, Bac Giang increased by nearly 12%, Ho Chi Minh City by 5%, and Bac Ninh by 1%.

Real estate business is the industry with the highest number of newly registered companies with 44.8%, followed by healthcare, education and transportation, and warehousing.

The report of the Business Registration Administration said that the sharp increase in the number of new companies in Vietnam showed the efforts and entrepreneurial spirit of the business community in the context of the epidemic. That is also a positive signal that production and business activities recovered quite strongly compared to last year.

However, two outbreaks in January and April also negatively impacted existing companies. More than 70,200 companies withdrew from the market in six months, an increase of nearly 25% over the same period. Of which, the number of business suspensions accounted for over 35,600 companies, and 24,600 companies were waiting for dissolution. The rest of nearly 10,000 companies have completed dissolution procedures

Companies

Most companies that choose to close down are under five years old, small scale, mainly operating in the field of commerce and services. Specifically, more than 89% of companies that withdrew from the market in the first half of the year had a capital of less than 10 billion VND, while over 100 billion VND was only about 1%.

Struggling to maintain operation

The COVID-19 pandemic struck hard on Vietnam’s companies. Even with response plans in place, companies across the country are still in quite a bind.

In the early stage of the fourth pandemic outbreak, a model called “three on the spot” was implemented in most companies in the pandemic-affected area. Employees would work, eat, and sleep on-site. In case the companies could not implement said strategy, they must carry out the “one route, two destinations” model, which means companies must arrange transportation on one route between the accommodations and the work venues. If neither of the plans could be put in place, companies would be put on suspension.

At the current stage of the outbreak, those two plans are prompting difficulties for companies over Vietnam. A representative of Long Viet Veneer Technology Stock Company (Binh Duong) said that the company has a scale of 800 workers and performs "three on the spot" with 300 workers from July 10. On July 20, this company detected 1 case of F0 with an unknown source of infection. From July 21, through rapid testing and PCR, the Company detected 248 cases of F0, and many F1s are at risk of becoming F0.

Long Viet Venner

On July 28, Vissan Joint Stock Company (Vissan) also announced to suspend operations for 3-4 weeks and officially stop delivering to supermarkets and stores.

Vissan stated that after implementing the "three on the spot", they consecutively detected cases of F0. A representative of this company said that despite their best efforts, “three on the spot” is still difficult to implement because of the large number of employees.

Notably, according to many textile and garment enterprises, enterprises continuously detected F0 cases while performing “three on the spot”, causing difficulties for production. This option is no longer safe for many reasons.

Manufacturing enterprises are confused in maintaining production and business activities. Not only do they have to maintain production, but the most important thing to them is also the customer. For example, a business in Binh Duong has customers in the world, export bottlenecks will lead to loss of customers, customers can find suppliers in other countries instead of waiting for businesses.

Economic expert Can Van Luc also affirmed that Vietnam's economy is facing many challenges. The “three on the spot” model is facing many problems and obstacles. Industrial production grew very slowly, the index of industrial production in July increased by only 2.2% over the same period.

Experts expect that in the last five months of the year, the pandemic will be stable. The number of companies leaving the market is expected to increase but not too fiercely.

 

Compiled by VietnamCredit

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