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Vietnamese firms sill in difficult period, but improving: data

Vietnamese firms sill in difficult period, but improving: data

Monday, March 02, 2015, 18:30 GMT+7

The Vietnamese business community is still in a difficult period given the latest data on the number of local firms dissolving or having their operations suspended in the first two months of this year, according to the Department of Business Registration Management under the Ministry of Planning and Investment.

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About 16,000 Vietnamese enterprises were dissolved or suspended from January to February, the ministry said, citing statistics from its department.

In that fashion 240 firms entered that same sticky situation on average every day during the period, according to the ministry.

In February alone, over 5,400 local businesses completed dissolution procedures or terminated their operations.

Thus, each day there were about 180 enterprises undergoing the final state of their operations, the ministry said.

As reported by the department, Vietnam had around 6,900 new firms established last month with registered capital of VND45.82 trillion (US$2.15 billion).

The average registered capital per new firm founded in that month was VND6.6 billion ($310 million), up 43.5 percent from January, according to the department.

Although the number of new enterprises increased in February, the big picture in the first two months was not bright, with more firms falling into insolvency, the department said.

In particular, there were 13,766 newly established enterprises, but over 16,000 completed dissolution procedures or stayed idle.

The number of firms halting operations increased 25 percent over the same period last year to over 14,000.

Further analysis by the department showed that the dissolved companies operated mainly in the sectors of car and motorcycle repair (38.9 percent), construction (16.0 percent), and processing and manufacturing (13.5 percent).

There was a bright spot in the first two months with 4,376 inactive businesses reactivated, up 20.2 percent in comparison with the same period in 2014.

The two parts having the most firms returning to business were the South Eastern region (33.8 percent) and the Red River Delta (25.6 percent).

The majority of businesses resuming operations focused primarily in the industries of car and motorcycle repair (37 percent), construction (18.7 percent), and processing and manufacturing (12.5 percent).

Improving situation

According to the General Statistics Office, the index of industrial production (IIP) increased 12 percent in the first two months compared to the same period last year, much higher than the year-on-year increase rate of 5.4 percent recorded in the latter period.

The IIP is an index giving details about the growth rates of various industrial sectors in the local economy on a monthly basis.

Industries which witnessed increased year-on-year IIP in the first two months include motor vehicles (44 percent), electronic products, computer and optics (28 percent), leather and related products (26 percent), metal (22.4 percent), paper and paper products (21 percent), and textiles (20.4 percent).

In February alone, the index of industrial production was estimated to rise seven percent compared to the same period last year, but down 19 percent from the previous month, as last month saw the arrival of the Lunar New Year holiday.

According to the latest report on Purchasing Managers’ Index (PMI) released by the Hongkong and Shanghai Banking Corporation, the figure reached 51.7 in February, up marginally from the reading of 51.5 seen in January, indicating that the Vietnamese manufacturing sector maintained its recent period of growth last month, with new orders and output both rising at faster rates than at the start of the year. “A further steep reduction in input prices was recorded in line with lower fuel costs, and this fed through to another marked fall in prices charged,” the report said.

New orders at manufacturers in Vietnam went up at a solid pace during February, with the rate of expansion slightly stronger than in one month earlier.

New business has now risen in six successive months, with panelists reporting improved client demand, good quality products and competitive pricing. In contrast, new export orders decreased, ending a five-month sequence of growth.

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