COVID-19 causes alarming withdrawal rate from local market
VOV.VN - The COVID-19 pandemic continues to deal a crushing blow to business operations in Vietnam as the number of local enterprises withdrawing from the market outpaced those newly established in the first quarter of this year.
Data from the General Statistics Office (GSO) show that as many as 40,323 businesses stopped operations in the first quarter, up 15.5% compared to the same period last year. In contrast, the number of newly established firms reached 29,300, down 1.4%.
Economists believe that the figure represents cause for concern as this is the first time in a decade that the number of businesses withdrawing from the market has outstripped the number of newly-established ones.
A report released by the Vietnam Chamber of Commerce and Industry (VCCI) in mid-March indicates the pandemic has exerted a range of adverse impacts on business production. Accordingly, 87.2% of affected businesses said the pandemic has had an impact on their access to customers, cash flow and workforce. Some of them were forced to lay off workers due to disruption occurring in supply chains.
The negative impact of the pandemic has also cast a shadow on the employment market locally. Approximately 1.1 million people of working age were unemployed during the first quarter of the year, marking an increase of 12,100 people compared to the same period last year, according to GSO statistics.
Although the Government has moved to take drastic solutions aimed at supporting businesses, plenty of firms have failed to bounce back, says the VCCI in its report. Tourism, retailing, transportation, vehicle manufacturing, and beverage production are among the hardest hit industries. Notably, newly established businesses are most vulnerable to market volatility.
Nguyen Van Ket, director of SKD Vietnam Engineering Co., Ltd, reveals that the pandemic has caused a decline in the number of export orders, while the postponement of the import of raw materials for production, coupled with escalating prices, has led to many businesses encountering numerous difficulties in terms of sustaining their operations.
Economists have therefore underscored the importance of removing hurdles faced by enterprises and carrying out economic institutional reform.
The Government has moved to extend the deadlines for the payment of value added tax, corporate income tax, personal income tax, and land rent as part of efforts to support businesses.
Economist Tran Dinh Thien suggests that the government maintain a stable policy environment and avoid increasing taxes and fees during this challenging period, alongside offering financial support packages and tax payment extensions for local firms in need.
