This resulted in a total amount of capital injected to the economy in the January – November period of VND3,400 trillion (US$146.92 billion), of which VND1,200 trillion (US$51.26 billion) was from newly founded enterprises and an addition of VND2,100 trillion (US$90.75 billion) from operational enterprises. 

During the period, 31,869 enterprises resumed their operations, up 30.9% year-on-year.

Meanwhile, the number of enterprises temporarily ceasing operation in the period was 57,000, an increase of 64% against the comparable period last year, 25,977 enterprises registered for time-limited temporary cessation of business, rising by 24.8%, and 14,861 enterprises completed the dissolution procedure, increasing by 37.4%. Overall, the number totaled 97,838 in the first 11 months of 2018, up 6.7% against the 10-month period. 

In November, most of newly established enterprises are in the fields of real estate business with 6,423 enterprises, up 41.7% year-on-year; financing, banking and insurance 1,716 enterprises, up 23.7%; healthcare and social development 20.8%. 

Enterprises operating in field of real estate have the largest registered capital of VND375.06 trillion (US$16.20 billion), accounting for 30.4% of total registered amount; followed by wholesale, retail sale, automobile repairing with VND193.60 trillion (US$8.36 billion) or 15.7%; construction VND158.91 trillion (US$6.86 billion); manufacturing and processing VND140.41 trillion (US$6.06 billion). 

Reasons behind growing number of enterprises ceasing operation 

According to the MPI, the growing number of enterprises ceasing operation is due to their own existing shortcomings of small and medium enterprises, including inefficient corporate governance, lack of innovation, and low productivity. 

Currently, Vietnam’s labor productivity is lower than most of countries in the region, equivalent to 7% of Singapore, 17.6% Malaysia, 36.5% Thailand, 42.3% Indonesia, 56.7% the Philippines, and 87.4% Laos. 

Vietnam’s enterprises scored 53.7 out of 100 points in terms of dynamism in the 2018 Global Competitiveness Report of the World Economic Forum, ranking 101th ouf of 140 economies, 33.4 out of 100 points in innovation capabilities, ranking 82nd ouf of 140. 

Tran Thi Hong Minh, director of the Department for Business Registration Management under the MPI, said there has always been a number of enterprises ceasing operation in an economy, due to low competitiveness. 

However, part of the issue lies on inefficient legal framework and business conditions, in turn restricting the development of enterprises, Minh added.