Around 100,000 businesses are forecast to close between 2011 and 2012. The figure is equal to half of the figures over the entire past two decades since Vietnam adopted the Law on Enterprises, Chairman of the Vietnam Chamber of Industry and Commerce (VCCI), Vu Tien Loc forecast.
VCCI Vu Tien Loc (left) visit an enterprise
Loc further said the enterprises that were still in business were meeting difficulties such as incomprehensive policies, lack of capital and especially a lack of transparency in the business environment.
Major companies have been accused of lacking transparency, which in turn has jeopardised small businesses providing them with services.
Unstable policies are also blamed for the downturn. In a survey with 8,177 enterprises, only 10% said they could predict the changes in macro-economic policies.
However, Loc said what's most disappointing is that enterprises have not been proactive.
When were asked what preparations they had made for the free trade area between ASEAN and China, when import taxes will be reduced to 0-5%, 42% enterprises in a big business club in HCMC said they were unaware of the impending agreement and 42% said they had heard of the information but haven't made any plans. Only 16% had made preparations.
According to Loc, the government should help those enterprises that had the greatest potential, not just in difficulties. Because in reality, there are many companies that could only survive due to the support they received and it was a waste to pour money into them.
In the next two years, enterprises may still face the problems in macro-economy along with other issues such as limited access to capital, and gloomy real estate and securities markets, meanwhile foreign investment will slow.
The results of the ninth quarterly EuroCham Business Climate Index survey, conducted in October 2012, show that business confidence and the outlook among European businesses in Vietnam continued to drop to a record low.
The enterprises said the inflation rate, the banking system and the increases in taxes had affected the business environment.
However, the percentage of European enterprises who wanted to increase their investment grew, showing positive signs for the medium-term.
To boost the market, Loc proposed to reduce VAT for consumers.