An estimated 2, 500 enterprises in Hanoi have dissolved or halted activity in the first nine months of the year.
Businesses go bust as the city budget shrinks
According to Hanoi Department of Planning and Investment, as of September 2012, the number of new businesses is 11,480, accounting for a total capital of VND64 trillion, only 68% of last year's numbers.
Meanwhile, 730 firms are in the process of completing procedures to dissolve, 1,900 firms have stopped business activities and many companies that are still running are obliged to hold large inventories. The beverage, textile, construction and auto industries are having a particularly hard time, as many companies cannot make returns on their investment or access bank loans.
For the construction industry, capital has been a major problem, with only about 50% of funds having been disbursed for planned projects. There are currently 231 FDI projects in Hanoi that have been renewed, accounting for about USD919 million. This is just 88% of last years figure.
The city budget has also been affected. The total income of the first nine months of 2012 was around VND92 trillion, or 63.1% of the local People's Committee's expectations, and municipal budget expenditures were VND31 trillion, or 58.7% of what was forecast.
Not only has the slump in the economy lowered income, it also reduced the municipal budget and threatens social safety.
A representative of the Ministry of Industry and Trade said the Government should hold meetings with enterprises and banks in order to find the best solution. He said that more capital is needed to deliver goods to rural areas and quicken the pace of transportation projects.
In the future, Hanoi aims to carry out policies to boost development, ensure social safety and reduce inflation.
Nguyen The Thao, the chairman of Hanoi People's Committee, said the city needs stimulus policies to support enterprises and stabilise prices.
