A total of 8,600 new enterprises, with a total registered capital of nearly VND80.5 trillion (US$3.54 billion), were set up in September, according to the Ministry of Planning and Investment.
The registered capital dropped 39 percent compared with the previous month, while the number of newly established enterprises declined by 31 percent.
The ministry said that the sharp decreases both in the number of new firms and registered capital were because September fell in July according to the lunar calendar, which is considered a “Ghost Month”, making people hesitant to establish a new firm.
However, in the first nine months of the year, the country had some 94,000 newly established firms, with a total registered capital of more than VND900 trillion, an annual increase of 15.4%, in terms of the number of businesses, and a 43.5% rise in the amount of registered capital.
Average registered capital was VND9.6 billion for each business in the January-September period, down 11.4 percent from the same period last year.
The number of labourers in the newly established companies in the period was 886,453, posting a 4.5% annual decrease. The ministry also reported that in the first nine months of the year, some 30,846 firms were dissolved or ceased operations.
More than 21,100 enterprises also resumed operations in the first nine months of the year.
One-member limited companies had the highest number with over 53,000 firms, accounting for 56 percent of the total number of newly-established enterprises in the nine-month period. However, one-member limited companies accounted for just 33% of total registered capital of the new firms, with an average registered capital of VND5.6 billion each, VND4 billion lower than the average capital of all business types.
Two-member limited companies took the second position with some 22,000 firms accounting for 20% of the total. Their average registered capital was VND8 billion each.
Average registered capital of newly-established joint stock companies was the highest figure posted with VND27 billion per firm.
The South Eastern and Red River Delta regions had the highest number of new companies with 39,600 and 28.400 firms, respectively.
Vietnam’s government recently has made effort to support household businesses as they convert into enterprises.
As Mr To Hoai Nam, Vice Chairman of the Vietnam Association of Small and Medium-Sized Enterprises (VINASME) shared: “First I would like to note a few advantages of switching to enterprises, including easier access to credit and other support, the ability to operate nationwide and abroad, something that household businesses are not allowed to do, and the ability to operate in conditional sectors.
Concerning the measures, it is necessary to make household businesses the same size as SMEs make the conversion, not to change their names, but to fulfil their tax obligations. My stance is that the government can only encourage them and cannot force them through administrative orders, except for the rule that, if a household business is the same size as an enterprise, it must fulfil its obligations like an enterprise.
This cannot be done with hollow calls but requires substantive actions. One of the key measures is to ensure that local tax collectors comply with the law. For example, if we want household businesses to fulfil their obligations like an enterprise, it is necessary to prevent any tax negotiations. This is easier said than done, especially as household businesses are usually the ones who recommend negotiations first.
The second measure is to push through administrative reform in order to allay public anxiety when dealing with public service agencies. And finally, continuous assistance should be given before and after the conversion, such as complimentary conversion, training on how to open accounting books or tax support.”