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Saturday, June 22, 2024

Business health index in decline

By Bui Trinh

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The White Book on Vietnamese Businesses 2022 shows that in 2017-2021, only 83% to 85% of registered enterprises reported their business performance, with 42% of them incurring losses, nearly 19% breaking even, and only 39% earning profits. The service sector boasted the largest number of enterprises, at 68.2% of the total, but it also had the highest proportion of money-losing enterprises, at 43.6% in this sector. In the manufacturing-construction sector, 37.1% of enterprises incurred losses, while in the agriculture-forestry-fishery sector, that proportion was a bit lower, at 32.9%. As of 2020, State-owned enterprises accounted for a tiny share of 0.3% of all businesses, foreign direct investment (FDI) enterprises 3.2%, and non-State domestic enterprises a whopping 96.5%. It is noteworthy that the total amount of capital at all active enterprises as of December 31, 2020 was VND48,700 trillion; State-owned enterprises, despite a small number, accounted for 21.4% of this capital amount. Given the GDP of about VND8,040 trillion at the time, enterprises had to use VND6.01 of capital to generate VND1 in GDP; but if the calculation is limited to the added value only, then VND13 was required to generate VND1. However, there was a wide difference among economic sectors. For […]
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