The number of dissolved businesses is increasing, is it a cause for concern?

The number of businesses dissolved or suspended in the past 9 months reached 54,000, much higher than the same period last year. Is this number worrying?

Business dissolution or bankruptcy is a rule of the market economy. Weak businesses that are not competitive enough will be eliminated. The number of businesses dissolved or suspended in the past 9 months reached 54,000, much higher than the same period last year. So is this number worrying?

According to the Department of Business Registration Management, Ministry of Planning and Investment, in the past 9 months, nearly 68,350 new businesses were registered nationwide, but the number of businesses completing dissolution procedures and ceasing operations during this period was nearly 7,000 and the number of businesses facing difficulties and temporarily suspending operations was more than 47,600.

Thus, nationwide, the number of struggling enterprises that had to dissolve and temporarily suspend operations in the past 9 months reached 54,000, an increase of more than 15% over the same period last year. Assessing this situation, experts said that the situation of many enterprises dissolving and going bankrupt is inevitable when the economy is in decline. Because dissolution and bankruptcy help restructure the economy, purifying to allow "healthier" enterprises to survive.

Bankruptcy is a normal signal

Economist Nguyen Tri Hieu analyzed: Bankruptcy in a market economy is not a bad phenomenon. When a business is no longer able to pay, it has the right to either ask the court to declare bankruptcy or have the court declare bankruptcy so that when it is bankrupt, it can start over and rebuild its business. According to this expert, bankruptcy is a normal sign.

Some economists say that business bankruptcy is a normal signal.

Agreeing with this view, Ms. Pham Thi Thu Hang, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), also said that most Vietnamese enterprises are small-scale, so when facing difficulties, business owners can easily close down and switch to other business areas. Dissolving a business is not necessarily a bad sign. Bankruptcy and dissolution of a business, from a positive perspective, is to purify the business.

“There are still many difficulties ahead because the macro economy is not yet stable, especially depending on fluctuations in the external market. The domestic situation is better, but we are integrating, so the influence of foreign markets cannot help but affect Vietnamese businesses,” said Ms. Hang.

However, according to economic experts, there are many reasons why businesses temporarily stop operating, in which the objective reason is the world economic downturn, while Vietnam's economy depends heavily on exports, so Vietnamese businesses face difficulties in output and have to dissolve and stop operating.

Meanwhile, according to data from the National Database of Business Registration, the majority of dissolved and suspended businesses are those with registered capital of less than VND10 billion. This partly shows that, in the face of difficulties, small businesses in Vietnam are less resilient than large businesses.

Consequences of business bankruptcy

Mr. Nguyen Tat Thinh, an economic expert, said that dissolving and temporarily ceasing businesses is an inevitable process of elimination in the market. However, when an economy has too many bankrupt businesses, it will also bring many consequences.

“Business closure and bankruptcy are not simply due to lack of output, but are related to the entire quality of internal operations of the business system, and are related to the lack of trust in partnerships, the lack of trust in the standard system, the lack of trust in their other activities with partners, the market, the quality of human resources, the quality of management, technology, etc. All of these are important reasons leading to the collapse, closure and bankruptcy of many businesses recently,” Mr. Thinh analyzed.

In an economy with too many bankrupt enterprises, especially when Vietnam is building a stable business environment to attract investment, especially foreign investment, the fact that tens of thousands of enterprises complete dissolution procedures, terminate and suspend operations in one year also has a significant impact on investors' views of the domestic business environment.

On the other hand, social consequences such as employment and the ecological environment are also noteworthy issues when many businesses stop operating. Therefore, there should be support measures to help businesses operate better and return to the market, helping the domestic economy recover and develop./.

According to VOV