Storm drives firms to rocks

April 12, 2012 | 10:48

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Firms suffered a potentially disastrous first quarter in 2012. More than 2,400 firms dissolved in the quarter, reported the Ministry of Planning and Investment’s Business Registration Management Department.

Over 3,800 firms had their licences withdrawn and 11,600 firms registered for a temporarily halt to production or delays to tax payments.

Topping the list of dismantled firms were retail and wholesale businesses.

Ranking second were industrial and mining firms, which accounted for 15.05 per cent of dissolved firms, followed by construction and property firms at 10.54 per cent and transport-warehousing firms at 10.09 per cent.

Firms operating in science, technology and education areas occupied 8.2 per cent of firms going bust.

Consumer goods and services sectors were all hurt when consumers cut expenses, according to Vietnam Young Entrepreneurs Association chairman Mai Huu Tin.

Tin once forecast retail would be one of most profitable businesses this year.

“Firms have tried their best - cutting costs, curtailing production or operation and divesting from non-core areas,” said Tin. High borrowing costs, strong competition from imports, smuggled goods and low consumption all hurt firms.

In fact, diverse solution packages were launched to rescue firms ranging from tax extensions, postponements to easing lending rates.

Vietnam Institute of Economics president Tran Dinh Thien said: “Many firms incurred bad debts, so they cannot borrow more. Besides, getting loans makes no sense if firms cannot sell products.”

Thien proposed the government weigh up a tax reduction and exemption instead of just delaying tax payments.

“Firms also need time to heal themselves. Banks could restructure debts or extending debt repayments for firms,” said Tin.