Brian Jeffrey
The Private Economic Development Research Board (part of the Prime Minister’s Advisory Council on Administrative Procedure Reform) recently surveyed businesses and found a significant improvement in sentiment, contrasting earlier surveys from April and December 2023.
Notably, the portion of businesses perceiving the macroeconomic situation as “very positive” has risen sharply—nearly five times since April 2023, increasing from 0.7% to 3.3%. Similarly, those seeing it as “positive” rose to 12.8% from just 1.8%. Furthermore, the businesses that view the situation as “very negative” dropped to 19.4%, significantly down from 44% previously.
This shift suggests that business confidence is steadily improving post-pandemic and recovery from the economic struggles of 2022.
This positive trend is corroborated by additional macroeconomic data. In the first nine months of 2024, over 183,000 new businesses registered or rejoined the market, surpassing the yearly totals recorded from 2018 to 2021. Monthly, more than 20,300 new businesses are launching, a significant rise compared to previous years.
Since 2022, the surge in businesses starting up reflects growing optimism within the private sector amidst a stabilizing economic backdrop. The increasing number of new businesses entering the marketplace underscores a strong economic recovery.
The resurgence of the private sector is also evident in Vietnam’s trade figures for the third quarter of 2024. Export revenues reached $108.6 billion, a year-on-year increase of 15.8% and up 10.6% from the previous quarter. Imports totaled $99.74 billion, a 17.2% year-on-year rise, leading to a trade surplus of $8.8 billion for the quarter.
For the first three quarters of 2024, total trade reached $578.5 billion, marking a 16.3% hike compared to last year, alongside a notable trade surplus of $20.8 billion – a strong achievement within the 2020-2024 timeline.
This data illustrates a robust recovery and an improved competitive edge for Vietnamese goods on the global market.
Particularly, exports of mobile phones, computers, and electronics have significantly bolstered overall growth. In Q3, three categories surpassed $10 billion, predominantly electronics, with computers and related products accounting for $19 billion (+19.2% year-on-year); mobile phones and components at $14.7 billion (+14.7%); and machinery, tools, and spare parts tallying at $14.6 billion (+14.7% compared to the same period last year).
This impressive growth in electronics not only reflects global demand for technology but also highlights Vietnam’s pivotal role in the global supply chain. The expectation is for computer and electronics exports to continue leading in coming years.
Conversely, the rate of businesses exiting the market is high, with increasing numbers since 2020. In the first nine months of 2024, the figure approached 163,760, nearing the total for all of 2023 and exceeding figures from previous years post-2018.
On average, 18,200 businesses shut down monthly—an increase of 21.2% year-on-year for the first three quarters of 2024. Of these, 86.9 thousand businesses suspended operations, marking a 14.6% rise year-on-year, nearing the previous year’s record of 89 thousand.
Additionally, the ratio of exits to new businesses in the first three quarters of 2024 was 89.7%, up from 79.3% the previous year.
The growing number of business suspensions indicates that many companies are reassessing their circumstances and waiting for promising opportunities. Most of these are small to medium-sized enterprises, typically established within the past five years and with capital below 10 billion VND.
This sharp uptick in business exits highlights the prevalent challenges in the post-COVID-19 landscape and the unpredictable global economic climate, especially affecting smaller firms.
These struggles exacerbate pressures on businesses, making them more vulnerable to market fluctuations and diminishing their resilience and recovery potential.
Despite the positives, the business environment continues to have significant risks, with persistent barriers concerning business conditions and administrative processes that remain—if not worsen—due to weakening reform efforts across governmental bodies.
The Ministry of Planning and Investment indicates that local-level support for business development is lacking. This perception is echoed in the Provincial Competitiveness Index (PCI) survey conducted by VCCI.
Therefore, it is essential to conduct thorough research to pinpoint the legal challenges businesses face, urgently addressing necessary amendments to related legal documents and improving guidance on policy implementation.
Extensive consultations with stakeholders should be prioritized during the drafting of regulatory documents to ensure transparency and address feedback adequately.
