International crisis still haunts Vietnam's small businesses

By Bao Van, TN News

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The international crisis and the business environment appear to have worsened, since 2013, for small businesses. (File photo) The international crisis and the business environment appear to have worsened, since 2013, for small businesses. (File photo)

Vietnam's small-and medium-sized enterprises (SMEs) are struggling more than they were two years ago due to across-the-board drops in productivity, job generation, and investment, according to recent survey results.
Around 70 percent of respondents to a survey conducted by the Central Institute for Economic Management (CIEM), the Institute of Labor Science and Social Affairs, and the University of Copenhagen stated that the 2007-2008 international crisis continued to haunt their businesses in 2013.
Only 15 percent reported feeling no effects, according to the poll of 2,500 SMEs operating in 10 cities and provinces.
“The international crisis and the business environment appear to have worsened from the enterprises' point of view,” said Nguyen Dinh Cung, directot of CIEM.
A shortage of loans was cited as the most serious problem for enterprises in both 2011 and 2013. However, the survey showed a decline in proportion of firms experiencing this kind of challenge from 45 percent in 2011 to 30 percent in 2013.
Limited demand was cited as the second-largest obstacle for businesses here.
While 19 percent of SMEs in 2011 cited limited demand as a serious challenge to growth, almost 27 percent of firms did so in 2013.
Competition also shot up sharply between 2011 and 2013.
Last year, 21 percent of respondent firms reported being under strong competitive pressure and more enterprises said they were constrained by a lack of modern machinery.
Generally speaking, few of the firms grew during the period considered.
Some 94 percent of enterprises with 1-9 employees in 2011 and 72 percent of SMEs stayed in this category in 2013. Around 25 percent of SMEs decreased in size, illustrating a tendency of the firms to downsize.
Around 18 percent of the 2,419 firms surveyed in 2011 had shut down by 2013 and total employment decreased 7.4 percent. SMEs also cut more full-time employees than micro firms.
Cung concluded that the impacts of the international crisis and a dearth of policies designed to help SMEs has led to the overall decline of the sector.

 

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