The General Statistics Office reported 12,456 business shutdowns in January--a 27.5 percent increase from 2015 that raised doubts about the government's remarkable GDP growth reports.
During a press conference held last week, economist Pham Chi Lan said the government's claim to 6.68 percent growth in 2015 “did not
make sense," given the dire difficulty faced by local businesses.
The GSO reported 8,320 new businesses opened--a 21.2 percent year-on-year increase--but Lan said these businesses are half as big as they were a decade ago before calling the significant gap between shutdowns and openings "concerning."
She said it's unlikely that all of these new businesses will survive 2016.
Former Minister of Trade Truong Dinh Tuyen also said domestic firms now lack the strength to drive the country's economic growth. Tuyen said last year's exceptional growth was mainly due to the FDI sector, which now accounts for half of the economy’s industrial value and nearly 70 percent of its export value.
Chi said private businesses in Vietnam are operating under too much pressure and estimated the government takes 40.8 percent of their profits through taxes and various fees, leaving little to reinvest in development and training.
“They can hardly survive that [burden]. So that’s why they have been scaling back and dying,” Chi was quoted by numerous local outlets as saying. She added that the government has further strained businesses by keeping fuel prices artificially high despite plummeting global crude prices.
Nguyen Dinh Cung, director of the Central Institute for Economic Management, said macroeconomic management must change because state firms continue to monopolize opportunities that private firms could have make better use of.
Vietnam is taking steps to privatize its many SOEs but Cung said the government needs to fully privatize these firms rather than auctioning off minority stakes.