The number of newly-established enterprises in the first half of the year decreased 4.7 percent against the same period last year to roughly 39,500 due to economic difficulties and high input costs, according to the Ministry of Planning and Investment.

Total registered capital among the new enterprises reached 232 trillion VND (11 billion USD), down 5.4 percent over the first half of (H1) last year, the ministry said.

The situation was quite different from H1 last year when the country saw 42,000 new firms established with a total registered capital of 250.6 trillion VND (11.9 billion USD), up 0.25 percent and 27.8 percent in volume and value, respectively, against H1 of 2009.

The ministry said that high inflation and interest rates had escalated input costs, imposing direct negative impacts on businesses and production.

According to the Vietnam Chamber of Commerce and Industry, lending interest rates of 20-25 percent per year were generally too high for many businesses.

Government tightening of the monetary policy to control inflation had also made it difficult for enterprises to access bank loans for implementation of their new business plans, the chamber said.

Director of a confectionery company in Hanoi , who declined to give his name, admitted that his company had to delay plans to develop new products in addition to scrapping a portion of existing output due to capital and market difficulties.

Experts were also concerned about Ministry of Industry and Trade statistics on raw material imports in H1, which declined by roughly 1 percent against the same period last year. They said as domestic production depended significantly on import materials, a reduction in the imports could reflect the difficulties enterprises had in maintaining and growing their business and production plans.

Director of the Central Institute for Economic Management Le Xuan Ba said that the narrowed production could have a negative impact on the country's economic growth and employment in the coming months.

Considering that the high rise in intermediary costs for businesses and production was one of the main contributors to profit losses for enterprises, deputy director of the General Statistics Office Nguyen Bich Lam urged relevant bodies to immediately cut the costs to reduce the difficulties, adding that it would be a timely and practical measure at this time.