Many enterprises have had to restructure debt, consider mergers and cutdown on costs and product prices to improve their competitiveness in theeconomic downturn.
The economic recession has caused bankruptcies, closed operations and increased tax debts.
A Ministry of Finance report showed in the first quarter of this yearthere were more than 18,700 new registered businesses, 10 percent lowerthan the same period last year. However, the number of firms ceasingoperations matched the number of new ones.
Theministry reported 65 percent of dissolved enterprises had been operatingfor only one or two years, meaning new firms had found the situationdifficult.
The majority of businesses ceasingoperations were in real estate and construction. Almost all businessessaw decreased turnover in the first three-month period compared with thesame period last year.
Hanoi 's Industry andTrade Department said firms had struggled with high interest rates,increased input prices, exchange rate fluctuations and difficultiesaccessing bank loans.
Businesses in key productionsectors which use a large number of labourers – such as garment andtextile, electronics and mechanics – have suffered a worker shortage.
Enterprises producing building materials and electronic appliances had low sales because of the frozen real estate market.
Commerce has faced with the same difficulties.
Trang An Joint Stock Company had only 180 billion VND (8.5 millionUSD) turnover in the first four months of this year, down 20 percent onthe same period last year, while its annual growth rate was 150 percentin previous years.
Duong Van Binh, general director of October 10 Weaving Company said the market has become more narrow.
In the four-month period, the company's turnover was 600 billionVND (28 million USD), 60 percent of the same period last year, he said.
It had to reduce its workforce from 2,800 to 2,100; its contracts were half its production capacity.
February 3 Automobile Mechanics Joint Stock Company reduced itsworkforce by 8 percent; May 1 Automobile Company by 10 percent; Gia LamMechanics Company by 20 percent; and Gold Star Rubber Company by 12percent.
Do Duc Oanh, general secretary of theVietnam Cement Association, said the biggest difficulty of the sector isits huge inventory.
"The industry is forecast toconsume around 47 million tonnes of cement and export 7 million tonnes.It means that the sector would have an inventory of 10 million tonnes,"Oanh said.
In responding to the challenges, businesses had cut down on water, electricity, labour and transport.
Trinh Sy, general director of Trang An Joint Stock Company, said ithas stopped some projects to expand and improve production. It willfocus on expanding its market.
A representative froma real estate company said they restructured 80 percent of theirshort-term debt into mid-and long-term debt after the State Bank ofVietnam lowered interest rates.
The company alsosold its small projects to increase capital and is considering a mergerto restructure investment categories and enhance competitiveness.
The ministry's Institute of Strategy and Policy director Vu NhuThang said the ministry had assessed business difficulties through amacroeconomic lense, including import-export, GDP growth rate, inventoryand the number of newly established and bankrupt firms.
"We have seen that businesses, especially those in construction,cement, steel, production, assembly, leather shoes and cotton sectorsare having a hard time," Thang said.
This year wouldbe a year for restructuring the economy as well as providing chancesfor enterprises to restructure their production in combination withfinancial, monetary and banking policies.
One of thesolutions was to accelerate public investment to help firms resolvetheir inventories, such as cement and steel.
He asked enterprises to renew their business strategies and management methods to fit the new situation.-VNA