A coconut candy production facility in Thoi Son commune of My Tho city, Tien Giang province (Photo: VNA) 

Hanoi (VNA) – Vietnam aims to have 1 million businesses by 2020, and to reach this lofty goal, more timely solutions are needed, according to Minister of Planning and Investment Nguyen Chi Dung.

According to the General Statistics Office (GSO), there were more than 702,700 businesses as of early July, including nearly 2,500 State-owned firms – down 6.6 percent from 2016. There were more than 541,700 companies in the non-State sector – up almost 11 percent and some 16,170 foreign direct investment (FDI) firms – up 15 percent.

In 2017, the number of new businesses hit a record of some 126,860, up 15.2 percent from the previous year. Their registered capital surpassed 1.2 trillion VND (51.6 million USD), soaring by 45.4 percent, while average capital per company reached 10.2 billion VND (439,000 USD), up 26.2 percent.

Total pre-tax profit of all businesses exceeded 876 trillion VND (37.7 billion USD) last year, up about 23 percent from 2016.

The GSO noted between 2010 and 2017, firms with real operations increased by 10.5 percent while the number of employees in this sector rose by 5.9 percent annually. Their capital, revenue, profit and contribution to the State budget hiked 15.4 percent, 15.6 percent, 13.7 percent and 12.4 percent each year, respectively.

Notably, the number of new firms has climbed by more than 100,000 annually over the last couple of years, over 110,000 in 2016 and 126,000 in 2017.

The office said the State-owned sector has been declining in both scale and contribution to the budget. Meanwhile, the opposite has been seen among non-State and FDI firms.

GSO General Director Nguyen Bich Lam said Vietnam’s economy is developing well with a surge in business numbers. This has partly demonstrated the increasingly favourable investment and business climate in the country.

However, Director of the GSO’s Industrial Statistics Department Pham Dinh Thuy said up to 96.7 percent of total companies are non-State firms at a small scale. Although the number of enterprises is growing rapidly, most of them are small and medium sized and the number of major ones is falling. As a result, it will be harder for them to join global production chains.

Meanwhile, among the more than 5 million individual business households, only 103,000 are eligible to become businesses, he noted.

With current trends, it is difficult for Vietnam to reach the target of 1 million businesses by 2020, Thuy added.

Minister Nguyen Chi Dung urged overhauling regulations, reducing business conditions that are hampering companies and business households’ activities and stepping up administrative reform to help firms be set up and grow.

He said the 5.1 million individual business households employ 8.7 million workers. The Government needs appropriate policies to encourage them to transform into businesses.

Dung added the quality of human resources also decides whether or not the economy is able to develop amid Fourth Industrial Revolution. Therefore, the Cabinet should also align training methods and programmes with Industry 4.0.

Thuy recommended the Government maintain macro-economic stability, improve the investment climate and help companies, especially business households, cooperatives and cooperative groups, to apply sci-tech advances and develop manpower.

GSO General Director Lam added