BUSINESS REGISTRATION UPDATE IN MAY AND THE FIRST FIVE MONTHS OF 2021

I. Factors affecting business registration in May and the first five months of 2021:

The COVID-19 pandemic continues to be complicated globally as a series of countries face a new outbreak of a large-scale pandemic, especially in Southeast Asia, where a new wave of pandemics develops rapidly, complicatedly in Malaysia, Philippines, Thailand and Cambodia. Since the end of April 2021, Vietnam has faced the fourth outbreak of COVID-19; the pandemic developed in a complicated and challenging direction with many attacks in many localities, concentrated in a few industrial zones, with a high speed of spread. As of May 24, 2021, this outbreak was affecting 30 provinces/cities with a total of more than 2,000 infections.

In the new situation, the Government determines that pandemic prevention is still a fundamental and decisive factor in response to the pandemic. We need to mobilize the resources of the State and the people for proactive testing and organizing vaccination for people, ensuring the implementation of the "dual goal" of both effective anti-pandemic and promotion of socio-economic development.

On April 30, 2021, the European Chamber of Commerce in Vietnam (EuroCham) announced the EuroCham Business Climate Index (BCI) for the first quarter of 2021. Accordingly, European businesses started 2021 with positivity and optimism about Vietnam's investment and trade environment. Specifically, the BCI in the first quarter of 2021 reached 73.9 percentage points, the highest score recorded since the third quarter of 2019, before the COVID-19 pandemic impacted the global investment trading system. The BCI survey results also show that optimism about the business environment continues to remain, affirming that Vietnam is continuing to open its economy while many countries are still being heavily affected by the impact of the COVID-19 pandemic. Vietnam is likely to be able to ensure normal business operations without much disruption. This is one of the positive factors that strengthen confidence in the business investment environment in Vietnam.

According to the Asian Development Bank (ADB), Vietnam's economy will grow strongly and steadily, possibly reaching a growth rate of 6.7% this year and 7% in 2022. On May 21, 2021, the credit rating agency Standard & Poor's Global Ratings announced that Vietnam's national credit rating would remain unchanged, raising the outlook from Stable to Positive. Thus, since the pandemic outbreak until now, Vietnam is the only country in the world that has been upgraded to Positive by all three credit rating agencies, including Moody's, S&P and Fitch.

Effective anti-pandemic and positive changes in the macro-economic situation are factors that have positively impacted the business registration situation in May and the first five months of 2021.

II. Business registration update in May 2021

1. Enterprises entering and re-entering the market

The total number of enterprises entering and re-entering the market in May 2021 was 16,495 enterprises (up 4.5% over the same period in 2020), including 11,603 newly established (up 8.2%) and 4,892 returned (down 3.2%).

1.1. Newly established enterprises

In May 2021, the newly established enterprise was 11,603 (up 8.2% compared to the same period in 2020), the registered capital was 150,606 billion VND (up 33.6% of registered capital compared to the same period in 2020)^[1]. The average registered capital reached 13 billion VND, up 23.6% over the same period in 2020. This is an excellent effort of the business community in the context of the 4th Covid-19 outbreak since the end of April 2021.

The number of newly-established enterprises registered employees in May 2021 was 72,156 people, down 21.1% over the same period in 2020.

- Segmentation by field of activity:

May 2021 recorded 13/17 fields with an increase of newly established enterprises compared to the same period in 2020. The fields with the highest growth rate were: Other service activities increased by 74.6%; Real estate activities increased by 60.4%; Education and training increased by 53.5%; Information and communication increased by 41.4%. Some sectors affected by the Covid-19 pandemic also recorded an increase in the number of newly registered businesses, such as Employment activities, Travel, Renting and leasing of machinery and equipment and other support services up 11.6%; Accommodation and food service activities increased by 8.4%; Arts, entertainment and recreation increased by 13.2%.

03/17 fields with a decrease in the number of newly-established enterprises compared to the same period in 2020: in which Manufacture and distribution of electricity, water, gas recorded a sharp decline of 71.6%; Agriculture, forestry and fishing decreased by 16.8%; Construction fell 3.6%.

Mining and quarrying had the number of newly-established enterprises unchanged compared to the same period in 2020.

- Segmentation by area of operation:

In May 2021, the number of newly-established enterprises increased in 32/63 localities, decreased in 28/63 localities, and remained unchanged in 03/63 localities. Among 30 localities with Covid-19 cases, 10 localities recorded a decrease in the number of newly-established businesses in May 2021 compared to the same period in 2020, particularly provinces/cities: Vinh Phuc, Tuyen Quang, Dien Bien, Lang Son, Son La, Nghe An, Quang Tri, Thua Thien-Hue, Quang Nam and Dak Lak. In which the most robust decrease was recorded in Dak Lak (down 40.4%), Vinh Phuc (down 29.7%), and Dien Bien (down 36.4%).

1.2. Resumed operation enterprises

May 2021 recorded 4,892 businesses returning to operation, down 3.2% over the same period in 2020.

The number of businesses returning to operation in May 2021 decreased in most fields compared to May 2020, specifically in 13/17 business lines. In which, the industries and professions with the most substantial decrease were: Education and training (down 27.7%); Human health and social work activities (25% reduction); Mining and quarrying (down 17.3%); Arts, entertainment and recreation (down 16.7%).

2. Enterprises withdrawing from the market

In May 2021, 8,913 businesses withdrew from the market, up 20.7% over the same period in 2020, including:

- 3,400 enterprises registered to suspend their business, up 1.7% over the same period in 2020;

- 4,234 enterprises were waiting for dissolution procedures, an increase of 37.3% over the same period in 2020;

- 1,279 enterprises were dissolved or ceased to exist, up 33% over the same period in 2020.

III. Business registration update in the first five months of 2021

1. Enterprises entering and re-entering the market

The total number of enterprises entering and re-entering the market in the first five months of 2021 was 78,333 enterprises (up 11.9% over the same period in 2020), including 55,769 newly established enterprises (up 15.4%) and 22,564 enterprises returned to operation (up 3.9%). On average, 15,667 enterprises entered and re-entered the market every month.

1.1. Newly established enterprises

The number of newly-established enterprises in the first five months of 2021 is 55,769, increasing 15.4% over the same period in 2020. This is the highest number of newly-established enterprises in the first five months of the year in the period 2016 - 2021. The increase in the number of newly-established businesses shows the belief and expectation of the business community for the prospect of economic development in the coming time.

Total registered capital added to the economy in the first five months of 2021 is 1,753,416 billion VND (an increase of 27.5% over the same period in 2020). The registered capital of newly established enterprises is 778,327 billion VND (up 39.5% over the same period in 2020)^[2]. There were 19,066 operating enterprises registered to increase capital in the first five months of 2021 (up 26.6% over the same period in 2020). The additionally registered capital of operating enterprises reached 975,089 billion VND (an increase of 19.3% over the same period in 2020). The average registered capital per enterprise in the first five months of 2021 reached VND 14 billion, up 20.9% over the same period in 2020.

The total number of newly-established enterprises registered employees in the first five months of 2021 was 412,421 employees, increased by 1.3% over the same period in 2020.

- Segmentation by field of activity:

There were 16/17 industries with an increase in the number of newly-established enterprises compared to the same period in 2020. The fields with a substantial increase in new registration were: Real estate activities (up 57%); Other service activities (up 43.6%); Human health and social work activities (up 40.7%); Education and training (up 36.7%);...

The industries with the most significant number of newly-established enterprises accounted for the largest proportion, including Wholesale and retail trade; repair of motor vehicles, motorcycles and other motor vehicles had 18,538 enterprises (accounting for 33.2%); Manufacturing had 7,197 enterprises (accounting for 12.9%); Construction had 7,120 enterprises (accounting for 12.8%).

There was only one industry decreased in the number of newly-established enterprises compared to the same period in 2020: Manufacture and distribution of electricity, water, gas, with 657 enterprises (down 29.2%).

- Segmentation by capital size:

The number of newly-established enterprises increased in all five capital sizes. Newly established enterprises mainly focused on the capital scale from 0 to 10 billion VND with 49,454 companies (accounting for 88.7%, up 14.3% over the same period in 2020). There were 3,016 enterprises registered for establishing with the scale of 10 to 20 billion VND (accounting for 5.4%, up 18.3% over the same period in 2020). The capital scale of 20 to 50 billion VND had 1,700 enterprises (accounting for 3.0%, up 24.1% over the same period in 2020). From 50 to 100 billion VND, there were 802 enterprises (accounting for 1.4%, up 41.7% over the same period in 2020). And the scale of over 100 billion VND were 797 enterprises (accounting for 1.4%, up 43 .3% over the same period in 2020).

1.2. Resumed operation enterprises

The number of businesses returning to operation in the first five months of 2021 was 22,564, increased by 3.9% over the same period in 2020.

The sectors with the highest number of resumed operation enterprises in May 2021 were Wholesale and retail trade, repair of motor vehicles, motorcycles and other motor vehicles (7,917 enterprises, accounting for 35.1%); Construction (3,379 enterprises, accounting for 15%); Manufacturing (2,786 enterprises, accounting for 12.3%).

The number of resumed operation enterprises in the first five months of 2021 increased in 11/17 fields. The highest increases were recorded in the following areas: Other service activities (332 enterprises, accounting for 1.5%, up 19.4% over the same period in 2020); Real estate activities (718 enterprises, accounting for 3.2%, up 19.3% over the same period in 2020); Employment activities, Travel, Renting and leasing of machinery and equipment and other support services (1,276 enterprises, accounting for 5.7%, up 12.7% over the same period in 2020) and Manufacture and distribution of electricity, water, gas (177 enterprises, accounting for 0.8%, up 12% over the same period in 2019).

In the first five months of 2021, there was a decrease in 05/17 fields of resumed operation enterprises: Agriculture, forestry and fishing (314 enterprises, accounting for 1.4%, down 12.3% over the same period last year. 2020); Arts, entertainment and recreation (194 businesses, accounting for 0.9%, down 6.7% over the same period in 2020); Financial, banking and insurance activities (217 enterprises, accounting for 1%, down 5.7% over the same period in 2020); Mining and quarrying (197 enterprises, accounting for 0.9%, down 5.3% over the same period in 2020); Education and training (494 enterprises, accounting for 2.2%, down 1.4% over the same period in 2020).

Human health and social work activities had the number of businesses returning to operation unchanged compared to the same period in 2020.

2. Enterprises withdrawing from the market

The data of enterprises entering and re-entering the market increased compared to the same period in 2020 was showing a positive signal. However, the economy continued to be affected by the pandemic, reflected in the number of businesses withdrawing from the market continued to increase, especially the group of small-sized enterprises.

There were 59,820 enterprises that withdrew from the market in the first five months of 2021, an increase of 23% over the same period in 2020, of which 31,818 enterprises temporarily ceased business, accounting for 53.2%.

Most of the enterprises that had to suspend their business and were dissolved or ceased to exist were newly established less than five years enterprises with small scale, mainly in the commercial sector. They were very vulnerable objects due to adverse external influences.

2.1. Enterprises temporarily suspending business

The number of businesses suspending business in the first five months of 2021 was 31,818, up 22.3% over the same period in 2020.

Enterprises were temporarily suspending business mainly in the following fields: Wholesale and retail trade, repair of motor vehicles, motorcycles and other motor vehicles (11,752 enterprises, accounting for 36.9%); Construction (4,422 enterprises, accounting for 13.9%); Manufacturing (3,814 enterprises, accounting for 12%).

Enterprises registered to suspend business mainly focused on the capital scale from 0 to 10 billion VND with 28,921 enterprises (accounting for 90.9%, up 21.1% over the same period in 2020). At the scale of 10 to 20 billion VND, there were 1,586 enterprises (accounting for 5.0%, up 36.5% over the same period in 2020); from 20 to 50 billion VND, there were 847 enterprises (accounting for 2.7%, up 37.5% over the same period in 2020); from 50 to 100 billion VND, there were 275 enterprises (accounting for 0.9%, up 21.7% over the same period in 2020) and with the scale of over 100 billion VND, there were 189 enterprises (accounting for 0.6%, up 44, 3% over the same period in 2020).

The majority of enterprises that have suspended their business in the first five months of 2021 had a short operating time, mainly those with 0 to 5 years of operation with 16,735 enterprises (accounting for 52.6%); 8,214 enterprises were operating for 5 to 10 years (accounting for 25.8%) and 6,869 enterprises were operating for more than 10 years (accounting for 21.6%).

The number of enterprises suspending business in the first five months of 2021 increased in 16/17 fields. In which: Manufacture and distribution of electricity, water, gas (309 enterprises, up 134.1%); Mining and quarrying (205 enterprises, up 40.4%); Education and training (670 enterprises, up 39.3%); Human health and social work activities (101 businesses, up 38.4%); Scientific and technical activities; Consulting and design services; Advertising and other professional activities (2,104 enterprises, up 34.5%); Agriculture, forestry and fishing (444 enterprises, up 25.8%); Information and communication (682 enterprises, up 25.6%); Employment activities, Travel, Renting and leasing of machinery and equipment and other support services (1,932 enterprises, up 25.2%);...

2.2. Enterprises waiting for dissolution procedures

In the first five months of 2021, 19,979 enterprises were waiting for the dissolution procedure, increased by 20.7% over the same period in 2020.

Compared to the same period in 2020, the number of enterprises waiting for dissolution procedures increased in 15/17 fields. The highest number of enterprises awaiting dissolution were in these sectors: Wholesale and retail trade, repair of motor vehicles, motorcycles and other motor vehicles (7,316 enterprises, accounting for 36.6%); Construction (2,330 enterprises, accounting for 11.7%); Manufacturing (2,310 enterprises, accounting for 11.6%).

By capital size, enterprises waiting for dissolution procedures increased in all 5/5 of their capital size. They were concentrated mainly on the capital scale from 0 to 10 billion VND with 18,002 enterprises (90.1%, up 20.8% over the same period in 2020). In the capital scale from 10 to 20 billion VND, there were 982 enterprises (accounting for 4.9%, up 26.4% over the same period in 2020); from 20 to 50 billion VND, there were 514 enterprises (accounting for 2.6%, up 18.2% over the same period in 2020); from 50 to 100 billion VND, there were 228 enterprises (accounting for 1.1%, up 5.1% over the same period in 2020) and over 100 billion VND there were 253 enterprises (accounting for 1.3%, up 17.7% compared to the same period in 2020).

2.3. Enterprises dissolved, ceased to exist

The number of enterprises dissolved or ceased to exist in the first five months of 2021 was 8,023 enterprises, increased by 32.3% over the same period in 2020.

17/17 main business lines had increases in the number of dissolved and terminated enterprises. The rise mainly focused on Manufacture and distribution of electricity, water, gas; Mining and quarrying; Transportation and storage with the increases of 181.7%; 106.1% and 53.5% respectively.

In the first five months of 2021, the number of dissolved or terminated enterprises with operating time from 0 to 5 years was 5,365 (accounting for 66.9%); 1,411 enterprises had been running for 5 to 10 years (accounting for 17.6%) and 1,247 enterprises had operated for more than 10 years (accounting for 15.5%).

By capital size, the number of dissolved and terminated enterprises increased in 4 of 5 capital sizes, concentrated mainly on the scale from 0 to 10 billion VND with 7,153 enterprises (accounting for 89.2%, up 31.8% over the same period in 2020). At the scale of 10 to 20 billion VND, there were 442 enterprises (accounting for 5.5%, up 44.4% over the same period in 2020); from 20 to 50 billion VND, there were 248 enterprises (accounting for 3.1%, up 47.6% over the same period in 2020); from 50 to 100 billion VND, there were 94 enterprises (accounting for 1.2%, up 20.5% over the same period in 2020) and at the scale of over 100 billion VND, there were 86 enterprises (accounting for 1.1%, down 1.1% over the same period in 2020).

Source: Agency for Business Registration

[1] This capital does not include the capital of 02 enterprises in Ho Chi Minh City.

[2] This capital does not include the capital of 02 enterprises in Ho Chi Minh City.