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60% of Vietnamese Businesses Are Losing Money

More than 60% of Vietnamese businesses are breaking even or operating at a loss, according to a local business group.

Chairman of the Vietnam Chamber of Industry and Commerce Vu Tien Loc told Thanh Nien that the majority of the 500,000-plus businesses currently operating in the country were failing to make a profit.

Though Vietnam is expected to end 2015 with an economic growth of 6.5%, its highest since 2010, Loc argues that this does not necessarily mean good news for everyone. With few medium and large businesses to keep the Vietnamese economy afloat, the chairman warned that such small-scale operations could lead to instability in future.

At present, 96% of Vietnamese businesses are either small or super small, operating with a capital of less than VND20 billion. Large and medium businesses are fairly split – around two percent each of the national economy – but fail to make up a large enough portion of the economy. Without bigger enterprises, Vietnam may face difficulties weathering future economic troubles.

This year alone, over 54,000 businesses in Vietnam either shut down or went bankrupt. In an effort to help stablilize the national economy, Loc encouraged authorities to limit penalties on late tax payments for medium and large companies, as well as streamlining business procedures.

[Photo via Emilio Labrador]

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