Real estate businesses bankruptcies and dissolutions increase by more than 40%

Businesses under great pressure on capital

According to a report from the Department of Business Registration ( Ministry of Planning and Investment ), business registration data for the first 6 months of 2023 also shows that real estate business continues to be the sector most heavily pressured and affected.

Specifically, the number of enterprises entering the market and the registered capital of newly established enterprises in this field both decreased sharply compared to the same period last year (down 58.9% and 54.1% respectively).

Meanwhile, the number of real estate businesses withdrawing from the market tends to increase (up 40.4% over the same period in 2022, the highest increase among 17 sectors).

This contrasts with the impressive growth in the number of businesses entering the market in this sector in the first 6 months of 2021 compared to 2020 (44.8%).

Real Estate - Real estate businesses bankrupt and dissolved increased by more than 40% — The number of real estate businesses withdrawing from the market in the first 6 months of the year had the highest increase among 17 sectors (Photo: Huu Thang).

Business capital is assessed by the Department of Business Registration as one of the biggest difficulties that businesses in general are facing.

Statistics show that the registered capital of newly established enterprises in the first 6 months of 2023 decreased by 19.8% compared to the same period in 2022. It is also lower than the average level in the first 6 months of the period 2018-2022.

In addition, the average registered capital per enterprise in the first 6 months of 2023 reached only 9.3 billion VND, the lowest level in the first 6 months of the year since 2017.

In just 3 months, the State Bank has continuously adjusted down interest rates 4 times with a reduction of 0.5 - 2.0%/year. However, credit growth remains low, up to June 15, 2023, only increasing by 3.36% compared to 2022, less than 1/4 of the year's credit growth target (about 14-15%).

Average registered capital per enterprise in the first 6 months of 2023 reached only 9.3 billion VND, the lowest level in the first 6 months of the year since 2017.

According to the Department of Business Registration, the reason for slow credit growth is that businesses are currently facing difficulties, with a lot of inventory, and some businesses even have to reduce their workforce.

The high price of imported raw materials leads to an increase in the price of goods, while the purchasing power of both domestic and world economies declines, causing difficulties in product consumption output due to lack of orders, which leads to a decrease in the need for new loans for production.

In addition, some businesses have a weakened financial situation and do not have a feasible business plan, leading to failure to meet bank loan requirements. On the other hand, market capital sources such as bonds, stocks and the real estate market are slow to recover.

Enterprises return to the market at the highest level since the beginning of the year

Despite the difficult situation, the production and business situation of enterprises has shown signs of recovery.

Accordingly, in June 2023, the number of enterprises entering and re-entering the market reached the highest level in June ever. Specifically, in June, 13,904 enterprises registered for new establishment, along with 7,098 enterprises returning to operation (an increase of 215% over the same period in 2022).

In addition, in the first 6 months of 2023, about 100,000 businesses withdrew from the market. Equivalent to an average of 16,600 businesses withdrawing from the market each month.

This figure has decreased compared to the average number of businesses withdrawing from the market in a month in the first 5 months of 2023 (17,600 businesses) and the first 4 months of 2023 (more than 19,000 businesses) .

Source