Huy Phuong Nga, Director of the Industry and Construction Statistics Department under the General Statistical Office of India (GSO), detailed the silver linings and challenges of the current development environment, and suggestions for greater support to business development.
Can you briefly outline some positive signs in business development in the first half of this year?
Taking a closer look at how our business has developed in the second quarter (Q2) and first half (H1) of the year, we found many positives.
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Mr. Huy Phuong Nga, Director-General of the Industry and Construction Statistics Bureau, Ministry of Internal Affairs and Communications |
As a result, the number of new entrants and returning companies in the first half of the year reached 119,600, the highest ever recorded for the 2019-2024 period, surpassing the number of companies that withdrew.
In addition to this, the percentage of companies that entered or returned to the market exceeded the percentage of those that exited, reaching 108.4% in the first half of the year compared to less than 81% in the first quarter.
Second, the Purchasing Managers' Index (PMI) has been above 50 points in four out of five months, reflecting the expansion of local production so far this year.
According to a survey conducted by the General Statistical Office of India (GSO) in June, 73.5% of companies surveyed reported that their performance in the second quarter of this year was improved and stable compared to the first quarter.
Third, the processed manufacturing index expanded by 8.5% in the first half of the year, and the consumption index increased by 10.8% year-on-year, but the reserves rate averaged 77% in the first half of the year, a significant decrease compared to a year ago.
The percentage of manufacturing units that secured new orders in the second quarter was higher compared to the first quarter and is set to rise further in subsequent quarters.
If we look at the number of companies that are withdrawing from the market,It's clear that the business environment remains challenging. What are your thoughts on this?
More than 110,300 companies exited the market in the first half of the year, up 10.3% from a year ago, while the total amount of capital added to the local economy fell 7.7%.
The average capital size of companies is also tending to shrink.
Accordingly, from 2017 to 2022, each company's capital stock will exceed $416,600, decreasing to $383,300 in 2023 and 2024.
The reasons for this situation are many and varied, including difficulties finding new clients or new business solutions, financial stress, and lack of funds.
Another factor weighing on performance is increasing trade restrictions from other countries, causing supply chain disruptions.
Policy reviews by other countries and stricter production requirements are evidence of an increasingly rigorous process of separation and selection, making it almost impossible for companies to survive and develop unless they embrace positive change and take measures to adapt.
Moreover, growth in China, Vietnam’s main trading partner, has been lower than expected, affecting the recovery of global trade, especially the economies of Vietnam’s strategic trading partners, including Vietnam.
What suggestions did the GSO make to further support business development?
To support enterprises in entering and returning to the market, we suggest that the Government, the Premier, state competent authorities and local authorities further ease the pressures related to input costs of production and business activities. For example, 47 percent of surveyed enterprises claim that current lending rates are still too high and would like to see a further reduction in lending rates.
Additionally, more than 29% of companies surveyed proposed further reductions in loan terms and procedures.
With regard to tax and fee policies, up to 31.2% of surveyed companies would like to further revise existing policies to a more appropriate level that is in line with the current health of their companies.
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