Cities and provinces across the country reported that over 2,200 enterprises had filed for bankruptcy from the start of the year until March 21, a report said.

The number of bankrupted companies has soared by 57%

The Ministry of Planning and Investment (MPI) announced the news at a recent meeting with the prime minister’s consultancy group, elaborating that over 9,700 firms had applied to halt operations or defer tax duties during the period.

According to the ministry, the number of enterprises that have fallen into bankruptcy or had to halt operations in the first quarter of this year had increased 6% compared to the same period last year. The number of bankrupted companies has soared by 57%.

At the ministry’s regular meeting for the first quarter on March 28, Lam Khoi Nguyen, Deputy Director of HCM City Department of Planning and Investment said as of March 19 the city recorded 931 enterprises filing for bankruptcy.

A total of 526 companies had completed procedures to declare bankruptcy during the period, up 23.8% from a year earlier, he noted.

While 5,012 enterprises had sent announcements to halt operations to the municipal Department of Tax, a total of 462 others had made declarations to the city’s Department of Planning and Investment during the period, a 4.6-fold increase compared to the same period last year.

He said that as many as 1,725 companies were completing procedures for bankruptcy, while another 1,198 firms have closed their offices and fled and 463 others had undergone restructuring.

Most of troubled companies operate in the fields of trading, construction, transportation and tourism, he added.

Bui Ha, Director of the ministry’s Department of General Affairs, explained that high interest rates had prevented enterprises from accessing bank loans to maintain their businesses, resulting in the gloomy situation.

In order to improve the situation, further interest rate cuts are a desperate need, he emphasised.

Do Thi Nhung, Director of the State Bank of Vietnam’s Department of Monetary Policy, said interest rates may decline by 1% per quarter in line with a fall in inflation, a more stabilised macroeconomic situation and improved banking liquidity. If this occurs, deposit interest rates may fall to around 10%-11% per year and loans may be lowered to 15% per annum.