The registered capital in the first quarter dropped 16.1 per cent compared to the same period last year, while the number of newly established enterprises declined by 6.8 per cent.

Compared with the fourth quarter of last year, the decline in capital and the number of firms was even higher at 26.7 and 9.4 per cent, the ministry noted.

Average registered capital for each firm also dropped 19 per cent over the fourth quarter of last year to VND5.05 billion.

All cities and provinces reported a decline in the number of newly-established firms in the first three months, of which the mountainous provinces of Bac Kan, Ha Giang, Yen Bai and Kon Tum saw the strongest decrease of more than 35 per cent. The falling figures in Ha Noi and HCM City respectively were 13 and 7.8 per cent.

The number of newly-established firms in agro-forestry and fisheries experienced the strongest drop... of 34.7 per cent. Information and communications also reported a drop of 29.5 per cent.

New firms in finance, banking, insurance, real estate and construction, which were hot industries last year, also declined between 18 and 20.5 per cent.

The ministry also reported that in the first quarter, around 15,200 firms dissolved or ceased operations, up 19.92 per cent year on year.

Ha Noi and HCM City had the highest number of firms which dissolved or ceased operations in the period.

The decline proved that domestic firms were facing continued difficulties in production and business, the ministry noted, adding that a major problem facing local firms was credit access due to unresolved bad debts and reluctant banks.

The State Bank of Viet Nam's Credit Department said that its measures to boost credit had left outstanding loans in the banking system for the first two months of the year at minus 0.16 per cent against late 2012.

Vietnamnet