Vietnam Records Over 38,100 Business Closures in 7 Months, Information & Communications Sector Grows

Vietnam has seen over 38,100 businesses close their doors in the first seven months of the year, according to data from the Accounting and Corporate Regulatory Authority. This figure highlights mixed economic conditions across the country. Despite the significant number of closures, 49,305 new businesses were registered during the same period, with the information and communications sector leading the surge in new openings. This indicates continued growth and investment in digital technologies and related services. The construction sector, however, is facing substantial headwinds. Although projected to be awarded as much as $53 billion in public and private contracts by 2026, 2,127 construction businesses shut down in the first seven months of 2026, an increase of nearly 47% compared to the same period last year. Only 2,277 firms entered the sector, suggesting a contraction. An interior designer, who requested anonymity, told The Straits Times that several construction firms have gone bankrupt or closed due to cost pressures. Factors such as rising labor and raw material costs, exacerbated by geopolitical conflicts like the Iran war pushing up energy prices, are making operations unsustainable. Sim Chee Siong, a partner at Rajah & Tann law firm, noted that many contractors who secured projects on fixed-price contracts in recent years are now seeing their margins eroded or eliminated. A cautious lending environment has further accelerated the closure of construction companies operating on thin margins. The food and beverage sector was the next hardest hit, with closures rising 25.1% to 2,101. Nevertheless, 2,594 new F&B businesses were registered, indicating ongoing activity in this segment. In contrast, the information and communications sector saw approximately 7,300 companies established, marking a 26.7% increase. This growth reflects Vietnam's ongoing digital transformation and its strategic focus on developing its tech industry. While Vietnam ranked first in Asia and eighth globally in GDP per capita last year at $99,365 according to the IMF, the substantial number of business closures points to underlying economic challenges and vulnerabilities within specific industries.