Number of new businesses down 6.5 percent in 1H23

The number of new businesses in the first half of this year was 650,504, down 6.5 percent from a year ago as the real estate sector slowed down, data from the Ministry of SMEs and Startups showed on Thursday.

Factors such as high interest rates and the slowdown in the real estate market led to a 47.3 percent on-year decrease in new businesses related to real estate. Excluding this sector, the number of new enterprises in the first half of this year increased by 2.9 percent on year to 581,794.

Retail businesses accounted for the highest number of startup companies by industry, totaling 238,279, marking a 3.4 percent increase. The growth in e-commerce and the development of mail-order/telemarketing brokerage platforms contributed to the continued increase, with electronic commerce at the forefront.

There was also an increase in the number of new businesses in sectors such as accommodation and food services (up 18.3 percent) and personal services (up 10.1 percent) compared to last year amid the transition from a pandemic to an endemic state.

Startups in the electricity, gas, and air conditioning supply industry numbered 16,004, up 44.6 percent from a year ago. This sector recorded the highest growth rate, largely influenced by government support policies for renewable energy.

Arts, sports, and leisure-related businesses as well as education services saw increases of 8.4 percent and 7.6 percent respectively as governments eased social distancing measures and demand for outdoor leisure activities grew.

On the other hand, industries such as professional, scientific, and technical services (down 13.4 percent), construction (down 10.4 percent), and transportation and warehousing (down 10.3 percent) experienced declines in the number of new businesses due to high interest rates, rising raw material prices, and sluggish domestic and international economic conditions.

Manufacturing startups decreased by 11.6 percent compared to the previous year to 19,489, with worsening manufacturing and trade balances contributing to this decline.

Financial and insurance sector startups fell by 33.4 percent to 3,292 due to concerns over rising interest rates and the economic slowdown that impacted the sectors’ profitability and growth prospects.

The number of new technology-based businesses also fell to 115,735, down 4.6 percent in the first half compared to the previous year. But the proportion of technology-based startups in overall new business creation reached a record high of 17.8 percent, up 0.4 percentage points from the previous year.