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| Workers on a production line at the Ha Nam Knitting Company. Business confidence in the country’s SME sector has recently increased. — VNA/VNS Photo Tran Viet |
HCM CITY — Business confidence in Viet Nam’s SME sector has climbed since the fourth quarter of 2008, a recent survey found.
According to the latest Emerging Markets Small Business Confidence Monitor results released by the Hongkong and Shanghai Banking Corporation (HSBC) yesterday, the increase in confidence compared to six months ago stretched across all eight Asian markets surveyed.
The semi-annual survey of the small business sector, conducted in May and June 2009, reflects the views of more than 3,400 SMEs in 12 markets across Asia, Latin America and the Middle East.
Respondents were asked about their six-month outlook on economic growth, capital investment plans, recruitment plans and trade, said an HSBC press release.
The results were used to calculate a monitor ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest and 100, neutral.
The regional index rose from 92 in the fourth quarter of 2008 to 107 in the second quarter of 2009. Viet Nam’s business confidence was calculated at 150, a 19-point increase from six months ago, the highest index score in Asia.
Following Viet Nam was India with a score of 128. Although having the biggest index rise with 33 points, Hong Kong remained low in confidence rankings with a score of 83.
In Viet Nam, the survey showed SMEs were more willing to increase capital expenditure and recruitment plans over the next six months.
Huynh Buu Quang, Head of Commercial Banking of HSBC Vietnam, said: "Thanks to the country’s strong long-term prospects, the effectiveness of the Government’s stimulus package, including the 4 per cent interest rate subsidy scheme for corporates, Viet Nam’s economy has picked up in the second quarter with GDP expanding by 4.5 per cent year-on-year.
"Our latest survey shows an increase in Viet Nam’s business confidence and a majority of SMEs believe that the economy will grow in the next six months."
The survey, which included the Middle East and Latin America for the first time, found that as in Asia, the more domestic-oriented economies showed more optimism than those more dependent on exports.
Outlook for growth
In terms of local GDP growth, Viet Nam maintains its position as the most optimistic in Asia, with 62 per cent of SME respondents expecting faster GDP growth. Twenty-two per cent expect growth to decline in the next six months and 27 per cent expect the same pace. The majority in Saudi Arabia, 51 per cent, also expect faster growth, as do 43 per cent in India.
At the other end, Hong Kong has the fewest SMEs expecting GDP growth to pick up although it shows the largest positive shift in economic outlook compared to the fourth quarter of 2008.
Across all 12 markets, most businesses were not planning to make changes to their capital investment plans. However, 58 per cent of SMEs in Viet Nam, 50 per cent in Brazil, and 39 per cent in Saudi Arabia say they plan to increase capital expenditures.
In Viet Nam, very few businesses were planning to shrink capital expenditures compared to six months ago: 3 per cent planned to decrease expenditures and 38 per cent planned to maintain the same level as last year.
The survey showed the majority of small businesses planned to make no change to staff levels. Viet Nam ranked highest in terms of recruitment plans, with 49 per cent of respondents showing an intention to hire new staff, 47 per cent will retain the same staffing levels and only 4 per cent planned to cut jobs. Saudi Arabia follows closely with 40 per cent of respondents planned to hire more staff.
Cross-border expectations
Small companies that engage in cross-border businesses were asked about their expectations on trade volumes for the next six months. Those in Viet Nam who trade with China were the most optimistic, with 58 per cent expecting growth in trade volumes. The outlook for growth in trading with the rest of Asia was brighter than with the US (54 per cent versus 49 percent). Among those trading with Europe and the rest of the world, 41 per cent expected an increase.
When the Vietnamese SMEs were asked what they believe will be the main driver of local economic growth, 40 per cent said "government policy/measures" and another 28 per cent said "recovery of the region and the world economy". —
Source: vietnamnews.vnagency.com.vn
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