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Viet Nam's small businesses confident about growth: Survey
Business confidence among Viet Nam's small - and medium - d enterprises (SMEs) climbed 10 points in the fourth quarter last year, reaching its highest point since the height of the financial crisis in the fourth quarter of 2008.
Viet Nam tops the region's confidence index, according to the semi-annual HSBC Small Business Confidence Monitor, which gauges the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment.
This fifth wave of the survey is the largest to date, capturing the views of more than 6,000 SMEs across 20 markets in Asia, the Middle East, Europe, North America and Latin America. It is the largest international survey of its kind.
Viet Nam's business confidence was from 150 to 160, the highest confidence level among the Asian areas in the survey.
The Asian index rose from 107 in the second quarter of 2009 to 122 in the fourth quarter.
The country is followed by India (132), mainland China (124) and Singapore (117).
Hong Kong has the biggest index rise from 83 to 108, placing it back in positive territory from the negative territory in the second quarter in 2009.
The results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100 neutral.
The survey was conducted in October and November last year by research agency TNS for HSBC Commercial Banking.
Pre-crisis levels
Sandy Flockhart, HSBC's Chairman of personal and commercial banking, said: "Our small business confidence index is telling us that confidence levels are back to pre-financial crisis levels. Not only are SMEs confident that their local economies will strengthen, they are ready to invest again in their own operations and people."
Globally, the SME indices tracked by HSBC in most countries and territories hold a positive outlook, with the Middle East at 125, Latin America at 118, the US and Canada at 107 and the UK at 101. France is just below neutral at 94.
But emerging markets in Asia, the Middle East, Latin America and Eastern Europe are significantly most optimistic than the developed markets of the US, Canada, the UK and France, with an index of 121 versus 106.
GDP growth
In terms of local GDP growth, 71 percent of Viet Nam SMEs expect local GDP to increase, 23 percent expect growth to maintain the same, and only 6 per cent expect growth to slow down in the next six months.
There is a noticeable increase in the portion of respondents who believe the economy will grow over 4 percent, from 28 percent in the second quarter of 2009 to 53 percent in the fourth quarter in 2009.
In the Middle East, 47 per cent of SMEs expect the pace of growth to increase, as do 41 per cent in mainland China, India and Turkey. In France, only 11 percent expect faster growth.
Outlook on capital
Viet Nam's SMEs are also more confident when it comes to their investments in their own businesses in 2010's first half.
Over half of them (66 percent, up from 58 percent in second quarter of 2009) are planning to increase their capital expenditures. Some 32 percent say they will maintain current levels (Cmpared to 38 percent) and only 1 percent are planning reductions (Cmpared to 3 percent).
Globally, there are significant numbers of SMEs planning to increase capital expenditure, led by Viet Nam (66 percent), India (49 percent) and the Middle East (47 percent).
Recruitment
More than half of Viet Nam's SMEs (54 percent) will start to hire again, as 36 percent said they would increase staff up to 20 percent, and 18 percent said they would increase their staff over 20 percent.
Forty-four percent will maintain their staff base in the next six months. The number planning to reduce staff dropped down to 1 percent (Cmpared to 3 per cent in the second quarter of 2009).
Recruitment is generally stable across the 20 markets in the survey, with hiring increases planned by 36 percent of SMEs in the Middle East.
Although the UK has the smallest of SMEs planning to recruit more staff, 84 percent of SMES in the UK will maintain their staff base.
Cross border trade
For the first time, the HSBC Small Business Confidence Monitor asked SMEs about the extent of their cross-border trade and other international business activities, such as overseas operations.
Three in ten SMEs (31 percent) across all 20 markets surveyed say they were engaged in international business activities.
Levels ranged widely from only 4 percent of SMEs in Brazil involved in international business, to 52 percent in Hong Kong, up to 66 percent in Viet Nam, and 69 percent in Qatar.
In Viet Nam, two out of three respondents say they have some level of cross-border trade or international business.
At least 53 per ent of Vietnamese SMEs say they plan to do more international business by 2011, with 19 percent saying they will have the same amount of business, while 28 percnt say they are not doing business internationally and have no intention to do international business in the next two year.
The top market for Viet Nam's international SMEs are Greater China comprising Hong Kong, mainland China and Taiwan (28 percent), Europe (22 percent) and South Korea (22percent).
For Vietnamese SMEs engaged in international business, the top reasons are sales and revenue opportunities (Mntioned by 60 percent of SMEs), and the presence of suppliers and partners in other markets (50 percent). These are results that are consistent with most of the Asian markets in the survey.
Outside Asia
As for other markets outside Asia, the need to gain access to international markets is more important, as SMEs seek to diversify their risk beyond domestic markets.
Doing international business is not without its challenges. Among Viet Nam's SMEs that are already international and those that are not, the top barrier cited remains unstable financial conditions, such as fluctuating exchange rates and interest rates (55 percent).
Huynh Buu Quang, head of Commercial Banking HSBC Bank (Vietnam) Ltd. said: "Since the last survey in the second quarter in 2009, we have seen an increase in business confidence among the surveyed Vietnamese SMEs. Now the survey results of the fourth quarter in 2009 makes it clear that a majority of Vietnamese SMEs are expecting the economy to further recover in the next six months."
"As a result, Viet Nam's small businesses are planning to expand their staff base and investment to prepare them for new business opportunities, not only in the country but also overseas. At HSBC, with a network of 8,500 offices in 86 countries and territories, our international connectivity and its on-the-ground expertise, we are uniquely placed to help small businesses unlock their business potential."
Thuy Anh
vietnamnews
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