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HSBC: Exchange rate fluctuation is the biggest barrier for export
Many enterprises fear that the foreign trade volume may decrease in the next six months, the survey conducted by Hong Kong and Shanghai Banking Corporation (HSBC) shows.
Vietnam’s Trade Confidence Index (TCI) for the second half of the year in the report released by HSBC decreased by 10 points in comparison with the first-half , down to 112 points (Out of the maximum of 200).
The main reasons behind the worse TCI are the increasing worries about the possible decrease of foreign trade volume in the next six months, the higher caution in payment and Vietnamese exporters’ fear about the negative impacts of the dong/dollar exchange rate.
This is the fourth HSBC survey, conducted in 17 markets, including the most important markets in Asia-pacific, the Middle East, Latin America, the US, Canada and Europe. 5124 small and medium enterprises took part in the the poll, including 300 Vietnamese enterprises, mostly located in Hanoi and HCM City.
The survey consists of businesses’ predictions about the trade volume, the risks from buyers and suppliers, the demand for trade finance, the capability to access trade finance, and the impacts of the foreign exchange policies on businesses’ operation.
The survey shows that Vietnam’s TCI has fallen for the first time after increasing continuously in the previous three TCI reports and this has been blamed on the increasing caution of export enterprises. However, Vietnam does not lag behind in the ranking too far. Vietnam’s TCI is still among the five leading countries. It has just fallen from the third position to the fifth, after India, UAE, Mexico and Indonesia.
Twenty four percent of polled businesses believe that the trade volume will remain unchanged in the next six months, while eight percent of businesses think the trade volume would decrease, 46 percent of businesses think the trade volume would increase slightly. And only 23 percent of businesses believe that the volume would increase significantly.
With the higher caution in drawing up business plans, the number of Vietnamese enterprises, which think their demand for trade finance would increase, has slightly reduced from 74 percent in the first half of 2010 to 67 percent.
Fifty one percent of enterprises think that the capital would come from banks, while 34 percent said they would only rely on their own capital. Only 15 percent of enterprises said they will need the support from buyers and the payment terms from suppliers.
Regarding the recent exchange rate fluctuations, more businesses think that the fluctuations will bring the biggest difficulties to export. 78 percent of polled businesses have said so, while the figure was only 52 percent in the first half of the year.
66 percent of enterprises think that the exchange rates would have negative impacts on their operation in the next six months (The figure was 53 percent in the first half of 2010). Only nine percent believe the exchange rates will have positive impacts.
Surprisingly, only 20 percent think that the increasing interest rate is their biggest problem, much lower than the figure released in the first half of the year (38 percent).
Vietnamese enterprises believe that the expanded China remains the most important market. The majority of Vietnamese exporters (58 percent) are doing business with the market. Other important markets include South East Asian market (34 percent) and the rest of Asia (38 percent).
vietnamnet, vneconomy
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