VBF’s positive spin on dizzying times

Many firms are upbeat there will soon be more flavours in the economic horizon

Business representatives attending the annual Vietnam Business Forum (VBF) in Hanoi last week raised the usual concerns over macroeconomic challenges and administrative burdens, but also expressed confidence in a brighter outlook in 2012 and beyond.

“While the gloomy image of macroeconomic instability, 20 per cent inflation and a weak currency in Vietnam is temporary, the medium to long-term outlook remains positive,” said Christopher Twomey,  chairman of American Chamber of Commerce in Vietnam and chief executive officer of ACE Insurance Company in Vietnam.

A survey on business sentiment conducted by the VBF Secretariat during September-October this year among 240 firms found that business morale had fallen to a three-year low in 2011 and much lower than the levels recorded in 2010.

The survey, with 80 per cent of participants being domestic firms and the remaining 20 per cent having foreign investment, gave an average score of 2.04 on the ease of doing business in Vietnam for 2011 compared to 2.52 in 2010 and nearly 1.9 in 2008 when the global financial crisis first struck.

Under its definition, four meant very good, three signified good, two was acceptable and one poor.
However, the ratings for the favourableness and ease of doing business in Vietnam for 2012 and 2013 were rated at 2.45 and 2.88, respectively, by the respondents.

This indicates growing confidence among business community for the next two years and could be a result of faith in the government’s efforts to restructure the economy and implement a raft of measures to recover macroeconomic stability.

“Most respondents believe that sticking to this resolution, painful and difficult as it may be, is right and necessary to ensure the survival of the economy,” the survey report said.

The Vietnamese government would keep on pursuing tightened fiscal and monetary policy, Minister and Chairman of Government Office Vu Duc Dam affirmed in a governmental press conference last week.

Dam said the government would continue to create favourable conditions and remove barriers for private enterprises to develop next year. He added that he expected the private sector would be the key driver of economic growth targeted at 6 per cent.

“We are restructuring investment by reducing public investment. So if we don’t have policies to encourage private investment, our economic growth will not reach 6 per cent next year,” said Dam.
Meanwhile, the government would adopt specific  plans to restructure the financial system and state-owned enterprises next month, according to the Ministry of Planning and Investment.
Twomey said if the government’s plans were strictly implemented, the business environment was bound to improve.  

The VBF Secretariat survey revealed that 69 per cent of enterprises said they would be expanding their business in the next three years. The key reasons for the expansion were perceptions of local and regional market growth, better prospects of the local economy, and market opening and reform following Vietnam’s increased integration into the world economy.