Confidence flags

January 13, 2011 | 16:00

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Business confidence in Vietnam has suffered its biggest drop since the third quarter in 2008 amid rising inflation and high lending interest rates, according to a survey conducted by Petro Vietnam Finance Investment and Consultancy Company (PVFC Invest) and US-based World Vest Base Financial Intelligence Service (WVB Vietnam).

The result reflects concerns of enterprises over rising inflation and difficulty in accessing loans at local banks.

The rate of inflation reached 11.75 per cent last year and economists expected it would continue to rise in the next few months. Meanwhile, the annual lending interest rate is around 18-19 per cent as the government implements a tightened monetary policy.

According to the survey, nearly 76 per cent of enterprises are more confident about better economic prospects over the next 12 months, down from 84.35 per cent in the third quarter 2010.

Just over half of enterprises say they’re going to raise their levels of investment over the next 12 months. This number is down 8.09 per cent against the third quarter last year, according to the survey of PVFC Invest and WVB Vietnam.

Meanwhile, 45.06 per cent say to maintain the current business operations and 3.87 per cent saying to cut back investments.

Furthermore, enterprises are also less confident in their turnover and profit this year. Only 68.24 per cent believe their turnover will increase and 65.67 per cent believe there will be a rise in profit in next twelve months. The proportions in the previous survey were 74.05 per cent and 72.53 per cent, respectively.

The survey was conducted from December 15, 2010 to the first week of this January with the participation of 233 companies across eleven primary sectors and industries of Vietnam. Seventy-five per cent of the respondents are small and medium enterprises. Business confidence dropped from 137 points in the third quarter 2010 to 126 points in the fourth quarter 2010.

By Song Ngoc

vir.com.vn

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