Investment outlook remains positive

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Private Equity in Vietnam – Investment Sentiment and Outlook, which polled more than 200 decision-makers either based in Vietnam or having a significant focus on the country, said 65 per cent of them had a positive view.

Trinh Kim Dung, advisory services manager at Grant Thornton Vietnam, said: "Recent economic data, particularly rising inflation and the likely continued devaluation of the dong, has provided some investors reasons to be less confident about the Vietnamese economy."

She added, however, that the fundamentals for growth remained, and most investors sit on the positive side of the fence.

Whilst there has been a slight dip in their confidence, investors remain significantly more optimistic than they did throughout 2009. This can be seen from the fact that 59 per cent said they were planning to increase their investments in Vietnam in the next 12 months.

Retail remains the most positive sector for investment, with education, a favourite in past surveys, coming a close second.

Oil and gas and natural resources are still considered to be less attractive investments, as are agriculture and manufacturing.

Industries reliant on an international networks appear to be significantly less attractive than those operating solely in the domestic market.

Ken Atkinson, managing partner of Grant Thornton Vietnam, said: "With retail sales growing at 25 per cent year-on-year, it is not surprising that retail remains the most attractive sector for private equity investors. The domestic economy continues to shift towards modern trade and away from traditional markets, and this is providing opportunities for investors to develop brands and gain market share as a foundation for their future."

Just like in past surveys, respondents said the limited availability of the debt financing and general lack of corporate transparency remained a barrier to investment.

Corruption, which was earlier seen to be seriously impeding investment, has become less of a barrier though it still ranks high.

Other obstacles mentioned in previous reports such as red tape, the legal system, and poor infrastructure have remained consistently prominent since the first survey in the second quarter of 2009.

According to audit partner Nguyen Thi Vinh Ha, infrastructure was constantly held up by foreign investors in the country as a major barrier to additional investment.

Though the Vietnamese government was acutely aware of problems, certain difficulties prevented infrastructure needs from being effectively addressed, she added.

Around 61 per cent of respondents consider Vietnam as attractive for investment compared to other destinations, down from 78 per cent in the last survey.

But 15 per cent sees it as "extremely attractive" compared to just nine per cent last time.

No one called it unattractive.