Investors applaud work to avoid greater chaos

Despite fierce headwinds, the economy has yet to grind to a halt

Minister and Chairman of the Government Office Vu Duc Dam told VIR that while Vietnam’s economic growth rate expected to be 5.2-5.5 per cent this year was considered to be low domestically, it was lauded by foreign credit organisations and investors.

“We have worked with many international banks and organisations. They are quite optimistic about Vietnam’s existing macro-economic situation and have recommended the government continue its current macro-monitoring,” he said.

Standard Chartered Bank in a report named “Vietnam – In a consolidation phase” issued in late July forecast Vietnam’s gross domestic product (GDP) would grow 5 per cent in 2012 and said it was a year of consolidation after several years of rapid economic growth.

“Based on seasonal trends, we are optimistic that GDP growth will pick up as the year progresses. However, we expect growth to consolidate after several years of rapid expansion,” stated the report.

The bank said Vietnam’s export performance had been resilient. “We attribute this to international manufacturers’ diversification into Vietnam in recent years. As previous investments turn into production, this is supporting Vietnam’s export growth during this challenging time.”

The Ministry of Planning and Investment (MPI) reported Vietnam’s export turnover totaled $62.9 billion in 2012’s first seven months, up 19 per cent on-year. While the domestic economic sector’s total export turnover was $23.9 billion, down 1.7 per cent on-year, the foreign-invested sector’s  reached $34.3 billion, up 41.1 per cent on-year.

“We expect this trend to broadly continue for the remainder of 2012. We forecast that Vietnam’s export growth will outperform the rest of the region but be a touch lower than in previous years.

The positive trend in the trade balance is likely to boost the foreign exchange reserves and support the dong.”

Vietnam WVB Financial Intelligence Services Company, a global  investment consultant, in mid-July trumpeted its Vietnam Business Confidence Index for 2012’s second quarter conducted from June 15, 2012 to the first week in July, 2012 over 154 companies across Vietnam’s 11 primary industries.

Under the survey, 71.43 per cent of surveyed companies said Vietnam’s overall economic conditions had improved against one year ago and would be better over the next 12 months, while only about 3.09 per cent of surveyed companies were worried about a dismal economy over the upcoming year. Some 72.73 per cent were confident their sales revenues would increase over the next 12 months. Besides, 70.78 per cent believed their profits would rise in the coming years.

Only 4.55 per cent were worried about the decline of their profits in the coming 12 months.

Finnish advisory group Global Intelligence Alliance said in its Business Perspectives for Emerging Markets 2012-2017 conducted over 400 large and mid-sized global companies that Vietnam was ranked as the world’s seventh top 10 emerging markets, after the BRICs including Brazil, Russia, India and China for 2012-2017, with 20.1 per cent of the surveyed companies saying Vietnam would be a lucrative business and investment destination in this period. Some 22 per cent of the surveyed companies said Asian companies favoured Vietnam the most.

“Vietnam stands out for consumer, logistics and resources sectors,” said the report released in late July. Specifically, 21 per cent of surveyed companies coveted logistics and transportation in Vietnam, while the rates for the country’s oil, and consumer and retail sectors were 18 and 20 per cent, respectively, for instance.

According to the “World Investment Report 2012” recently released by the United Nations Conference on Trade and Development in early July, Vietnam kept its 11th position as the most prospective economy for investment during 2012-2014. The ranking is based on the respondents of 174 validated transnational companies.