Vietnamese business confidence drops in continued global business volatility

October 31, 2012 | 14:29
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A sharp decline in business confidence in many rapid growing economies is raising a warning flag that global business may face continued volatility for some months to come.

In Vietnam, confidence levels have fallen, dipping 16 points in the Regus Business Confidence Index (from 122 to 106) since April 2012.

Business confidence in some of the world’s leading growth economies has dropped significantly over the last six months. Despite the fall, levels of business confidence in rapidly growing economies still remains well ahead of levels in mature economies – yet this setback should act as a warning flag for businesses across the world to stay nimble and expect further volatility before a general global upturn, finds the latest Regus Business Confidence Index (BCI) based on the views of more than 24,000 senior business people from 92 countries.

Confidence among small businesses in particular has flatlined in both mature and developing economies, and given the important role of small and medium-sized enterprises as an engine of growth and provider of jobs, this finding is of particular concern.

Access to affordable credit and cash-flow management were among their biggest concerns, highlighting the need for flexible, pay-as-you go business services allowing businesses to remain flexible and agile.

According to the BCI, the proportion of Vietnamese companies reporting revenue increases rose marginally from 31 per cent in April 2012 to 45 per cent, while profits fell very slightly from 39 per cent to 38 per cent. Just over half (52 per cent) of Vietnamese respondents reported that they were satisfied with their government’s support strategies for business;

The following issues are major challenges to small businesses and start-ups: sales (46 per cent), cost of marketing and promotion (37 per cent), cash-flow (37 per cent) and administrative tasks (29 per cent)

Respondents also highlighted key measures for government to introduce that would substantially help small businesses and start-ups. These are: tax exemption (76 per cent), information services (54 per cent) and low interest loans (54 per cent).

“It’s clear that there’s been a stagnation in business confidence, accompanied by significant falls  in some rapidly developing economies since our last BCI report in April,” said Regus’ CEO for Asia, Filippo Sarti. “This suggests that slowing trade with Europe and western economies, combined with a host of national factors, is taking its toll. If there is some good news it’s that, globally, the proportion of companies reporting revenue growth is stable while profits increased slightly.”

 “We were particularly struck by the lack of any improvement amongst entrepreneurs and small businesses. In order to improve their cash situation, respondents identified affordable and flexible business services – especially for overheads such as workspace, administrative support and sales/marketing. 45 per cent of respondents, for instance, reported that one of the major burdens during the downturn has been inflexible property leases. Flexible services allow businesses to be more agile and free-up cash for investment without relying on credit at a time when it is so difficult to secure,” Sarti said.

In its every edition, the Regus Business Tracker report presents an updated Business Confidence Index. This index is a measurement formed on an aggregate of positive and forward-looking statements combining year-to-date revenue and profit trends with views on the expected economic upturn in the coming months and aims to provide businesses with a single point of reference of the survey’s key findings. Its benchmark average was set at 100 in the first edition of the Regus Business tracker in September 2009.

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By Hoang Anh

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