Scores of companies need a reality check

Many private-owned enterprises are seeing the country’s economic picture this year through rose-coloured spectacles.According to Grant Thornton’s 2011 international business report (IBR) released last week and recently conducted with 11,000 businesses across 39 economies, Vietnam’s private business owners recorded a 62 per cent level of optimism towards their country’s economic performance in 2011.

This is significantly higher than the global average of 23 per cent and the Asia-Pacific (excluding Japan) average of 50 per cent. Optimism in China was 42 per cent, Australia 37 per cent and New Zealand 35 per cent, North America 26 per cent. Europe was the least optimistic region at 22 per cent.

However, Vietnam also witnessed a slight decrease in optimism from 2010’s 72 per cent to 62 per cent this year.

Grant Thornton Vietnam’s managing partner Ken Atkinson said inflation and rising interest rates had had an impact on Vietnamese optimism. “Albeit at 62 per cent, this is still a relatively strong result,” he said.

According to the IBR, despite declining optimism, businesses in Vietnam continued to take a long-term view. Some 41 per cent of businesses expected to augment expenditure on research and development (global average 24 per cent), 34 per cent expected to increase investment in plant and machinery (global average 35 per cent) and 78 per cent (global average 29 per cent) expected to increase employment.

Nguyen Trung Chinh, general director of CMC Group said Vietnam’s economy would be “stable and continue developing”.

“Vietnam’s information technology industry’s growth rate will not be 10-15 per cent, but 20-25 per cent thanks to the government’s more practical policies for the industry. CMC targets to grow by 35 per cent between 2010-2015,” Chinh said.

Tran Quoc Manh, general director of Ho Chi Minh City-based Saigon Trade and Production Development Corporation, said he was upbeat over Vietnam’s economy and his corporation’s business this year.

“The country’s recovered economy can help us develop more export markets for our wood product exports in Eastern Europe, Russia, the US, while continuing exploiting the local market,” Manh said.

Nguyen Duc Khiem, general director of Viet Thang Textile Company, forecasted that this year would see a rebounding demand for garment and textile products from the US, Japan and South Korea.

“This can give big opportunities for local companies. We will continue renewing our technology in line with international standards, while cementing relation with partners to ensure our raw material sources for our long-term business development,” Khiem said.

Matthew Lourey, advisory services director at Grant Thornton Vietnam, said businesses would need to invest if they wanted to continue growing. However, the government needed to create environments that encouraged business investment, he said.

The Ministry of Planning and Investment reported that the number of privately-held enterprises increased by 22 per cent between 2000-2010. At present, Vietnam has over 500,000 privately-held enterprises and Minister Vo Hong Phuc said most of these enterprises were cash-strapped and could not access bank loans.

“The government has applied many policies to create an equal business environment and support the private economic sector. However, discriminatory treatment can be seen between state-owned and privately-owned enterprises and between foreign-invested and local privately-invested enterprises,” he said. – VIR

Tags: Vietnam companies, Vietnam enterprises