European confidence in Vietnam rises 4 notches
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Business confidence among European businesses operating in Vietnam has increased, according to the latest survey by the European Chamber of Commerce in Vietnam (EuroCham).
The EuroCham Business Climate Index survey released on Thursday shows that the business index for Vietnam for the first quarter of 2011 increased to 79 from the 75 in the fourth quarter of 2010.
Commenting on the result, EuroCham Chairman Alain Cany said that it was a very positive change, since up to 58 percent of the surveyed businesses believed that their business outlook would be improved.
In the last survey, the rate was 48 percent.
“The increase…certainly reflects the broad confidence of our membership in Vietnam’s business prospects after the 11th Party Congress and the new leadership announcement”.
Regarding the 2011 business outlook and investment plans of European businesses in Vietnam, the predictions were largely positive without major changes.
The percentage showing investment reduction in Vietnam declined from 12% in the last survey to 8% this time, while the number of businesses wanting to increase their investment in Vietnam remarkably increased from 23% to 32%.
However, many businesses in the survey were worried about the inflation situation in Vietnam. Of the survey’s respondents, 32% forecasts the inflation to reach 6-8% by the middle of 2011, while 35% expects the rate would be more than 10% by the end of the year.
Solid current business situation: With 73 percent, the majority of respondents to the survey focus their activities on the local market in Vietnam. When asked about the current situation of their business, the response was largely positive. The majority of businesses assessed their current situation as ‘good’ or ‘neutral’. The number of businesses describing their situation as ‘excellent’ rose from 6 to 11% points. Investment plans increased in 2011: When asked about their business outlook and investment plans 2011, the predictions were largely positive without major changes. The percentage giving a negative response declined from 12% to 8%. As far as investment plans were concerned, there was a slight shift in respondents that wanted to increase their investment in Vietnam ‘significantly’ (up from 23% in the last survey to 32% this time). Significant salary increases expected: Salaries for skilled labor in 2011 are expected to increase significantly: 54% indicated they expect salaries to rise by more than 10% this year (up from 30% last time). For unskilled labor salaries, a massive increase of 36% was expected (up from 19% last time). Optimistic about their own sector growth: 58 percent of businesses in the survey responded that they expect their sector to grow by more than 8% in 2011 (up from 42% last time), showing an overall confidence in further economic development of their business in Vietnam. Higher inflation rate expected in late 2011 The majority of businesses in the survey (32%) expects inflation in Vietnam to reach 6-8% by the middle of the year. Towards the end of 2011, the majority of respondents see inflation rising to levels higher than 10% (35%) Source (Eurochamvn) |
