Local firms positive over trade prospects: HSBC
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Vietnamese traders remain positive about the prospects for their business in the next six months though there is a slight decrease in their confidence in the import and export sector, the Hongkong and Shanghai Banking Corporation (HSBC) says in its Trade Confidence Index released Tuesday.
Vietnam scored 116 in the index, down six points from a previous survey announced in October last year.
The majority of Vietnamese respondents polled (70 percent) said that they expect trade volume to increase.
Eighteen percent of the respondents forecast the volume will remain the same while 11 believed trade volumes will decrease.
Twenty two percent of those Vietnamese traders thought the risk of buyers defaulting on payment will increase while 18% claimed there will also be a rise in the risk of suppliers not honoring trade agreements.
There is a big jump in the portion of traders planning to offer flexible terms (38 percent from 14 percent in the survey released in October) and do less business with particular buyers (25 percent compared to 7 percent at the end of last year) in order to overcome non-payment risk from buyers.
In addition, they would accept smaller orders to reduce transaction exposure, require advance payment, and have greater use of trade finance via their banks.
Only 4 percent of the domestic traders are putting their hopes in export credit insurance.
The number of Vietnamese traders who said their need for trade finance will increase has risen from 67 percent in the previous survey to 75 percent in this poll.
Fifty-two percent of the respondents will use trade finance from banks, while over one third (34 percent) will rely on their own capital to do business.
Impact of foreign exchange on business
Most Vietnamese traders (81 percent) considered exchange rate volatility the most difficult variable in growing their trading business, especially with the recent movement in early 2011.
A higher portion of Vietnam’s traders (77 percent compared to 66 percent in the last survey) expected the impact of exchange rates in the next six months will be unfavorable for their business.
In addition, as inflation surged in the first quarter of 2011, the rising interest rate has become the second most worrying issue for Vietnamese traders when talking about growing their business.
Most promising regions for trade growth
Vietnam’s traders still consider Greater China the most important region, as 57 percent of the Vietnamese exporters and importers surveyed said they will continue to actively trade with this bloc, followed by the rest of Asia (41 percent) and Southeast Asia (36 percent).
Over one third reckoned Greater China will be the most promising region for trade growth in the next six months.
The HSBC Trade Confidence Index covers a total of 21 markets, including key economies in the Asia-Pacific region, the Middle East, Latin America, North America and Europe.
HSBC asked a total of 6,390 trade-oriented small and mid-market enterprises about their six-month outlook on trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange and government trade regulations on their businesses.
The results were used to calculate an index ranging from 0 to 200, where 200 represents the highest confidence level, 0 represents the lowest and 100, neutral.
