Business confidence recovers from Q2: Grant Thornton
By Binh Nguyen - The Saigon Times Daily
HCMC - Positive changes to Vietnam’s macro-economic situation in the first quarter of this year were of good support to regaining business confidence in the country from the second quarter, Grant Thornton Vietnam said.
Ken Atkinson, managing partner of the accounting and consulting firm, credited the macro-economic improvements to decreases in inflation and interest rates among others, though some 14,000 enterprises reportedly went bankrupt or stopped operations in this period.
“Government policies appear to be working with a steady decline in inflation, a reduced trade deficit, and a stable currency. This together with the decline in interest rates should help re-build the business confidence in the second quarter and beyond,” Atkinson said in a review of the latest Grant Thornton International Business Report obtained by the Daily on Wednesday.
In the year to date, the State Bank of Vietnam has lowered the highest deposit interest rate two times to 12% per year in order to make life less tough for local enterprises and fuel the country’s economic growth. The central bank’s move has resulted in decreases in the lending rate at a number of banks.
However, experts have predicted that the average loan interest rate will not drop significantly until the third quarter of 2012, as lenders need time to balance their loans with reduced rates and the deposits they had mobilized with high rates. This is one of the reasons why many companies, particularly small- and medium-sized enterprises, still find it difficult to take out bank loans with lowered rates.
In the review, Atkinson listed access to finance as among the factors that affect business confidence recovery in Vietnam.
“Lender support, cost of finance, lack of skilled labor, access to finance and red-tape continue to be the major hurdles to improving confidence in Vietnam,” he said.
The survey with 3,000 businesses in 40 countries and territories showed business optimism in the Asia Pacific region moved from -9% in the fourth quarter of last year to 2% in the first quarter but this was not reflective of Vietnam. The survey found the optimism in Vietnam still fell to 6% in the January-March period from 34% in the last three months of 2011 despite macro-economic improvements.
According to the survey, developing economies were more optimistic in the first quarter of this year, with business confidence in the Association of Southeast Asian Nations (ASEAN) averaging at 27% from 0% in the previous quarter. After recovery from the floods, the optimism level for Thailand rose from -52% in the October-December period of 2011 to 8% in the first three months of this year.
The business optimism in the United States jumped by 45 percentage points, from just 1% in the fourth quarter of 2011 to 46% in the first quarter of 2012, but businesses in Japan and Europe remained pessimistic though both saw pick-ups over the last quarter of 2011. These are major export markets of Vietnam.