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» Business Confidence Index rises to 123 points in Quarter III, 2011

Hanoi, 17th October 2011. Today, Vietnam WVB Financial Intelligence Services (WVB Vietnam) is pleased to provide the report titled “Vietnam Business Confidence Recuperates in 2011 Q3”.

The survey is carried out every quarter covering, across eleven manufacturing industries in Vietnam with the primary objective of seeking information and views on trends in output activities, inventories of finished goods, the state of order books, business outlays on plant and equipment, selling price expectation, production expectations and so forth. From the survey, all data is anonymously analyzed and an index called the Business Confidence Index (BCI) is generated. The index drew on perspectives of 200 executives in various sectors in Vietnam. The Q3 2011 survey was conducted from September 15 to October 10, 2011 attracted the participation of Top manager in finance, real estate, construction, and information technology, petrochemicals, advertising, electronics. Almost 80% of the survey participants selected also is Small and Medium Enterprises (SMEs) as representatives of Vietnamese SMEs.

According to this survey results, the business confidence index (BCI) in the Third Quarter of 2011 rose  to 123 points from 88 points in Q2, which increase 23 points in comparison  with the first index score in the Third Quarter of 2008.

After falling a record low with 88 points in Q2, the strong recuperation of the business confidence in this quarter reflecting the improvement from business confidence of business owners after a long decline from 2010 Q4.

Here are some key results for the 06 subcomponents of the Business Confidence Index in Quarter III of 2011:

• Current economic conditions: 47% think the overall economic conditions have improved compared to one year ago (against 37.8% in Q2) ; 28% believe that the current economic conditions stay the same and only 4.20% said that current economy conditions have become weak.

• Economic outlook: The bulk of the respondents (70%) expect the overall economic conditions will be better over the next twelve months, which increase 17.24% in comparison with Q2, while 22.5% think the overall economic will be unchanged, they support expectations of a turnaround in economic growth and only 7.5% is worried about a dismal economy over the upcoming year, down from 10.24% in Q2.

• Expected change in employment: With respect to expectations about employment levels in the coming year, the result indicates that expectations remained relatively unchanged. Nevertheless, respondents were less optimistic about growth in employment (47.5%) than they were in Q2 (44.09%). 11% think there will be a cut down on the workforce in their companies but 41.5% said they would not hire new employees in the next twelve months.

• Planned fix investment: 48% is the number of firms reporting a plan of investment more, that’s up from 33.07% who said the same in Q2, while 40.5% said they will keep them at the same level they are now over the next 12 months and 11.5% think they will reduce investment in fixed assets over next 12 months, down from 18.9% in Q2.

• Expected revenue growth: The majority of firms expected an increase in activity in the third quarter of 2011. 74% is the number of firms that expected an increase in revenue compared to the numbers that expected a decrease had sharply recuperated in this quarter. This level of optimism was however slightly lower than observed in Q2 of 2008/09. Only 22.5% said their company’s sales will keep the same (against 72.44% in Q2) and only a slight 3.5% of enterprises are worried about the decline of their revenues in 12 months, down from 7.09% in Q2.

• Expected profit growth: An overwhelming 72.52% of respondents said they expected their profit will rise over next year, up from 40.94% who said the same in Q2. Meanwhile 22.5% said their profits will stay the same and 5.0% are worried about the decline of their profits in next 12 months (against 9.45% in Q20 .

In this quarter, the team survey WVB Vietnam has also investigated the opinions of the enterprises on the significant issues which their companies are facing in Vietnam such as : Inventories levels in this quarter, oil prices, inflation, prices of inputs, real estate price, the local political situation as well as the general political institutions in Vietnam; what kind of impact which businesses believe each of following will have on businesses in the short term future. What are the great challenges to business in Vietnam over the next year; What are the main source of growth in business’ industry in the short term; What is the business’ policy towards environment or corporate social responsibility issues; Finally, what is business’ opinion about the general course of business in the industry over the next year?

The survey results showed: Up to 60% of respondents said that their  current stock of finished products are normal and above normal for the season, which is one of main causes of rising production costs. The bulk of the respondents (75%) said that inflation and inputs prices are the most influential factors on businesses, in which up to 56% believed that is negative impact for them. The general economy in Vietnam (up to 32.6%), competition (up to 31.5%), staffing (15.58%), and lack of investment (14.49%) are the great challenges to businesses. 58% think the main source of growth in the short term future is market growth (increase in the number of customers). Actively pursue means on minimizing negative environmental impact as well as actively seeking ways of growing our business by being environmentally friendly are policies towards environment which 82% businesses are doing. 60.5% are more optimistic with the general course of business in their industry, over the twelve months.

Survey Result

Vietnam Business Confidence Index Score

Component Score

Respondent breakdown by Sector/Industry

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Ms. Dao Phuong Thao                                          
WVB FISL                                                             
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