Fifty five percent of them remain optimistic about growth, compared to 56 percent last year and well above the global average of 29 percent, according to HSBC’s Navigator report, which polled over 10,000 companies in 39 countries and territories, including 200 in Vietnam.
This is partly testament to Vietnam’s success story in combating and eliminating Covid-19, and the majority of Vietnamese companies have adjusted to the new situation and are looking ahead with far more optimism than their counterparts elsewhere in the world, the bank said.
They have also been less impacted by the pandemic than companies in other countries, and 59 percent expect to return to pre-Covid-19 levels of profitability by the end of 2021 compared to the global average of 45 percent.
Eighty six percent expect sales to grow next year, compared to 64 percent globally and 60 percent in the Asia-Pacific, the report found.
Tim Evans, CEO of HSBC Vietnam, said: “Vietnam’s remarkable resilience and effective response to the pandemic has been a major contributor to increased optimism. Unlike many other countries, from a purely domestic economy perspective, in the second half of the year Vietnam is broadly back to a ‘business as usual’ environment.”
Vietnamese companies also remain more positive on international trade (91 percent) than their global peers (72 percent) though a majority of businesses feel that international trade has become more difficult.
Optimism in Vietnam will have been further buoyed with the signing of the Regional Comprehensive Economic Partnership (RCEP) in November by all ASEAN nations plus Australia, China, Japan, South Korea, and New Zealand.
“RCEP has brought 15 Asian nations together to help drive the agenda around increased cross border trade. As one of the region’s fastest growing and most dynamic economies, Vietnam has much to gain from this far-reaching free trade agreement,” Evans said.
“Offering faster, more efficient and tariff-free access to a market of some 2.3 billion people, the RCEP can help local firms in Vietnam increase exports.”
Not all sunshine
However, not everyone is so upbeat, and more companies have said this year that they “expect to shrink.” The rate has risen to 26 percent from just 4 percent in 2019.
Covid-19 has also taken a toll on growth expectations, with significantly fewer Vietnamese companies expecting growth of more than 5 percent (66 percent in 2020 versus 92 percent in 2019).
In global trade, protectionism continues to be strongly felt with 90 percent of Vietnamese companies thinking it is increasing. Price competitiveness, local partnerships and selling through digital channels are the key solutions to combat it, HSBC said.
To adapt to external factors, 68 percent of Vietnamese companies have implemented changes in the last 12 months (compared to 74 percent globally). The need to reduce costs (46 percent), mitigate risk (46 percent) and increase collaboration (43 percent) have been the top drivers of the changes businesses have made.
But cutting costs does not mean cutting future investments, with 88 percent of Vietnamese companies saying they intend to increase investment in their business next year, significantly more than the 66 percent globally.
Some 69 percent said in 2021 they intend to focus investment on sales channels, 68 percent on upskilling their workforce, 67 percent on the customer experience, and 67 percent on cash flow/capital management.
Sixty one percent said they intend to invest in technology to improve speed to market, 59 percent plan to target new customers and 55 percent seek to enhance automation/ operational efficiency.
Vietnam is among the few countries that are likely to achieve GDP growth this year with most other economies set to contract.
The IMF has forecast GDP growth of 1.6 percent for Vietnam this year, which would make it the fourth largest economy in Southeast Asia behind Indonesia, Thailand and the Philippines.