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Vietnamese businesses optimistic about economy   2008-09-15 - VNN

Despite a lot of difficulties caused by higher input material prices, most enterprises, especially foreign-invested ones, still believe there will be stable economic growth in the last months of the year, a quick survey of 282 businesses conducted by the Vietnam Chamber of Commerce and Industry (VCCI) in July has found.


42% of enterprises believe that the national economy will be stable in the last months of the year.

Private-owned enterprises accounted for 58.8% of the total 282 polled enterprises, state-owned enterprises 31% and foreign-invested enterprises 9.2%. Small- and medium-size enterprises (less than 300 labourers) accounted for 62.1% of the polled enterprises, while export enterprises 47.5%.


Higher turnover does not mean higher profit


79% of the polled enterprises said that they tried to borrow money in the first half of the year (H1) to serve their production and business plans, but very few enterprises could borrow money. 73% of enterprises complained about overly high interest rates.


Sharp increases of input material prices were cited by most enterprises as their biggest difficulty in the first six months of the year (84.09%).


Enterprises reportedly had high growth rates in turnover in H1, at 10.9%; however, VCCI’s experts pointed out in the report that the encouraging figures originated from high growth rates from last year, not from conditions this year.


More than a half of enterprises had higher turnover in H1 than in the same period of last year, but only ¼ of them had higher profit.


“This shows that the turnover increase in H1 does not mean the enterprises performed better,” VCCI’s report noted.


FIEs most optimistic


Foreign-invested enterprises (FIEs) prove to be the most optimistic businesses as they made fewer complaints about difficulties than other enterprises.


Only 76.4% of FIEs complained that they have been influenced by input material price increases, while 91.3% of state-owned enterprises complained about this and the figure was 81.2% for non-state enterprises.


Regarding capital arrangement for production and business, domestic enterprises complained that they could not access bank loans because they did not have collateral, while very few FIEs mentioned this problem.


90.2% of non-state enterprises and 81.5% of state-owned enterprises reportedly want to borrow money in the second half of the year, while only 57.7% of FIEs want loans, which shows that the demand for loans of FIEs is lower than the demand of domestic enterprises.


Keeping optimistic


Despite difficulties, 42% of enterprises believe that the national economy will be stable in the last months of the year. 4% of the polled enterprises expect a splendid improvement of the national economy in the upcoming months.


41% of enterprises plan to expand their production scales, while 53% of enterprises said they would keep the same production scale.

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