A seafood processing line. 57 per cent of the surveyed businesses have seen an increase in the cost of materials. — VNA/VNS Photo

HÀ NỘI — Reducing costs is a top priority for Vietnamese businesses as high inflation has affected 94 per cent of businesses surveyed in 2022, according to a new study by the Singapore-based United Overseas Bank (UOB).

Between December 2022 to January 2023, the bank’s Business Outlook Study 2023 (SME & Large Enterprises) surveyed more than 4,000 businesses in Asia, including 505 in Việt Nam, mostly located in HCM City and Hà Nội.

The survey found that while remaining positive on the 2023 outlook, the top priorities for surveyed Vietnamese companies are reducing costs, tapping new customers, diversifying supply chains, re-skilling/up-skilling existing talent and developing sources of revenue.

It showed that 57 per cent of the surveyed businesses have seen an increase in the cost of materials and 56 per cent of the businesses have seen an increase in the cost of operations. To mitigate inflation, over one in every two businesses in Việt Nam focus on improving productivity and 45 per cent of businesses surveyed said that they apply cost cutting on company activities.

The study found that a majority of businesses in Việt Nam have seen an impact on their supply chains. More than half of the respondents said that their supply chain has been impacted by geo-political issues and find rising supply costs the main challenge in managing their supply chain.

Top support measures for supply chain management include tax incentives or rebates, easier access to funding or grants, and opportunities to collaborate with industry, government-linked or large businesses, the study suggested.

Particularly, digitalisation can play a key role in helping businesses improve productivity to mitigate the impact of inflation on their business.

The study finds that nearly nine in every ten businesses in Việt Nam have adopted digitalisation in at least one department. As many as 86 per cent of businesses plan to spend more on digitalisation in 2023. Digitalisation creates a better impact for companies by improving productivity to mitigate the impact of inflation on their business, helping them become more customer-centric by enabling their customer outreach efforts and improving customer experience.

According to UOB, about nine in every ten businesses in Việt Nam are looking to expand overseas in the next three years. The interest in overseas expansion is leading to higher interest in cross-border digital trade platforms. Over six in ten businesses are ‘Very interested’ in using such platforms.

More than half of the surveyed businesses said that they are motivated to expand overseas to grow their revenue, improve profitability and build a reputation as an international business.

As many as 72 per cent of businesses in Việt Nam eyes Southeast Asia for their future expansion plans and Thailand, Singapore and Malaysia are preferred. — VNS