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SMEs show optimism over economic growth

Update: July, 16/2008 - 00:00

SMEs show optimism over economic growth

(17-07-2008)

A worker weaves sacks at the Indra Gaudli Jute Joint-stock Company in HCM City. SMEs are presently optimistic about the economic climate. — VNA/VNS Photo Pham Do

HCM CITY — Most Vietnamese small- and medium-sized enterprises still believe economic conditions will continue at the same pace or get better, but a sizeable minority of 33 per cent expect the economy to cool, according to a recent HSBC Commercial Banking survey.

The HSBC Asia-Pacific Small Business Confidence Survey was conducted by research company TNS in the second quarter of the year.

It covered more than 3,000 small- and medium-sized enterprises in 10 countries and territories, including Hong Kong, mailand China, Taiwan, Bangladesh, Singapore, India, Viet Nam, South Korea, Malaysia and Indonesia.

Despite concerns about economic conditions, most of the companies surveyed said they planned to maintain or increase staff and continue with capital investment.

They also expect trade to continue to be robust.

Companies were asked about their local economic outlook for the next six months, their plans to increase or reduce capital investment and staffing levels, and their expectations for trade volume with mainland China, Asia and the rest of the world.

In the survey, India’s small businesses were the most optimistic across a wide variety of key indicators, including economic outlook and trade.

The Taiwan SME survey results also revealed optimism, likely due to the improving political situation there.

But in Korea the increasingly uncertain economic and political conditions have reduced optimism since the end of 2007.

According to Margaret Leung, global co-head of commercial banking of the Hongkong and Shanghai Banking Corporation Limited, Asia’s small businesses were still doing well in exports and were experiencing healthy domestic demand.

Trade prospects

While the region is not immune to global economic factors, the survey suggests that for now SMEs are still growing their businesses and expecting strong trade, especially within Asia.

A majority of respondents say their trading will remain at the current buoyant level or will grow.

India was the most optimistic about trade growth with China and the rest of Asia as well as the rest of the world.

SMEs surveyed in Viet Nam remained overwhelmingly positive about trade prospects with China, the rest of Asia and the rest of the world.

About 55 per cent say trade volumes with mainland China will grow, and 32 per cent say they will remain the same as last year.

As for the rest of Asia, 57 per cent expect trade growth and 35 per cent expect the same volumes as last year.

Trade with the rest of world has the same prospect: 49 per cent expect growth and 38 per cent expect trade levels to remain the same.

Commenting on Viet Nam’s results, Huynh Buu Quang, head of commercial banking of HSBC in Viet Nam, said: "Viet Nam’s economy has been going through a difficult time in the first half of 2008 with high inflation, a trade deficit, a weakening dong and a volatile foreign exchange market.

"This explains why SMEs are now expressing more cautious views on the economic outlook compared to a very optimistic view expressed six months ago. However, it’s heartening to see … that they appear to be very proactive and have a positive attitude through continuous investing and recruiting and have high confidence about international trade."

The survey found that 54 per cent of Vietnamese SMEs expect increased capital investment and 41 per cent at the same level for the rest of the year.

While 74 per cent of SMEs across Asia plan to maintain current staffing levels, in Viet Nam 44 per cent were planning to increase headcount.

Quang said another HSBC survey showed that 70 per cent of Vietnamese SMEs wanted to obtain loans from banks for business maintenance and development.

SMEs account from around 35-40 per cent of HSBC Viet Nam’s corporate clients. —VNS

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