The HSBC Small Business Confidence Survey, conducted by Acorn Marketing and Research Consultancy, during the first quarter of this year questioned 501 small- and medium-sized enterprises (SMEs) in Ha Noi and HCM City.

The survey was done to measure local business confidence in Viet Nam’s economy.

The survey was conducted in tandem with the HSBC Asia-Pacific Small Business Confidence Survey by US-based market research firm Nielson.

That survey is the largest of its kind in Asia, covering 1,800 small – and medium-sized enterprises across nine countries and territories: Hong Kong, mainland China, Taiwan, Singapore, India, Korea, Malaysia, Indonesia and Australia.

Firms were asked about their local economic outlook, their plans to invest and recruit, and other questions.

Thomas Tobin, president and CEO of HSBC in Viet Nam, said: "The survey showed that an overwhelming number of respondents are positive about the economic outlook of the country’s economy and their trade volumes ahead and are willing to invest in their business as well as recruit more staff."

He added the survey would help his bank remain in touch with SMEs, the most vibrant and dynamic sector in Viet Nam.

Feeling bullish

Overall, Vietnamese SMEs felt very positive about Vietnamese economic prospects in the next six months.

A majority of the respondents (76 per cent) believe that the Vietnamese economy will develop strongly in 2007 (over 8 per cent).

Only about 4 per cent of them thought the business environment would remain unchanged.

The survey noted that SMEs in HCM City were more optimistic about the growth of the overall economy than those in Ha Noi.

However, the most optimistic SMEs in the Asia-Pacific region were in India, Singapore, mainland China and Indonesia.

Hong Kong SME respondents were generally positive about the economic outlook for the territory, with 71 per cent expecting the economy to grow at the same pace (19 per cent), and 27 per cent predicting a moderately faster rate and 25 per cent significantly faster than the economic growth rate in the first quarter of 2007.

Investment expectations

About 74 per cent of the surveyed SMEs in Viet Nam disclosed that they planned to invest for growth in the next six months.

None of them has plans to close down or cut production. This result is in line with Vietnamese SMEs’ confidence in the country’s favourable business environment.

Indonesian SMEs were the most optimistic about investing to expand their businesses, followed by SMEs in mainland China, Australia and Singapore.

The majority of Hong Kong SMEs (63 per cent) have no plans to invest while 27 per cent plan to invest and 11 per cent expect to reduce investment or cut production during the year.

Recruitment expectations

In conjunction with the optimism of the overall economic growth and capital investment plan, about 70 per cent of SMEs in Viet Nam revealed that they have plans to increase their workforce this year.

SMEs in mainland China are the most optimistic about recruiting more workers, followed by Indonesia, India and Singapore.

The majority of Hong Kong SMEs (73 per cent) do not plan to change the number of staff this year.

However, 13 per cent of Hong Kong SMEs plan to increase their head count by less than 10 per cent, and 11 per cent of the SMEs, by more than 10 per cent.

A minority of 4 per cent expect to reduce staff.

Trade expectations

Besides the increasing cross-border trade with China, SMEs in Viet Nam expect that their business volumes with the rest of Asia and the rest of the world to grow faster in the next six months.

These were the main reasons for optimism and plans for further investment.

Small businesses that engage in cross-border trade were asked about their expectations of trade volumes with mainland China, the rest of Asia and the rest of the world.

SMEs in India were the most optimistic about growing trade with these areas.

Hong Kong SMEs were generally optimistic, with 19 per cent expecting moderate growth with China and the rest of Asia, while 25 per cent expected moderate growth and 18 per cent expected significant growth with rest of the world.

Source:  VNEconomy