The confidence decline is seen as a reflection of the macro-economic problems, said Grant Thornton Vietnam in a report released on Monday.

The financial audit and advisory firm in the report said investors tended to be more cautious than six months ago since the economy is facing more challenges with the drop in gross domestic product (GDP) growth and the rise in the consumer price index (CPI).

Some 84% of respondents described the economic uncertainties as the biggest obstacle to their investment activity in Vietnam.

Regarding the outlook on Vietnam’s economy in the next 12 months, some 51% of the investors expressed a pessimistic view, or a surge of 30 percentage points against the last survey.

The attractiveness of Vietnam as an investment destination has fallen to be the lowest among the last five surveys to 38%. Besides, some 41% of respondents said Vietnam has become less attractive or even unattractive to investors.

Only 29% of the investors replied they would increase their allocation of investment funds to Vietnam, equal to half of the percentage in the previous survey. The numbers of investors unchanging and decreasing their allocation are 43% and 27% respectively.

Bill Hutchison, advisory services partner of Grant Thornton Vietnam, said that as the private sector contributed nearly half the GDP in Vietnam in 2010 and has continually increased its contribution, it was unsurprising that investors consider this sector as the most significant source of deals.

However, he added, the sombre business outlook as confidence wanes is making investors bide their time at the moment.

The most surprising is that property has surpassed education and retail to become the most appealing sector to investors with a jump from 12% to 44%. However, the survey also indicated that almost the same number of respondents rate the real estate sector as the least attractive.

Like the last surveys, red tape, corruption, infrastructure and the legal system remain as the biggest obstacles with more and more complaints from investors in Vietnam.

Besides Vietnam, investors are considering the new markets, with Indonesia chosen by 40% of the participants in the survey, followed by Cambodia and Laos at 20% and 15% respectively.

Source: SaigonTimes.