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HSBC: Businesses optimistic about int’l trade prospect
Phuong Thao
Friday,  Apr 6, 2018,14:35 (GMT+7)

HSBC: Businesses optimistic about int’l trade prospect

Phuong Thao

A view of Cat Lai Port in HCMC. Vietnamese businesses are concerned about the cost of rising protectionism but are optimistic about their international business prospects - PHOTO: TL

HCMC –Vietnamese businesses are concerned about the cost of rising protectionism but are optimistic about their international business prospects due to advantages such as low-wage labor, more trade agreements and improved business climate, according to a HSBC report.

In the “Navigator: Now, Next and How for Business” report, HSBC said firms are focused on growth. Of the 6,000 companies surveyed globally, more than three in four (77%) businesses are optimistic about their international business prospects, and expect the volume of trade to increase over the next 12 months.

The number for Vietnam is 90%, significantly higher than the world’s average, HSBC commented.

Reasons behind this confidence include an increase in demand for their products from consumers and businesses (33%), favourable economic conditions (31%) and the greater use of technology (22%) in driving growth. For Vietnam, the data is 40% and 42% for demand from consumers and favourable economic conditions while the country is not in the top 10 markets that cite greater use of technology as the third driver of growth.

Relevant to the growth projection, 62% of the companies expect an increase in need for trade finance. Some 88% of the respondents in Vietnam agree with this and 86% expect an increase in accessibility to trade finance.

Three major challenges the businesses cite to meet trade finance needs are high transaction cost (52% for Vietnamese companies), exchange rate volatility (44% for Vietnamese companies) and political environment. Thanks to political stability, Vietnam is not in the top 10 markets where respondents say political environment is the third challenge.

Three in five (61%) companies surveyed think governments are becoming more protective of their domestic economies.

This sentiment is strongest among companies in the Middle East and North Africa (70%), and Asia-Pacific (68%). In Vietnam, almost three quarters (67%) of businesses agree that the government is becoming more protective of their domestic businesses.

Vietnam focuses on key major trading partners in Asia, and the U.S. being the key partner outside of Asia. Focusing on the impact of government policies, those designed to strengthen regional ties such as China’s Belt and Road Initiative (40%) and ASEAN’s 2025 strategy (37%) were cited most frequently as having positive impact on international business.

Companies in Vietnam see ASEAN 2025 (74%) and CPTPP (63%) the top two government policies that have positive impact on their business. For the recently signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), 50% of surveyed participants in Vietnam cite it is relevant to their business.

Pham Hong Hai, CEO of HSBC Vietnam, said Vietnam has been resilient through challenging periods and remains among the fastest-growing economies in Southeast Asia.

Companies in Vietnam maintain that favourable economic environment and increasing demand for their products are the top growth factors for cross-border trade. A low-wage workforce, an improving business climate and trade deals such as the EU-Vietnam free trade deal and CPTPP are also seen as strengths and will further encourage foreign investment into the country.

HSBC Navigator is one of the most comprehensive reports of global trade and business confidence. It combines an economic forecast of medium to long-term bilateral trade for exports and imports of goods and services across 25 markets (by Oxford Economics), and a global survey gauging business sentiment and expectations on trade activity and business growth (by Kantar TNS).
 

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