Vietnam import-export firms remain confident

Vietnamese importers and exporters remain positive about their business prospects in the next half year, according to HSBC Vietnam’s Trade Confidence Index Survey, though the index dropped 10 points to 122 from the last survey.

The survey, done in March-April and September-October every year and released last Wednesday, polled businesses on their outlook on trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange and government trade regulations.

Forty six percent believed the trade volume will only increase slightly in the next six months while almost a quarter each thought there will be a significant increase and the volume will remain constant.

Only 8 percent believed trade volumes will decrease (versus 4 percent in the last survey).
A higher proportion believed that the risk of buyers defaulting on payment will decrease (26 percent vs 24 percent).

More respondents thought that the risk of suppliers not honoring trade arrangements will stay the same (75 percent) or decrease (28 percent) and so were willing to accept flexible payment arrangements such as credit or payment terms.

The number of traders who said the need for trade finance will increase also dropped slightly -- from 74 percent to 67 percent. More than half will use finance from banks and 15 percent o through buyers’ support and payment terms from suppliers. More than a third will depend on their own capital to do business.

Exchange rate volatility was considered the most difficult variable in the business (78 percent), with 26 percent more respondents than last time plumping for it.

One of the highlights was the increase in the percentage of traders (66 percent vs 53 percent) who expected exchange rates to have an unfavorable impact on their business; only 9 percent thought forex rates will have a favorable impact.

More respondents also said the fluctuating exchange rate is the biggest barrier to import/export business growth (71 percent vs 48 percent), followed by the cost of shipping, logistics, and storage (43 percent) and government trade regulations (36 percent). Only 20 percent considered rising interest rates as a major threat versus 38 percent last time.

Greater China remained the most important region, with the majority of Vietnamese exporters and importers (58 percent) continuing to actively trade with it, followed by the rest of Asia (38 percent) and Southeast Asia (34 percent).

Do Thuy Nhu Thuy, head of Trade and Supply Chain, HSBC Bank (Vietnam) Ltd, said: “As seen from the survey, banks remain the key source of trade finance in Asia in general and in Vietnam in particular where nearly 50 percent of respondents are funding their trade activities via banks. Not only do they leverage the banks’ strong footprint in the emerging markets and globally but also the strong relationship with buyers and suppliers at both ends of the supply.”

The HSBC Trade Confidence Index this year covered a total of 17 markets, including key economies in the Asia-Pacific, the Middle East, Latin America, the US, Canada, and Europe, polling 5,124 trade-oriented small and mid-market enterprises.

The results were used to calculate an index ranging from 0 to 200, where 200 represents the highest confidence level and 100, neutral.

In Vietnam, 300 small and medium-sized enterprises took part.

The Vietnam Business Insight Survey of 374 local enterprises done by the Vietnam Chamber of Commerce and Industry along with other partners in the third quarter also found strong confidence in business prospects.