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» Business Confidence Index at 116 points in Quarter IV, 2011

Hanoi, 31st January 2012. Today, Vietnam WVB Financial Intelligence Services (WVB Vietnam) is pleased to provide the report titled “Vietnam Business Confidence Recuperates in 2011 Q4”.

The survey is carried out every quarter covering, across eleven manufacturing industries in Vietnam with the primary objective of seeking information and views on trends in output activities, inventories of finished goods, the state of order books, business outlays on plant and equipment, selling price expectation, production expectations and so forth. From the survey, all data is anonymously analyzed and an index called the Business Confidence Index (BCI) is generated. The index drew on perspectives of 158 executives in various sectors in Vietnam. The Q4 2011 survey was conducted from December 15th, 2011 to January 16th, 2012 attracted the participation of Top manager in finance, real estate, construction, and information technology, petrochemicals, advertising, electronics. Over 83% of the survey participants selected also is Small and Medium Enterprises (SMEs) as representatives of Vietnamese SMEs.

According to this survey results, the business confidence index (BCI) in the Fourth Quarter of 2011 at 116 points has declined by 7 points from  123 points in Q3, which increase 16 points in comparison  with the based point of the Third Quarter of 2008 (100 points). After the strong recuperation of the business confidence in Q3, this index recorded a significant fall in confidence.

Here are some key results for the 06 subcomponents of the Business Confidence Index in Quarter IV of 2011:

• Current economic conditions: 43% said that the overall economic conditions have improved compared to one year ago, which decreased (-4%) in comparison with Q3 ; 31% believe that the current economic conditions stay the same and 25.9% said that current economy conditions have become weak, up from 25% in Q3.

• Economic outlook: Down from 70% in Q3, 59.5% expect the overall economic conditions will be better over the next twelve months, which decrease (-10.5%) in comparison with Q3, while 32.9% think the overall economic will be unchanged, they support expectations of a turnaround in economic growth and only 7.6% is worried about a dismal economy over the upcoming year, no change from Q3.

After a long time this index goes down and only one time it rose in Q3, the business confidence has turned around once again. In 2011 and the next year, the businesses believe that, Vietnam's economy is continuing to face difficulties and uncertainties, such as: high inflation (over 18% in 2011), high interest rate, dismal stock market, the freezing of real estate market...  

• Expected change in employment: With respect to expectations about employment levels in the coming year, the result indicates that 63.3% has plans to hire more employees higher than 47.5% in Q3. Only 7% think there will be a cut down on the workforce in their companies, down from 11% in Q3 and 29.7% said they would not hire new employees in the next twelve months, lower than 41.5% in Q3.

• Planned fix investment: 44.3% is the number of firms reporting a plan of investment more, that’s down from 48% who said the same in Q3, while 41.1% said they will keep them at the same level they are now over the next 12 months and 14.6% think they will reduce investment in fixed assets over next 12 months, up from 11.4% in Q3.

• Expected revenue growth: Only 44.3% of respondents believe in the prospects of revenue growth in the next year, down sharply from 74% in Q3, while 43.7% said their company’s sales will keep the same, which increases 21.2% in comparison Q3 (22.5%).  12% of enterprises are worried about the decline of their revenues in 12 months, up from 3.5% in Q3.

• Expected profit growth: 65.2% of respondents said they expected their profit will rise over next year, slight down from 72.5%, who said the same in Q3. Meanwhile 28.5% said their profits will stay the same (against 22.5% in Q3) and 6.3% are worried about the decline of their profits in next 12 months, insignificant up from 5% in Q3.

The belief in the revenue growth and profit growth over the next year fell down, along with downward tendency of confidence in the prospects of Vietnam’s economy. The businesses recognized that they had to face the most difficult year since 1990s. The businesses also believe that the State’s restructuring policies and the stabilization policies need more time to become effective and permeability to each business sector and economic field.

Survey Result :
Vietnam Business Confidence Index Score - QIV/2011:      116
Vietnam Business Confidence Index Score - QIII/2011:      123
Vietnam Business Confidence Index Score - QII/2011:        88
Vietnam Business Confidence Index Score - QI/2011:         109
Vietnam Business Confidence Index Score - QIV/2010:      126
Vietnam Business Confidence Index Score - QIII/2010:      137
Vietnam Business Confidence Index Score - QII/2010:       134
Vietnam Business Confidence Index Score - QI/2010:         138
Vietnam Business Confidence Index Score - QIV/2009:      135
Vietnam Business Confidence Index Score - QIII/2009:      136
Vietnam Business Confidence Index Score - QII/2009:        130
Vietnam Business Confidence Index Score - QI/2009:           99
Vietnam Business Confidence Index Score - QIV/2008:        93
Vietnam Business Confidence Index Score - QIII/2008:      100

Respondent breakdown by Sector/Industry

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