The document summarizes key findings from the Grant Thornton International Business Report (IBR) regarding business sentiment in Vietnam. While businesses in Vietnam remain optimistic about the economy and their prospects for revenue and hiring over the next year, optimism declined slightly compared to 2010. Inflation and the cost of financing remain major constraints. The majority of businesses feel the government's currency controls impact their operations and two-thirds have strengthened their focus on the domestic market since the global financial crisis.

1. Focus on: Vietnam
International Business Report 2012 – Economy focus series
The economy The business perspective
The economy is expected to have expanded by The Grant Thornton International Business
around 6% in 2011, and current estimates expect Report (IBR) surveys over 11,500 businesses in 40
this to increase in the medium term. However, with economies around the world. This report focuses on
a weakening in many of Vietnam’s major export the experience of businesses in Vietnam and their
markets – particularly Europe – government expectations for the next 12 months, as illustrated in
expansion targets may become more difficult to figure 1.
meet. Consumer price inflation has been running at The IBR survey tells us that PHBs in Vietnam
more than 20% since June 2011 and remains a major are optimistic about the economy over the next
concern. 12 months, although less so than in 2010. Business
The key indicators1 are highlighted below: expectations for revenue and profitability have both
• the economy grew by an annual 6.1% in fallen compared to last year but hiring expectations
Q3-2011 remain robust. The cost of finance and a lack of
• after hitting a three-year high in August, demand remain major constraints on potential
inflation slowed again in December to 18.1%, expansion.
down from 18.9% in November
• Foreign Direct Investment for the first nine
months of 2011 reached USD9.9 billion,
although this was around 72.5% of the total for
the same period 12 months previously
• a trade deficit equivalent to USD800m was
reported in in October 2011.
.
1
source: International Monetary Fund, The Economist and Experian.

2. The outlook
Figure 1: Key indicators for MLEs
The economy slowed in 2011 as much higher
interest rates and accelerating inflation weakened Vietnam compared to the Asia-Pacific average 2009 2010 2011 2011
private consumption and investment growth. A Viet Viet Viet APAC
sluggish global economy and continuing rampant Outlook for the economy over the next 12 months
Net optimism +31% +72% +34% -9%
double-digit inflation will also dampen foreign
direct investment in 2012. However, the economy is
Change in employment levels
still expected to grow at 6% again in 2012. Net hiring expectations +60% +60% +64% +34%
From 2013-16, a more helpful global
environment is expected to see Vietnam hit an Constraints on expansion
average growth rate of 7.3% per annum assuming Cost of finance 66% 54% 59% 31%
the government and central bank can get a handle on Shortage of orders/reduced demand 44% 64% 50% 47%
inflation. Remittances from Vietnamese overseas are Source: Grant Thornton IBR 2011
expected to remain robust in the medium term,
boosting private consumption.
2012 objectives include stabilising the macro
economy, curbing inflation and reaching an
economic growth rate higher than that of 2011 in
order to ensure social security, improved living
standards, political stability, defence and security,
law and order and the improved efficiency of
international integration.
Talk to us to find out how we can help you deal
with the challenges your business is facing today.
Ken Atkinson
T +84 8 3910 9100
E ken.atkinson@vn.gt.com

3. International Business Report results
The Grant Thornton IBR 2011 reveals that global Figure 2: Outlook for the economy over the next 12 months: 2010-2011
business optimism dipped again in the fourth Net percentage of businesses indicating optimism less those indicating pessimism2
quarter. Business sentiment for the next 12 months 80
70
in Vietnam fell marginally from 38% in Q3, to 34%
60
in Q4. 50
The sovereign debt crisis is weighing heavily on 40
business confidence in Europe; business optimism 30
20
across the European Union dropped to -17% in Q4.
10
However, confidence in the BRIC economies ticked 0
upwards to 34%. -10
Year-on-year optimism amongst businesses has -20
Q4-2010 Q1-2011 Q2-2011 Q3-2011 Q4-2011
declined slightly from net 22% in 2010, to net 16%
Vietnam 62 80 54 38 34
across 2011. Asia-Pacific 5 17 8 -7 -9
Global 23 34 31 3 0
Optimism/pessimism
Source: Grant Thornton IBR 2011
• businesses optimism in Vietnam declined again
in Q4, dropping from 38% in Q3 to 34%
• optimism also fell further in the Asia-Pacific3
region, down to -9% in Q4
• globally, business sentiment dropped by
3 percentage points in Q4 to stand at 0%.
2
the balance is the proportion of companies reporting they are optimistic less
those reporting they are pessimistic.
3
for the purposes of IBR, the term ‘Asia-Pacific’ refers to those Asia-Pacific
economies covered by our survey – Australia, mainland China, Hong Kong,
India, Japan, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand
and Vietnam.

4. Employment Figure 3: Employment history: 2006-2011
• net 64% of businesses in Vietnam expect Percentage balance of businesses indicating an increase against those indicating a decrease
employment to grow in 2011, compared with 80
70
34% of businesses across the Asia-Pacific region
60
• actual employment growth reported by 50
businesses in Vietnam for 2010 (54%) was lower 40
than expected 12 months previously (60%). 30
20
10
0
2006 2007 2008 2009 2010 2011*
Exp. Vietnam – – 83 60 60 64
Exp. Asia-Pacific – 50 31 8 33 34
Act. Vietnam – 77 48 54 54 –
Act. Asia-Pacific 49 47 25 19 31 –
*actual 2011 data will be documented in IBR 2012
Source: Grant Thornton IBR 2011
Revenue expectations
Figure 4: Revenue expectations: 2007-2011
• expectations for increasing revenues over the Percentage balance of businesses indicating an increase against those indicating a decrease
next 12 months remain high at 91% 100
90
• the Asia-Pacific business average is much lower
80
at 53%, but is up from 45% in 2010 70
• globally, expectations have risen from 40% in 60
2010 to 53% in 2011. 50
40
30
20
10
0
2007 2008 2009 2010 2011
Vietnam – 98 91 95 91
Asia-Pacific 73 68 16 45 53
Global 70 63 11 40 50
Source: Grant Thornton IBR 2011
Profitability expectations
Figure 5: Profitability expectations: 2007-2011
• net 90% of businesses in Vietnam expect to Percentage balance of businesses indicating an increase against those indicating a decrease
increase profits in 2012 90
80
• this is well above the Asia Pacific business
70
average of 37% 60
• the global average rose from 29% in 2010, to 50
39% in 2011. 40
30
20
10
0
-10
2007 2008 2009 2010 2011
Vietnam – 97 94 91 90
Asia-Pacific 58 42 -6 26 37
Global 52 41 -5 29 39
Source: Grant Thornton IBR 2011

5. Constraints Figure 6: Constraints on expansion
• the cost of finance (59%) is cited as the most Percentage of businesses rating constraint 4 or 5 on a scale of 1 to 5 where 1 is not a constraint
and 5 is a major constraint
pressing constraint on expansion by businesses
in Vietnam this year, significantly higher than the Cost of finance 59
31
Asia-Pacific business average (31%)
Shortage of orders/reduced demand 50
• a shortage of orders/reduced demand is also a 47
significant worry for Vietnamese businesses Shortage of working capital 47
31
(50%) as it is across the Asia-Pacific region
Shortage of long term finance 37
(47%). 27
Availability of skilled workforce 34
37
Regulations/red tape 34
32
Transport infrastructure 33
20
ICT infrastructure 25
22
Vietnam Asia-Pacific
Source: Grant Thornton IBR 2011
Support of lender Figure 7: Level of support provided by lenders
• fewer than 50% of businesses in Vietnam feel Percentage of businesses
supported by lenders 50
40
• just 33% class lenders as supportive of their
30
business 20
• this compares with 75% of businesses in the 10
Asia-Pacific region as a whole 0
9 33 24 42 49 14 14 3 5 1
• 19% of businesses in Vietnam believe that
lenders are unsupportive of their business, far Very Supportive Neither Unsupportive Very
supportive supportive unsupportive
higher than the average across the Asia-Pacific or unsupportive
region as a whole (4%).
Vietnam Asia-Pacific
Source: Grant Thornton IBR 2011
Vietnam specific questions
Figure 8: Do the government exchange rate controls, and resultant USD/VND liquidity issues, have
• more than three-quarters of businesses in an impact on your business operations?
Percentage of businesses
Vietnam believe the government exchange
controls and resultant USD/VND liquidity Yes, severe impact 27
issues are having at least some impact on their Yes, some impact 50
business operations
No impact 24
• two-thirds of businesses have adopted a stronger
focus towards the domestic market, as opposed Source: Grant Thornton IBR 2011
to the international/export market compared to
before the Global financial crisis first arose
• environmental issues have become more
important to 51% of businesses in Vietnam
compared with this time last year.

6. The Grant Thornton International Business Report (IBR) is a quarterly survey of the views of around 3,000 senior executives
in businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 11,500 businesses
in 40 economies on an annual basis providing insights on the economic and commercial issues affecting the global economy.
In Vietnam 200 businesses were surveyed across all industry sectors. These businesses ranged from small to medium in size
with total employment of between 50 and 499. Data for this report were drawn from interviews conducted between January
and December 2011.
To find out more about IBR and to obtain copies of reports and summaries visit: www.internationalbusinessreport.com. The
site also allows users to complete the survey and benchmark their results against all other respondents by territory, industry
type and size of business.
Participating economies
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Mainland China Singapore
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Finland Spain
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Germany Taiwan
Greece Thailand
Hong Kong Turkey
India United Arab Emirates
Ireland United Kingdom
Italy United States
Japan Vietnam
www.gti.org
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