A recent survey by consultancy Grant Thornton puts Vietnam on the top of the list for businesses that are most optimistic about their prospects in 2010.

Indeed, 92 percent of Vietnamese businesses expect higher profits in the year ahead, much higher than any of the 7,400 businesses from 36 economies polled in the International Business Report (IBR). Specifically, 95 percent of surveyed Vietnamese businesses said that they expected revenue to increase and 92 percent looked at increased profits in 2010, while the global average rates are 54 percent and 47 percent, respectively.

Vietnam rates highest in three categories: job offers, revenue, and profitability of businesses. Other ranked items in the survey include general optimism, export, and R&D (Research and Development). In the measure of general optimism, Vietnam ranks fourth after Chile, India, and Australia.

“Thanks to the USD/VND exchange rate adjusted up, Vietnamese producers are optimistic about 2010...a USD (U.S. dollar) price rise will help Intel Group build a chip production factory in Vietnam,” stated Grant Thornton.

Kenneth Atkinson, managing partner of Grant Thornton Vietnam, added that together with road and new power projects under construction, mergers and acquisitions (M&A) in Vietnam also increased in recent months. “I forecast many companies will run out of capacity this year,” he remarked.

The survey found that Asian countries rank in the top 10 when it comes to businesses that are optimistic about profit prospect in 2010. They include Vietnam, India, the Philippines, Brazil, Chile, Australia, Denmark, Sweden, Armenia, and South Africa.

Compared to countries suffering an economic downturn in 2009, Vietnam’s economy grew at a rate of 5.3 percent, the unemployment rate was lower than expected, and consumption increased in many localities. Furthermore, the Vietnamese government targets GDP growth of 7 percent this year.

According to Grant Thornton’s Atkinson, Vietnam should post a higher gross domestic product (GDP) growth than the 6.5 percent projection for this year, providing the recovery stays on track. “As long as there are no further hiccups in the global recovery, then in our opinion, 7 percent is not an unreasonable target,” he said.

Meanwhile, the International Monetary Fund (IMF) forecasts the global economy will grow 4 percent in 2010. Wt

Resource Box: Vietnam's Strengths and Weaknesses

Here’s a snapshot of what’s working, and what’s not, in Vietnam, according to Coface’s “Handbook of Country Risk 2009”:



Strengths

•    The economy benefits from a quality and low-wage workforce attractive to foreign investors.

•    Participation in ASEAN and admission to the WTO in January 2007 attest to Vietnam’s good diplomatic and economic relations with its main trading partners.

•    The poverty rate eased from 58 percent in 1990 to under 25 percent in 2006.

•    The opening of the market to foreign banks, privatization of state-owned banks and plans to strengthen the central bank’s independence all augur well for the financial sector’s future development.

•    The economy has tended to diversify, particularly by developing the tertiary sector (tourism and financial services).

Weaknesses

•    Vietnam’s specialization is still overly focused on price competitiveness and dominated by low-end products.

•    The business environment remains a major weakness. The civil service and legal systems in particular continue to lag behind the major Asian economies with the courts lacking independence, a limit placed on the number of lawyers and the rudimentary quality of legal procedures resulting in an accumulation of cases closed with no action taken.

•    Inadequate and dilapidated infrastructure (electricity, roads, rail network, and ports) undermines the country’s growth potential.

•    With reform of the public sector remaining unfinished, it still represents 31 percent of GDP and is still less dynamic than the private sector.

•    Social and geographic inequality has been increasing, particularly between urban and rural areas.