Business expectations among Vietnam CEOs in 2017

02 May 2017

Patrick Cooke, Asia Regional Editor

Patrick Cooke
Asia Regional Editor
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In the realm of second investment chances, Vietnam is emerging as a global champion after bouncing back from a severe downturn. Only five years ago the country was considered too risky to contemplate, having suffered a major economic decline and financial correction that affected many corporate and country ratings. However, after a major reform push, a clean-up of the banking sector and the signing of a major trade deal with Europe, the country is once again commanding the attention of regional and global players. This renewed confidence is reflected in OBG’s Business Barometer: Vietnam CEO Survey, which reveals that as much as 70% of top-level executives expect positive business conditions in the next 12 months. Some 20% expect the commercial environment to be very positive, while just 10% of those interviewed thought the months ahead will be negative.
Soaring sentiment is backed by real deal flows. According to the survey, two-thirds of company managers expect to make a capital investment decision over the next 12 months.
The majority – 60% – find the current tax environment very competitive or competitive. These private sector views are supported by the World Bank’s latest “Doing Business” report, which ranked Vietnam 82nd out of 190 economies, up from 91st in 2016. While slow-moving bureaucracy and complicated procedures have historically hampered the investment decision process, the country’s improved rankings reflect the government’s commitment to market-oriented reforms.
The main stimulus for further change came from Vietnam’s negotiations with the EU over a free trade agreement (FTA), and subsequent discussions surrounding the Trans-Pacific Partnership (TPP) agreement. Although the TPP has been suspended by the US, most investors believe Vietnam was the most advanced country in the process, with the brightest prospect of benefitting from new investment and trade flows. This, combined with strong fundamentals such as proximity to large ASEAN markets and a rising middle class, has solidified the case, especially for companies looking to locate manufacturing in South-east Asia. Nowadays, Vietnam is actively competing with China, India, Thailand and Malaysia for top tech companies in segments such as electronics and automotive, as well as footwear and textiles.
As a traditionally agriculture-oriented country, Vietnam has already established itself as a leading net supplier of rice and seafood, and is expected to emerge as a major global exporter of processed foods. External demand, meanwhile, should be bolstered by rising domestic consumption and the emergence of a middle class in an increasingly urbanised society.
Although investor risk appetite remains strong, Vietnam’s main challenge is to continue meeting high growth expectations, and avoid the macroeconomic and financial crises of the past. GDP growth has shown some welcome signs of stabilising year-to-date, with the consensus expecting annual growth of 6.25% for 2017. This comes after 6.2% growth in 2016 and 6.7% in 2015.
The rate of expansion could be faster; however, the government is rightly concerned that higher single-digit growth could reintroduce price pressures that used to weigh on financial sector confidence whilst eroding household incomes.
Another major challenge faced by the majority of nations in South-east Asia is access to long-term capital to fund large-scale infrastructure projects such as power stations, roads, ports and railways. The country needs to institutionalise its macroeconomic and fiscal discipline to build long-term market confidence. In the short term, though, Vietnam remains a star performer amongst South-east Asian nations, offering higher growth potential than most of its peers. Only the Philippines and India are expected to expand at a faster pace in the next 12 months. The good news is that ASEAN countries have started to specialise rather than compete head-to-head for foreign capital, as was common in the past.
Vietnam’s supply chain is likely to be heavily focused on manufacturing, whilst for its part, the Philippines is concentrating its efforts on services such as ICT and business process outsourcing. Arguably the best news is that regional players from mature economies in Malaysia, Thailand and Singapore are now ready to extend their manufacturing activities to Vietnam.
These companies are essentially building a new South-South-oriented supply chain that is more immune to global economic pressures originating in Europe and the US.
Thus, for the second time around, investors are betting the new Asian Tiger will continue to roar.
OBG Business Barometer: Vietnam CEO Survey Copyright (c). All rights reserved.
This survey has been designed to assess business sentiment amongst business leaders (Chief Executives or equivalent) and their outlook for the next 12 months. Unlike many surveys, the OBG Business Barometer is conducted by OBG staff on a face-to-face basis, across the full range of industries, company sizes and functional specialties. The results are anonymous.
OBG Business Barometer is based on data from companies with revenue within the following parameters, among others:
• 60% of companies surveyed were international
• 30% of companies surveyed were local
• 90% of companies surveyed were private
• 100% of companies surveyed were based in Vietnam
The data generated allows for analysis of sentiment within an individual country, as well as regionally and globally. Additionally, comparisons can be drawn between both individual countries and regionally. The results are presented statistically within infographics and discussed in articles written by OBG Managing Editors.
OBG provides this survey, infographics and accompanying analysis from sources believed to be reliable, for information purposes only. OBG accepts no responsibility for any loss, financial or otherwise, sustained by any person or organisation using it.
For further information on the content of the survey, please contact: Managing Editor for Asia, Paulius Kuncinas, at
Should you wish to reproduce any element of this survey, infographics and accompanying analysis please contact Any unauthorised reproduction will be considered an infringement of the Copyright. For further details about OBG and how to subscribe to our widely acclaimed business intelligence publication please visit


Asia Vietnam Economy

Patrick Cooke, Asia Regional Editor

Patrick Cooke
Asia Regional Editor
Follow Patrick on Twitter LinkedIn