Small- and medium-sized enterprises are expecting the economy to remain stable or expand in the first half of 2009, with many planning to maintain or increase their capital expenditure and recruitment, according to the HSBC Asia-Pacific Small Business Confidence Monitor.

The banking corporation’s semi-annual report says 300 Vietnamese SMEs defined as companies with an annual turnover of less than US$10 million – participated in the survey of 3,000 companies in Asia in October and November 2008. SMEs in Bangladesh, Viet Nam and India were the most optimistic, while those in Singapore, Taiwan and Hong Kong were the most pessimistic.

Margaret Leung, HSBC’s Global Co-head of Commercial Banking, said: "There is no doubt that 2009 will be a difficult year for many businesses. Viet Nam and Asia as a whole have withstood many difficulties in the last decade, and SMEs are entrepreneurial and resilient. Their determination to succeed and their commitment to their employees and customers continue to drive them now."

The HSBC Asia-Pacific Small Business Confidence Monitor study was conducted by research company TNS in the fourth quarter of 2008 in 10 countries and territories, including Hong Kong, mainland China, Taiwan, Bangladesh, Singapore, India, Viet Nam, South Korea, Malaysia and Indonesia. The first wave of this survey was conducted in the fourth quarter of 2007.

The survey asked SME decision makers about their local economic outlook for the next six months, their plans to increase or decrease capital investment and staffing levels, and their expectations for trade volumes with mainland China, the rest of Asia and the rest of the world.

Given the current uncertainty, most businesses are holding off on capital expenditures over the next six months. However, Bangladesh, Viet Nam and India are more likely to maintain the same level or increase capital expenditures. In Viet Nam, 45 per cent of SMEs will maintain the same level of expenditure, 28 will increase it by a small amount and 20 per cent will raise capital investment significantly, the survey finds.

Small business employment looks to be stable in the first half of 2009 and very few businesses plan to cut jobs according to the survey. Bangladesh ranks highest again in terms of recruitment plans, with 51 per cent of respondents planning to increase staff.

Viet Nam, again, acting on their positive economic outlook, has 55 per cent of the companies retaining same staffing levels, 25 per cent expecting to grow up to 20 per cent and 15 per cent expecting more than 20 per cent growth. Very few plan to cut jobs.

Regional trade outlook

Among the small businesses in the survey that engage in cross-border trade, trade volumes are expected to fall with China, the rest of Asia and the rest of the world.

Bangladesh is the most optimistic about trade growth with mainland China, with 80 per cent expecting trade volumes to increase over last year, followed by Viet Nam (46 per cent) and India (29 per cent).

Bangladesh expects the most growth in intra-regional trade (68 per cent), followed by Viet Nam (46 per cent) and India (37 per cent). Of Hong Kong respondents, only 10 per cent expect growth, 48 per cent expect the same volumes as last year, and 43 per cent expect a decrease.

For trade with the rest of the world, 76 per cent in Bangladesh expect growth, followed by Viet Nam (45 per cent).

Huynh Buu Quang, head of Commercial Banking of HSBC Bank (Viet Nam) Ltd, said, "Although 2008 was a very disconcerting year, Viet Nam SMEs’ confidence score is still amongst the highest in 10 countries/territories surveyed in the region.

These businesses believe, as does HSBC, that Viet Nam’s long-term prospect is fundamentally strong – its young dynamic workforce, stable pro-business government, excellent regional position and the growing force of Vietnamese consumers give it a keen advantage, Quang said.

"On the other hand, we should also take into consideration that there are greater challenges ahead in early 2009 as the global economy continues to go through one of its most difficult times," he continued, adding that meant for some SMEs, the outlook in early 2009 will be increasingly rough.

Quang also said Viet Nam’s long standing history of cumulative growth and market liberalisation is an indication that Viet Nam will continue to adapt and grow with the changing economic climate.  (VNS)