Nearly 90% of Vietnamese enterprises are interested in expanding to foreign markets.

Research by UOB Bank shows that Southeast Asia is the top destination for Vietnamese businesses looking to expand overseas in the next three years.

Outlook for 2024 remains positive, despite high inflation driving up supply costs

Despite ongoing uncertainties such as geopolitical tensions and slowing global demand, economies in the ASEAN region remain resilient, according to UOB.

The region will continue to grow in the world economy with a strong foundation driven by a rapidly growing middle class, a young and dynamic workforce, increasing connectivity and strong foreign direct investment.

Within the ASEAN region, Vietnam is a bright spot with positive prospects in 2024. UOB's growth forecast for Vietnam this year is 6.0%, in line with the Government's target of 6-6.5%.

UOB research shows that nearly 90% of Vietnamese businesses are interested in expanding into foreign markets.

Against this backdrop, the UOB Corporate Outlook 2024 Study surveyed more than 4,000 businesses (SMEs & Large Enterprises) in seven key markets across ASEAN and China, including 525 businesses in Vietnam, and the results showed that most businesses in Vietnam remain optimistic about the current business environment.

"Nearly 90% of Vietnamese enterprises expressed interest in expanding their business overseas, with ASEAN being the top market that enterprises are targeting for business expansion in the next three years (up to 2026)," the UOB report said.

High inflation and geopolitical tensions weigh on 2023 results but outlook for 2024 remains positive, UOB analysts say

Despite the generally positive business sentiment, the study found that there was a decline in the number of businesses in Vietnam that achieved revenue growth in 2023 compared to the previous year. High inflation, volatile commodity prices and recovery from the economic recession are the top three macro factors affecting businesses in 2023.

UOB believes that high inflation will also increase supply costs for nearly 50% of businesses in Vietnam in 2023, becoming the top challenge in supply chain management in addition to challenges from purchasing supplies and raw materials.

To cope with these challenges, businesses develop a prudent plan that combines short-term measures such as cost reduction and long-term measures such as diversifying supply chains and seeking new business partnerships to collaborate with over the next 1 to 3 years.

"Although geopolitical tensions have impacted the supply chains of nearly 50% of Vietnamese businesses in 2023, the study also shows a positive trend as the number of businesses affected by this issue has decreased compared to a year ago," UOB commented.

In terms of future prospects, nearly 90% of businesses in Vietnam expect the outlook for 2024 to be positive with improved business performance. To achieve this, businesses are planning to increase the adoption of digital solutions, upgrade equipment or facilities to improve productivity, and diversify sales channels to drive growth.

Expand business overseas to increase revenue and improve profits

About 60% of businesses surveyed in Vietnam said their top motivation for expanding overseas was to increase revenue. Cross-border digital commerce platforms are a popular means of expanding overseas, with more than 9 in 10 businesses interested in using this channel.

When looking at the regions that Vietnamese businesses are targeting for overseas investment in the next three years, ASEAN is the top choice, with nearly 7 out of 10 businesses wanting to expand their business operations to the region. Mainland China is the second most important market, with 37% of businesses wanting to invest in the country. Within ASEAN, Thailand is the most important country that Vietnamese businesses want to invest in, followed by Singapore, Malaysia and Indonesia.

However, according to UOB analysts, expanding overseas is challenging for Vietnamese businesses due to several key barriers such as: Lack of customers in new market(s) (41%); Lack of legal, regulatory, compliance and tax support (39%); Difficulty in finding suitable partners to cooperate with (38%).

About 60% of businesses surveyed in Vietnam said their top motivation for expanding overseas was to increase revenue.

To successfully expand into foreign markets, businesses in Vietnam are looking for financial support such as tax incentives or tax refunds (42%), and funding or subsidies for new markets (40%). In addition to these financial supports, more than 40% of Vietnamese businesses are looking for non-financial support, such as connections with large businesses that are potential customers that their company can provide in foreign markets.

Mr Lim Dyi Chang, Head of Corporate Banking, UOB Vietnam, said: “As a leading ASEAN bank with 30 years of experience in Vietnam, we are well-positioned to connect local businesses to regional opportunities and vice versa. With our deep market insights and strong industry expertise, combined with our extensive regional network and extensive ecosystem of partners, we are able to help businesses navigate the complex market landscape and capture growth opportunities in ASEAN and beyond.”

Businesses need to increase budget for digitalization

The UOB Enterprise Outlook 2024 study also found that nearly nine out of 10 businesses in Vietnam have adopted digitalisation in at least one part of their business. Of these, around 41% have digitalised across their entire business, the highest rate in the region. More than 80% of Vietnamese businesses are planning to spend more on digitalisation by 2024, with most budgets increasing by 10-25%.

However, according to UOB's assessment, businesses are expected to face a number of challenges, including concerns about cybersecurity, a shortage of digital skills among employees and increased risks of data breaches.

Businesses said they want additional support such as tax incentives/refunds, help connecting with appropriate technology and solution providers, and training programs to upskill or reskill employees in digital adoption.

Sustainability awareness is high but more support is needed to drive implementation. Sustainability is considered important by 94% of surveyed businesses in Vietnam. However, only 45% have implemented sustainability activities by 2023.

More than half of businesses see the value of adopting sustainability to enhance their reputation, build a better brand and attract investors. However, the top barriers to greater adoption of sustainability include a lack of suitable renewable energy infrastructure (38%), a lack of good sustainable finance options (34%) and concerns about negative impacts on profits (34%).

“The valuable insights from the Enterprise Outlook Study help us understand what businesses need to accelerate their transition to sustainability. By providing green financing solutions to businesses in Vietnam, connecting them with the right partners in our regional ecosystem and enabling them to access and learn from the successful examples of their peers, UOB is helping to accelerate the adoption of sustainable solutions by businesses in Vietnam. Our efforts are fully aligned with Vietnam’s sustainability agenda to achieve Net Zero by 2050,” said Mr. Lim Dyi Chang.

The UOB Enterprise Outlook 2024 Study seeks to understand the business outlook and key expectations of SMEs and large corporates across seven markets in ASEAN and Greater China – Singapore, Indonesia, Malaysia, Thailand, Vietnam, Greater China and Hong Kong.

Source: https://baodautu.vn/gan-90-doanh-nghiep-viet-nam-quan-tam-den-viec-mo-rong-sang-thi-truong-nuoc-ngoai-d220103.html