Socialist Republic of Vietnam

HA NOI (May 7, 2003) — American companies in Southeast Asia are planning to expand their businesses but corruption remains a major problem, according to the second annual regional Gallup business survey.

The survey, released last Monday by the American Chambers of Commerce (AmChams) in Southeast Asia, interviewed senior executives in American companies operating in the region.

Executive director of AmCham Ha Noi, Adam Sitkoff, said members were confident in the capability of Asian economies.

"While the current SARS situation has temporarily affected business planning in the region, 91 per cent of members surveyed in Viet Nam expect to expand their business this year."

"Bilateral trade has increased dramatically and we expect Viet Nam will continue its strong economic growth. Our members feel the opportunities for US business have expanded considerably and we continue to see increased interest in the Vietnamese market," Sitkoff said.

Recent structural reforms, together with Viet Nam’s global integration commitments, are creating a more favourable business climate for foreign investors, according to government officials.

"I am glad the ratio is so high at 91 per cent, it’s a very good sign," deputy director of the Investment and Trade Promotion Centre in HCM City, Truong Trong Nghia, said.

"The earliest beneficiaries of the Viet Nam-US Bilateral Trade Agreement are Vietnamese exporters. But after two or three years, American businesses will have greater access to Viet Nam, particularly service markets.

"So with upcoming expansion, they may be gathering themselves for further penetration into the market."

An official from the Ministry of Planning and Investment’s foreign investment management department said the conditions were right for business growth.

"The prospects for foreign investment in the next quarter are becoming brighter due to the war in Iraq coming to an end, Viet Nam’s exports getting back on track for growth, and domestic purchasing power growing because of stable prices," he said.

He predicted the SARS outbreak would have little impact on the country’s foreign investment health.

But perceptions of corruption in the region are still posing problems for further expansion, with 68 per cent of survey respondents saying they were dissatisfied with the impact of corruption on their business. This was an increase of 11 per cent from the last survey.

The Gallup survey group says negative responses of more than 30 per cent should be considered significant.

"Corruption continues to be a major concern for our members region-wide," Sitkoff said.

"This has a significant effect on investment decisions and is therefore a vital competitiveness issue."

A little over half of the companies surveyed said they will maintain current workforce numbers in the region, one-third said they would increase jobs and 16 per cent they would cut back.

According to AmCham Ha Noi, American companies in Southeast Asia have invested US$35 billion in the region.

The AmChams of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam jointly commissioned the Gallup organisation to conduct the survey from February 18 to March 11. —VNS

US Investment Outlook

Three-quarters of AmCham members believe their business will grow this year – 18 per cent anticipate a reduction.

More than half expect their profits to rise this year and 80 per cent predict profit growth in 2004.

About 70 per cent of members see Asian markets increasing their contribution to total company revenue over the next two years.

The majority of members expect Asian economies to recover by the end of 2004.