The
last quarter of the year has seen a significant fall in private equity
investors' confidence in the Vietnamese economy, a recent report by audit
advisory Grant Thornton Vietnam said.
According to the Investment Sentiment and
Outlook Quarter 4 report released early this week, negative sentiments about
Vietnam's economy more than doubled to 51 percent compared to last year's
report.
The percentage of investors showing positive
outlook also plummeted from 53 percent to 17 percent in the second quarter.
Over all, there was a decrease in confidence
in Vietnam and private equity investors were much more cautious than 6 months
ago which the report says reflect current challenges in Vietnam's economy and
the fall in GDP and consumer spending growth.
Almost 85 percent of respondents said the
current macro-economic situation was the biggest obstacle to investment into
Vietnam.
The attractiveness of Vietnam's economy also
reached the lowest point among the last 6 surveys. Particularly, only 38
percent of investors considered Vietnam as more attractive than other
investment destinations, a decline of 16 percent compared to the previous
survey.
The survey also shows that 41 percent of
respondents said that Vietnam was less attractive or unattractive.
In line with the plunge in Vietnam's
attractiveness among private equity firms, the percentage of respondents who planned
to increase their allocation to Vietnam decreased considerably to 29 percent in
this survey compared to 53 percent in the previous one.
Meanwhile, 43 percent of participants said
they were adopting a "wait and see" attitude and there was no change
in their allocation of investment funds to Vietnam.
The previous figure was 28 percent. 35 percent
of participants thought the most significant source of deals was private or
family businesses, followed by secondary buyout deals, and only 10 percent of respondents
said it was the public market.
Bill Hutchison, Grant Thornton Vietnam's
Advisory Services Partner, said this result was "unsurprising as the
private sector contributed nearly half of GDP in Vietnam last year and has
continually increased its contribution."
However, he said the somber business outlook
as confidence waned was making investors bide their time at the moment.
While the extremely high interest rates in
Vietnam in the second and third quarter of the year had led to an increase in
the number of distressed assets, especially in the real estate sector, the
report shows a surprising finding that real estate had taken the position of
the most attractive sector for investment.
It had overtaken education, which was ranked
as the most attractive industry for private equity investment in a survey
conducted in Q2.
But almost the same number of respondents
rated the real estate sector as the least attractive sector.
Following real estate in this list were
education, oil, gas and natural resources, and manufacturing sectors.
Weak macroeconomics was the most important
obstacle to investment, followed by corruption and red tape. Infrastructure and
the inadequate legal system also affected investments.
Tuoi Tre
Business & Investment Opportunities
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