Despite lingering challenges from 2023, most Vietnamese businesses remain optimistic about the business environment in 2024. Overseas market investment is identified as a key strategy, with ASEAN being the top target market for enterprises in the next three years.
Ho Chi Minh City, July 16, 2024 – UOB Vietnam released the Business Outlook Study 2024, with the participation of experts, leaders from UOB, strategic partners, customers, and media.
UOB Business Outlook Study 2024 is based on a survey of over 4,000 businesses, including large corporations and SMEs, across seven key markets in ASEAN and Greater China, including 525 businesses in Vietnam.
ASEAN: A region of opportunity
Kicking off the event, Mr. Victor Ngo, CEO of UOB Vietnam, shared: “Despite global economic uncertainties, the ASEAN region is poised for continued growth on a solid foundation, underpinned by a growing middle class, a young and dynamic workforce, increasing connectivity, and strong inflows of foreign direct investment (FDI)". This was echoed by Mr. Suan Teck Kin, Executive Director, Global Economics & Market Research, UOB Group, who presented data from the report "ASEAN and Vietnam Outlook".
According to Mr. Suan Teck Kin: "The outlook for 2024 remains positive". Growth drivers for Vietnam will stem from a rebound in the semiconductor cycle, steady growth in China and the region, and the potential for easing monetary policy by major central banks. On that basis, UOB's expert forecasts Vietnam's growth at 6.0% for 2024, with the official growth target of 6.0-6.5% achievable.
From a foreign investment attraction perspective, Mr. Suan Teck Kin shared the positive news: "Money is still pouring into Vietnam". Foreign investors remain largely positive on Vietnam's prospects in the coming years, despite domestic political changes in early 2024. Registered FDI increased by 13.1% year-on-year to USD 15.2 billion in June from the beginning of the year, following a 13.4% increase in Q1/2024.
"We remain optimistic for the second half of the year as these FDI figures show that businesses continue to view Vietnam as an important investment destination in the medium and long term, amidst the global economic landscape of supply chain restructuring; the increase in both realized and committed FDI inflows will further drive domestic activities in the coming quarters, including construction and employment; and the affirmation of foreign businesses' confidence and commitment to the country amidst the current wave of deglobalization, risk reduction and supply chain shifts," Mr. Suan Teck Kin noted.
Cautious optimism among Vietnamese businesses
Against this backdrop, UOB Business Outlook Study 2024 found that nearly 90% of businesses in Vietnam are expecting a positive outlook for 2024 with improved business performance. This level of optimism is higher than the regional average. Mr. Lim Dyi Chang, Head of Commercial Banking, UOB Vietnam, in his presentation of the survey findings, said: “Vietnamese businesses are cautiously optimistic. While companies are eager to expand as economic prospects improve, they understand the need to be prepared for potential disruptions based on their experiences in recent years. This is also a sound strategy”.
To improve business performance this year, businesses are planning to increase their adoption of digital solutions, upgrade equipment or facilities to improve productivity, and diversify sales channels to drive growth. Notably, close to 90% of Vietnamese businesses surveyed expressed interest in expanding overseas. To succeed in overseas expansion, businesses in Vietnam are looking for financial support such as tax incentives or rebates (42%), funding or grants for new markets (40%).
Mr. Lim Dyi Chang also shared key findings from UOB Business Outlook Study 2024 on the digital adoption and sustainability practices of Vietnamese businesses. Vietnam is one of the regional leaders in digital adoption, with nearly 9 out of 10 businesses in Vietnam having adopted digital technologies in at least one part of their operations. Additionally, over 80% of Vietnamese businesses plan to increase their spending on digitalization in 2024, with most budgets increasing by 10-25%.
In the context of sustainable development, while 94% of surveyed businesses in Vietnam recognize the significance of sustainable development, only 45% had implemented sustainability initiatives by 2023. The primary barriers stem from a lack of adequate infrastructure for renewable energy (38%), limited options for sustainable financing (34%), and concerns about a negative impact on profits (34%).
UOB: A trusted partner for Vietnamese businesses
"As the leading bank in ASEAN with 30 years of doing business in Vietnam, we are well-positioned to connect local businesses to opportunities in the region, and vice versa," said Mr. Lim Dyi Chang. “With our broad industry insights and strong sector expertise, coupled with our extensive regional footprint and wide partner ecosystem, we enable businesses to navigate market complexities and seize growth opportunities in ASEAN and beyond”.
Deeper insights into how UOB is supporting Vietnamese businesses in their growth ambitions were shared during a panel discussion that featured experts from UOB Vietnam and strategic partners, including: Mr. Jason Yang, Chief Sustainability Officer; Mr. Lim Hock Guan, Head of Technology & Operations; Mr. Lim Dyi Chang, Head of Commercial Banking; Ms. Dang Huynh Uc My, Chairlady, Betrimex Joint Stock Company; and Mr. Tran Ngoc Liem, Director of VCCI-HCM. The panel discussion focused on how businesses can navigate the challenges of 2024, such as high inflation, rising supply chain costs, and geopolitical tensions, by capitalizing on key trends: Overseas expansion, Digitalization, and Sustainability.
Through real-world business experiences shared by the panelists and expert advice, Mr. Jason Yang concluded: "We understand that the economic outlook for 2024 remains positive, with encouraging signs from both external and internal factors. However, we must remain cautious as uncertainties still exist. Navigating this environment, key trends are shaping business growth, including digitalization, overseas expansion, and, of course, sustainability. To capitalize on these trends, businesses will continue to need support from both the government, business associations, and financial institutions. With the insights provided by UOB Business Outlook Study 2024, we at UOB believe that together with our industry partners, we can continue to support businesses in achieving their growth ambitions in 2024 and beyond”.
Download the report ASEAN and Vietnam Outlook - Key Drivers and their Implications, presented by Suan Teck Kin, Head of Research, Executive Director, Global Economics & Market Research, UOB Group.
Download the UOB Business Outlook Study 2024 (Vietnam), presented by Lim Dyi Chang, Head of Commercial Banking, UOB Vietnam.