Firms lose no sleep over rough ride

Date: 26 September 2011
Economic instability is eating away at business confidence in Vietnam, but some transnational firms are keeping the faith.

NSG Group, the world’s leading manufacturer of glass and glazing systems, for instance, last week kicked-off the construction of its two new lines in southern Ba Ria-Vung Tau province, where the firm is already operating a glass manufacturing factory dedicated to solar energy products.

Total investment in the new lines will be around $232 million, with the lines due to go live in 2013. An estimated 500 jobs will be created locally as a result of the investment.

The move is in line with the  group’s expansion plans announced late last year, and suggests Vietnam is still a priority for NSG Group at a time when many other foreign investors are getting jittery about investment in this country.

Business confidence has been sharply dropping in Vietnam since the third quarter of 2010 when the economy was reeling under the effects of climbing inflation and the local currency’s devaluation. Vietnam’s inflation in August this year was 23.02 per cent year-on-year, the highest level in Asian region. This high inflation rate, along with the widening trade deficit, forced State Bank of Vietnam to depreciate local currency three times from February 2010 to February 2011. The largest devaluation, 9 per cent, was made last February.

A EuroCham survey reported business confidence and outlook among European companies in Vietnam in the second quarter this year dropped 7 points further to 63. This meant declines for three consecutive quarters.

Meanwhile, a survey from America’s World’vest Base and PetroVietnam Finance Investment and Consultancy Company also underscored sliding business confidence with a 21 point decline in the second quarter of 2011 – from 109 to 88 points.

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