VietNamNet Bridge – The HSBC Trade Confidence Index rose to 120 in the first half of 2014, the highest in three-and-a-half years, according to a report released by the bank on Wednesday.

Workers assemble sensor accessories at Sankoh Viet Nam Co Ltd. The HSBC Trade Confidence Index rose to 120 in the first half of this year, the highest in three-and-a-half years.

But the index is still below the record level of 132 reached in the first half of 2010.

Almost half of the polled importers, exporters and small- and medium-level firms expect trade to increase over the next six months.

A third of the 250 respondents to the survey, conducted between May and July, cited higher demand from key markets as the main reason.

They noted Viet Nam's central location in Asia, with 75 per cent of them saying their main trade partner was within Asia. They also said that trade agreements signed in recent years had had a positive impact on business.

Viet Nam has strong links with the West, and nearly 20 per cent of respondents said that Europe was the most promising region for trade over the next six months, while 8 per cent said North America.

Meanwhile, 54 per cent of those polled said the high costs of logistics, shipping and storage were a barrier to trade growth, and almost a quarter cited a lack of product demand.

The dong has stabilised since 2012, helped by the move into external surplus, but an increasing need for imports means the surplus will narrow in coming years. At least 22 per cent of respondents said they were concerned about currency volatility.

The Viet Nam economy is expected to grow strongly in coming years, and to support this rapid growth, investment expenditures will continue to expand, particularly in infrastructure.

Trade connections

Industrial machinery, the largest import sector, will continue to grow until 2030, with the sector contributing almost a third of Viet Nam's import growth.

China, India, Korea and Malaysia will be Viet Nam's fastest-growing import partners, taking advantage of geographical proximity.

Viet Nam has a diversified industrial base, and with continued investment, it will be well-placed to meet rising demand for consumer goods in emerging Asia.

Behind clothing and apparel, ICT equipment will remain its second-largest export sector until 2030. Strong ICT growth has given substantial scope for local suppliers to substitute currently imported components.

Samsung has led the growth of the ICT sector in Viet Nam, building in 2009 a US$2.5 billion mobile phone plant, which doubled its output each subsequent year.

Last year, it built another $2 billion plant, and is considering a third factory.

ICT companies have been able to take advantage of the country's low costs, and large but well-educated workforce.

LG electronics, for example, also manufactures high-tech electronics in Viet Nam and has plans to expand its operations.

In the short term, Viet Nam's exports are expected to grow by more than 11 per cent annually between 2014 and 2020, led by the ICT and textile and garment sectors.

VNS/VNN