Most businesses have set lower business targets for 2019, a surprising move if noting that they had a very bumper year in 2018.

Businesses set lower profit target in 2019

Hoa Phat Group, for instance, reported 20.7 percent in revenue growth in 2018, reaching VND56.58 trillion, while Ca Mau Electricity & Fertilizer had growth of 17.06 percent and VND6.827 trillion, and REE saw revenue increasing by VND105 billion.

However, they are very cautious about business plans for this year.

An analyst said enterprises’ business performance heavily depends on the macroeconomy. The lending interest rate is expected to escalate again after going up a little in late 2018.

In addition, businesses understand that once enterprises reach a certain level of development, a one percent growth rate of revenue in future will be much more than one percent growth of the previous year.

A report from the General Statistics Office (GSO) showed that the GDP grew by 6.79 percent in the first three months of the year compared with the same period last year.

“Vietnam’s economy unexpectedly met favorable conditions to grow in Q1 2018 and gained a record high growth rate. However, conditions are less favorable in 2019,” said Nguyen Bich Lam, head of GSO.

Dinh Tuan Minh from Viet Analytics also thinks that the growth slowdown in Q1 2019 is reasonable, because the national economy lacks the same push it had in 2017-2018, when Samsung and Formosa operations were in ‘full swing’.

In 2018, Vietnam received $35 billion worth of registered FDI capital and $19.1 billion worth of disbursed capital, an increase of 9.1 percent over 2017.

Regarding interest rates, the interbank interest rates had increased by 1.9-3.39 percentage points as of October 31, 2018 for short-term loans, and by 0.01-0.62 percntage points for 3-month and longer-term loans.

International experts all foresee uncertainties because of the global economy’s growth slowdown. This will affect the demand for imports from Vietnam, which has been relying on income from exports.

Hoa Phat, which still made high profits in 2018 while its rivals all took losses, has predicted that its revenue would reach VND70 trillion, or 24 percent higher than last year, but post-tax profit would decrease by 22 percent.

Meanwhile, REE plans for VND5.577 trillion in revenue, up by 10 percent, but foresees that net profit may decrease by 18 percent. As for GAS, the company projected pre-tax profit of VND9,546 trillion, or 32 percent lower than 2018.

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Thanh Mai