Businesses hope to escape the bottom in 2024

Although macroeconomic indicators showed improvement in the third quarter, many businesses said that actual business was still harsh and they had to hold out until 2024.

The leader of a wood company in Dong Nai said that orders can now be "looked at from the beginning of the month to the end of the month" instead of being measured weekly like before. This company specializes in exporting goods to the US, Europe, and Australia markets. Thanks to the approaching year-end holidays, the company has more orders, although the value of each order has decreased.

"But that's just a hopeful star before Christmas Eve, but in reality, winter is still very cold, the market is frozen," this person said and assessed that all changes will return to normal after the holiday season.

Since Covid-19, the company has maintained its current production status with half the workforce. The factory is operating at a moderate capacity, only about 40-50% of its capacity, depending on the time.

"I don't think business can recover soon because global demand is decreasing in general. This is clearly shown when I attend trade fairs in different countries, the scale is all reduced," he said.

Loading and unloading goods at Cat Lai port, Ho Chi Minh City. Photo: Thanh Nguyen — Loading and unloading goods at Cat Lai port, Ho Chi Minh City. Photo: *Thanh Nguyen*

Representing about 16,000 businesses, Mr. Dinh Hong Ky, Vice President of the Ho Chi Minh City Business Association (HUBA), shared that the situation is not very bright in most industries.

"Production orders and market consumption, especially in Ho Chi Minh City, are still very low, and people are tightening their spending. Some industries are somewhat optimistic, but efficiency is still low," he said.

Mr. Mac Quoc Anh, Vice President of the Hanoi Association of Small and Medium Enterprises, also agreed that the recovery did not meet expectations. Only a few businesses in the fields of light industry production, essential household appliances, health care, insurance, and finance in the area were operating well.

Representatives of associations said that most businesses are still in a state of holding on as the pull is no longer as strong as in the first two quarters of the year. However, they are facing great difficulties from low demand both domestically and internationally. This makes businesses reluctant to invest or borrow capital to do business, despite many preferential credit policies from banks. On the other hand, economic uncertainty also makes banks cautious, leading to some businesses having difficulty accessing loans.

Similar to domestic enterprises, many foreign enterprises are also cautious during this period. The European Chamber of Commerce in Vietnam (EuroCham) said that the Business Confidence Index (BCI) in the third quarter, although slightly increased from 43.5 to 45.1 points, was still below the average threshold of 50 points. European enterprises' expectations for revenue or orders were also not adjusted compared to the previous quarter. In addition, only 22% of enterprises planned to expand in the fourth quarter, 16% forecasted increased investment.

"My partners and I are hoping that now is the bottom point for things to improve next year. Hopefully there will be a new cycle in 2024 when the real estate market warms up," said Mr. Ky. The company is still receiving some new orders in the context of real estate businesses "struggling" to return.

In the tourism business, Mr. Pham Ha, Chairman of Lux Group, said new tourism policies, specifically visa relaxation, could also bring many expectations for 2024.

"There has been a recovery depending on the market, but overall it has reached 80% compared to the pre-pandemic period. We have to wait until 2024 to expect to return to the original level," said Mr. Ha.

However, he also noted that Vietnam's tourism is facing fierce competition with other countries in the region, notably Thailand. "They recovered faster despite opening later, and their policies are very flexible. They know exactly what customers want and how to achieve that goal," he added.

Still, the uncertainty has some businesses worried about another bottom next year, before they get out of the general slump.

Mr. Mac Quoc Anh said there could be another crisis at the end of the second quarter of 2024. "There could still be another bottom due to conflicts and potential risks in the global market," he said.

Similarly, the leader of a wood business in Dong Nai acknowledged that the economy has only gone halfway through the W-shaped chart, meaning there will be another downturn next year.

"Only a few businesses have the financial resources to cover their losses and support their operations. Their customers have similar capabilities," he said. Therefore, businesses, regardless of their size, must carefully look to the future.

Phuong Anh

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