The study surveyed over 4,000 companies across industries and seven markets, including 525 businesses in Vietnam, to capture the current business sentiments and support the firms to develop resilience and build growth. UOB experts said much like those across the region, Vietnamese businesses were impacted by various factors in 2023, with nearly four in 10 affected by high inflation levels and more than three in 10 challenged by fluctuating commodity prices and the overall economic slowdown.

Despite such pressures, local firms are still expecting a vastly improved performance in 2024. The most positive sectors are business services (44%) and wholesale trade (43%).

To enable growth, Vietnamese companies have identified key business priorities for the next one to three years. This includes diversifying supply chains (31%), sourcing for new partnerships (30%) and reducing costs (30%).

The survey showed that 90% of enterprises are increasingly exploring opportunities beyond the domestic borders, with those in industry, oil and gas as well as manufacturing and engineering particularly interested in venturing abroad.

ASEAN and mainland China are the primary destinations for expansion, with Thailand and Singapore topping the list of the preferred markets in the next three years. However, venturing into international markets comes with its own set of challenges like customer acquisition, navigating legal and regulatory frameworks and establishing strategic partnership.

The UOB experts also held that Vietnam has emerged as the fastest growing digital economy in ASEAN, a trend projected to continue to 2025 and beyond.

The rapid increase in internet penetration, with more than 80% of the population now online, is fuelling the expansion of e-commerce and digital payments.

The report found that 90% of businesses, particularly those in technology, media, and telecommunications sectors, have embraced digital technologies. Digitalisation has spread across the organisational layers, with internal functions mostly tech-enabled while customer-facing and supply chain digitalisation are in the works.

Nine in 10 businesses recognise the importance of sustainability, especially those from the wholesale trade as well as the technology, media, and telecommunications sectors. According to the report, improved business reputation, investor attraction, and competitive advantage are factors that incentivise businesses to embrace sustainability practices.

However, inadequate infrastructure (38%), lack of viable financing options (34%), and perceived impacts on profitability (34%) are hindering widespread adoption. Companies in the manufacturing and engineering sector have expressed particular concerns about inadequate infrastructure for renewable energy.

Financial measures such as tax incentives and options for sustainable financing also go a long way in addressing some of these concerns, according to UOB.