Confidence in Vietnam’s business environment continues to rebound
European business leaders began the year positive and optimistic about Vietnam’s trade and investment environment, according to new data from the European Chamber of Commerce in Vietnam (EuroCham).
|Business Climate Index (BCI)'s changes in the past 10 years. — Photo Eurocham|
EuroCham’s Business Climate Index (BCI) hit 73.9 points in the first quarter of 2021. This is the highest score recorded since the third quarter of 2019, before the COVID-19 pandemic hit global trade and investment. This continues a positive upward trend, with the score rising more than 47 points over the last 12 months.
It comes after Vietnam recorded strong economic growth at the start of 2021, and this is reflected in the optimistic outlook of European enterprises. When asked about the prospects of Vietnam’s business environment in the next quarter, 67 per cent predicted either ‘excellent’ or ‘good’ – a 12 per cent increase compared to the previous quarter.
Business leaders are also more optimistic about their own companies. More than two-thirds (68 per cent) predict that orders and revenue will ‘maintain or increase’ over the next three months. That’s a 25 per cent increase compared to the fourth quarter of 2020.
EuroCham members are also seeing positive effects from the EU-Vietnam Free Trade Agreement (EVFTA) which came into force on August 1, 2020. Since it was implemented, more than 60 per cent have benefitted from the agreement. However, business leaders continue to report that ‘administrative procedures’ are the biggest hurdle for them to utilise the EVFTA.
The BCI is a regular barometer of EuroCham members and their perceptions of the business environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Vietnam. The fieldwork and data collection for the BCI is conducted by YouGov Vietnam.
Commenting on the BCI, EuroCham Chairman Alain Cany said: “The Business Climate Index confirms once again that Vietnam is open for business. While countries continue to struggle with the impact of COVID-19, Vietnam has ensured that companies here can continue their operations as close to normal as possible. This is helping to drive economic growth and fuel the confidence of European business leaders.
“Therefore, it is no surprise that EuroCham members are positive about the future of their own companies and optimistic about the prospects for Vietnam’s trade and investment environment. The BCI has now almost climbed back to pre-COVID levels – this is a remarkable achievement and further evidence that Vietnam is on the right path to achieving its twin goals of protecting health and promoting economic growth.”
Thue Quist Thomasen, CEO of YouGov Vietnam, added: “Beyond the headline figure, the data in our latest BCI tells us a lot about Vietnam’s business environment. For instance, the fact that more business leaders are anticipating a rise in their headcounts and investment plans is – in itself – a vote of confidence in Vietnam’s long-term prospects. It shows that companies are investing in their workforces and their businesses now in anticipation of a strong and prosperous 2021.”
The local business community anticipates that the Government will take specific and efficient measures aimed at immediately resolving bottlenecks that hinder their operations, said Vu Tien Loc, chairman of VCCI.