European business leaders remain confident about the future prospects of their own companies in Vietnam despite short-term challenges.

Source: EuroCham BCI, Q2 2021

The latest data from the European Chamber of Commerce in Vietnam (EuroCham) Business Climate Index (BCI) showed more than half (56%) of surveyed businesses predicted an improved or neutral performance in quarter three (Q3) of this year while 80% of respondents plan to maintain or increase their headcount and investment. 

The survey noted the fourth wave of Covid-19 in Vietnam has knocked the confidence of European business leaders.

Before the fourth wave struck, the BCI had almost climbed back to pre-pandemic levels, reaching 73.9 in Q1. However, this latest outbreak and the spread of new variants have plunged the Index by almost 30 points in Q2 to 45.8. This is a significant drop, though not as steep as during the first outbreak of the pandemic in 2020.

The Covid-19 resurgence has also led to increased pessimism about the short-term outlook of Vietnam’s business environment. Only one-fifth of EuroCham members (19%) believe that the economy will stabilize and improve in the next quarter, a decrease by almost two-thirds from 61% in Q1.

Thue Quist Thomasen, CEO of YouGov Vietnam, said despite the short-term shock of this fourth wave, the data shows that Vietnam’s long-term prospects remain positive. 

“European business leaders are predicting maintaining or increasing their staff and investment plans - even in the midst of this current outbreak - which demonstrates a continued confidence in Vietnam’s trade and investment environment,” he said.

Urging mass vaccination drive

The BCI also showed the urgent need for Vietnam to roll out a mass vaccination program. More than half of business leaders (58%) predict that their companies would see a significant, negative impact if their staff could not be vaccinated in 2021. Meanwhile, nearly half (44%) have not been contacted to prepare for vaccination.

Source: EuroCham BCI, Q2 2021

EuroCham and its nine business associations asked their members if they would be willing to cover the cost of vaccinating their own staff. Of the responded 430 (representing around one-third of the chamber’s total membership and around 95,000 staff) 399 said they would be prepared to do so. 

With full vaccination requiring two shots, this suggests that at least 190,000 doses will be needed just to vaccinate the direct employees of these companies alone. However, the real number of doses required could reach over half a million if all European enterprises and their staff were taken into account. 

Meanwhile, 259 of those who responded are also willing to cover the cost of vaccinating the families of their staff members. When these dependents are taken into account, the real figure of doses required will be much higher.

EuroCham Chairman Alain Cany said there is no route out of this fourth wave without an ambitious and accelerated mass vaccination program, which will enable normal life to resume. 

“European companies are prepared to cover the cost of protecting their own staff-this will help to speed up vaccination while also reducing the financial and administrative burden on the state. But we need access to sufficient supplies,” he added

EuroCham is using all the tools at its disposal to support Vietnam in procuring enough doses, and European businesses are confident that business confidence will rebound as soon as the Southeast Asian country can achieve mass vaccination.