European business leaders in Vietnam are planning to increase their staffing levels, investment plans, and revenues as a result now that the pandemic is back under control.
According to the Business Climate Index (BCI) of the European Chamber of Commerce in Vietnam (EuroCham) for the last quarter of 2021, business leaders are more confident about the prospects of their own enterprises in this post-pandemic new normal.
Over half (58%) of European business leaders are now anticipating economic stabilization and growth in Q1 of 2022. That represents an eight-point rise in optimism. Meanwhile, less than one in five (17%) now predict a deterioration - a figure which has almost halved since the last BCI.
The latest survey found about 43% of respondents plan to increase their investment in the first quarter of 2022, compared to 17% three months ago. More than one-third (38.5%) intend to increase their headcount, up around 15%, while over half (51.5%) are predicting a rise in orders and revenue, a rise of 7.5% compared to the third quarter of 2021.
EuroCham Chairman Alain Cany said these latest figures are a vote of confidence in Vietnam’s trade and investment environment now that the pandemic is back under control as well as in the government’s clear direction that they learn to live with the virus.
“Business leaders welcome the return to life as normal and business as usual, and in particular the easing of entrance requirements for vaccinated foreigners who live and work here,” he said. “Almost 90% of our member companies reported that previous restrictions had an impact on their commercial operations. So, this new regulation will help to improve the business environment and increase the confidence of business leaders still further.”
However, some sectors remain at risk of falling behind in the race to recover post-pandemic. Tourism - one of Vietnam’s spearhead economic sectors and one which is responsible for millions of jobs - remains restricted to guided tours, and this is keeping the brakes on economic growth, according to Cany.
He encouraged the Vietnamese government to go further and faster in re-opening - at least in areas with high vaccination rates - so that Vietnam can achieve its full potential as a leader in this and other industries and attract more foreign investment in 2022.
European companies ended 2021 more positive and optimistic about Vietnam's investment environment, according to BCI. The index reached the highest point following the fourth wave, with positive sentiment reaching 61 points.
That represents a jump of 42 points since quarter three of 2021, with business leaders welcoming the end of lockdowns and the re-opening of normal commercial operations. The BCI remains below its pre-pandemic peak. However, it is clear evidence that confidence is returning to the market.
Thue Quist Thomasen, CEO of YouGov Vietnam, added the challenge now is to capitalize on this positive sentiment and ensure that enterprises in all sectors and industries can operate to their full potential. In doing so, European businesses will be able to make their greatest possible contribution to Vietnam’s economic growth in 2022.