European business leaders keep maintaining or increasing their investment in Vietnam in the fourth quarter. They are more optimistic about the country’s business environment following the ending of Covid-19 restrictions and the ‘new normal’ of post-pandemic trade and investment.
With 70% of European business leaders surveyed in the Quarter 3 Business Climate Index (BCI), the proportion is just two points higher than in Q2, with revenue projections seeing a similar increase, according to the European Chamber of Commerce (EuroCham).
The BCI saw a small but encouraging uptick to reach 18.3 points. That represents a three-point rise from its historic low of 15 points during the depths of the fourth wave outbreak in September.
Though the index remains low, the BCI uncovered improving perceptions about Vietnam’s economic outlook. Nearly half of surveyed business leaders and investors (49%) predict a stabilizing and improving economic prospect next quarter, compared to less than a fifth (19%) in Q2.
However, European business leaders remain cautious concerning their own recruitment, investment, and profit projections. Companies are taking a ‘wait-and-see approach to staff, with around one-fifth planning to hire more workers in the next three months - a figure consistent with the last quarter.
Alain Cany, Chairman of EuroCham, said though the BCI remains low in historic terms, the most important thing is that the index is now moving in the right direction. With the pandemic now back under control in Vietnam, the confidence and optimism of European business leaders should continue to climb as companies get back to normal and consumer confidence rises.
|Screenshot from the BCI|
“However, despite this positive progress, business leaders are still encountering challenges in their commercial operations. With two-thirds of companies suffering from the impacts of travel restrictions and staff shortages, this highlights the urgent need to speed up the entrance of vaccinated experts and accelerate the vaccination of domestic workers," he added.
CEO of YouGov Vietnam Thue Quist Thomasen added, while confidence in the prospects of Vietnam’s business environment has seen a small but encouraging rise, companies are a little more hesitant when it comes to their own operations.
“This suggests that business leaders are waiting to see how conditions and regulations in the ‘new normal’ unfold before making significant commitments in terms of investment projects or recruitment plans,” he said.
Around half of the responded companies are still operating at reduced levels compared to before the pandemic, while prolonged travel restrictions and staff shortages continue to affect two-thirds of companies.
“This indicates that there are still issues to be addressed if Vietnam is to reach its full potential in post-pandemic trade and investment,” the BCI noted.