European business leaders in Vietnam believe that Vietnam's travel and tourism sector will be the most likely to grow in the future as borders open.

The prediction was part of the latest Business Climate Index (BCI) report released on April 11 by the European Chamber of Commerce in Vietnam (EuroCham) and prepared by Decision Lab.

Ly Son Island in the central province of Quang Ngai is one of the most visited destinations for tourists. Photo: Quang Hai/ The Hanoi Times

According to respondents' expectations for the second quarter of 2023, tourism has emerged as one of the top three sectors poised for growth, with 38% citing it as a potential high-growth industry. This is likely due to an upsurge in travel and imminent travel visa reforms. 

The report also revealed that about 21% identified food & beverage and renewable energy sectors as they expect to gain ground in the same period.

“Regulatory reforms, investment incentives, and sustainable development are identified as key drivers for many sectors’ growth in Vietnam,” the report noted.

EuroCham Chairman Gabor Fluit expected more productive measures in the second half of the year as it is seen that in the past, the Vietnamese Government took swift and decisive action during times of crisis.

He stressed: “Upcoming reforms to work permit and travel visa procedures will likely directly impact growth. We eagerly await further information on these proposed changes.”

He said there has also been a notable improvement in liquidity in recent months, and he believes that a clear indication from the government on improved access to finance would boost morale.

EuroCham Chairman Gabor Fluit (R) and former EuroCham Chairman Alain Cany (L) attend a recent meeting. Photo: EuroCham

The Business Climate Index is the premier metric for gaining insight into the European business and investment community's perceptions of the Vietnamese market.

Assembled from feedback gathered from EuroCham Vietnam's expansive network of 1,300 members, who collectively represent nearly every sector of the country's dynamic economy, this quarterly survey delivers indispensable insights into the current state of Vietnam's business environment. It provides a snapshot of what to expect in the future.

According to the latest report, in the first quarter of 2023, the business climate index continues to be slightly below the midpoint at 48.00, indicating a sustained skepticism of the economy’s performance from business leaders.

Specifically, the number of respondents sanguine about the nation's economy has risen by 8 points, signaling a growing faith in its prospects. 

Besides, only six percentage points (ppts) fewer business leaders agreed that the Vietnam economy would deteriorate in Q1 2023, while one percentage point more respondents indicated that the economy would stabilize and improve in the next quarter in Q1 2023, compared to the previous quarter.

Likewise, a notable uptick in the number of individuals anticipating the stability and growth of the economy was observed. According to the survey, the number of individuals expecting a downturn in the economy decreased by 6%, while the number of those forecasting an upturn in revenue and orders increased by 7%.

Based on feedback from survey participants, regulatory simplification, sustainable development measures, investment incentives, and workforce development programs have all played a key role in creating prime conditions for long-term economic success.

Through a range of strategic initiatives aimed at enhancing the business environment, Vietnam has emerged as a leading destination for foreign investment and domestic enterprises alike, according to the BCI.

Commenting on the BCI, EuroCham Chairman Gabor Fluit said: “While a score of 48 might not appear impressive, it is encouraging that the situation is not deteriorating further. The fact that the score is not dropping is a sign of progress, even if it is still far from ideal. This gives us hope that the situation can be improved with further effort.”

“Overall, we have a positive outlook on the future of Vietnam's economy and look forward to engaging in productive conversations with the Vietnamese government. We are enthusiastic about working together to take on the challenges and embrace the opportunities ahead,” he stressed.