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Corruption a top challenge for European firms in Vietnam: survey

Corruption a top challenge for European firms in Vietnam: survey

Thursday, November 07, 2013, 18:47 GMT+7

Corruption tops the list of four key challenges that European enterprises face when doing business in Vietnam, the European Chamber of Commerce in Vietnam, better known as EuroCham, said in a survey released Wednesday.

Results of the 13th quarterly EuroCham Business Climate Index (BCI) survey, conducted in October 2013, indicate that 72 percent of EuroCham members who participated in the survey think corruption is a challenge.

The other three problems are: lack of inconsistent implementation of legislation (67 percent); administrative difficulties (52 percent); and lack of transparency (45 percent).

EuroCham said these are the underlying issues that have left a number of respondents considering relocating their business to another ASEAN country, as showed by the last quarter’s BCI survey.

“We have sought to support the Government of Vietnam in identifying the problems for this concern,” EuroCham said in its report.

The report also takes a closer look at the impact of ‘lack of or inconsistent implementation of legislation,’ and found that 50 percent of respondents claimed that “legislative changes negatively impacted their business,” and only 7 percent recognized the legislative changes as positive in 2013.

Sadly, half of the respondents expect legislation to continue to have a negative impact on their business next year, the report says.

However, 32 percent remain hopeful for a positive legislative environment in 2014.

Yet the respondents also found a number of positive aspects of doing business in Vietnam.

Sixty percent said it is the business opportunities in the country, while another 60 percent believed it is the future growth of the market. Another important aspect is “Vietnam is a regional hub for export,” according to 19 percent of respondents.

Unchanged outlook and confidence

The BCI survey also illustrates that “business confidence and outlook among European businesses in Vietnam remains unchanged for the third time - stagnating at 50.”

“EuroCham members who participated in the survey expressed reduced confidence in the business outlook and remain worried about the impact of future legislative changes,” the report reads.

Still, there are positive signs such as the fact that investment plans and business orders are expected to increase, which in turn positively impacts recruitment plans. Also, the impact of inflation on business is expected to reduce.

EuroCham said respondents’ assessment of the current business situation has “overall remained unchanged compared to the last quarter.”

Specifically, 38 percent of respondents assessed the current situation as positive, while the percentage of those with a negative view dropped from 28 percent in the last quarter to 24 percent.

However, the number of positive assessments of the business outlook dropped to 44 percent, the first decrease after two consecutive quarters of growth.

“Even if the majority of our members remain committed to the Vietnamese market in the long term, this development is worrying and further underlines the need for the Vietnamese Government to address the business issues negatively impacting foreign investors,” EuroCham stated in the report.

EuroCham was established in 1998 to help develop Vietnam into an attractive investment destination and trading partner for European business.

Tuoi Tre

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