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Vietnam’s economic rise fuels European optimism: survey

Vietnam’s economic rise fuels European optimism: survey

Monday, April 08, 2024, 16:31 GMT+7
Vietnam’s economic rise fuels European optimism: survey
Employees work at a local factory in Ho Chi Minh City. Photo: Duyen Phan / Tuoi Tre

The European Chamber of Commerce in Vietnam (EuroCham)’s most recent Business Confidence Index (BCI), conducted by Decision Lab, signaled optimism about Vietnam's economy as the quarterly index reached 52.8 in the first quarter of 2024, the highest level since the third quarter of 2022.

The index jumped by 6.5 percentage points from the previous quarter, according to a survey recently released by EuroCham.

The BCI is a regular barometer of the business sentiment among European companies operating in Vietnam. 

Conducted since 2011, the BCI collects feedback from EuroCham Vietnam's extensive network of 1,400 members across a diverse range of sectors. 

European businesses express optimism about Vietnam's economy, both in the near and long term. 

The proportion of businesses showing confidence in the economic outlook rose by six percentage points quarter-on-quarter, climbing from 39 percent in the fourth quarter of 2023 to 45 percent in the first quarter of 2024, while pessimism decreased by eight percentage points, dropping from 18 percent to 10 percent.

Positive sentiment among businesses remained steady compared to the fourth quarter of 2023, with a decrease in negativity from 39 percent to 32 percent.

Over half of the respondents anticipated higher orders and revenues in the second quarter of this year.

More than 40 percent of businesses plan to expand their workforce in the next quarter.

Also, 71 percent of companies are feeling positive about their long-term prospects in Vietnam over the next five years.

This positive outlook suggests that businesses see Vietnam as a stable and attractive environment for growth in the coming years, according to the survey.

“This positive trend underscores the European business community's view of Vietnam as a dynamic market with promising growth prospects,” said EuroCham chairman Dominik Meichle. 

“The index once again rising above the 50-percent threshold reaffirms the country's growing appeal. Continued efforts to enhance stability and predictability will further strengthen Vietnam's global competitiveness and unlock its full potential.”

“Vietnam certainly has the capacity to become the region's preeminent investment destination, and proactive, investor-focused policies will further accelerate its rise,” said Decision Lab CEO Thue Quist Thomasen. 

European businesses signal a strong likelihood of recommending Vietnam as a top investment destination. 

A significant 54 percent of those surveyed indicated a high likelihood of recommending the country to other foreign businesses.

Vietnam's skilled workforce is a major draw for European investors, with 75 percent of EuroCham members hiring 76 percent or more of their staff locally. 

While optimism remains high, businesses face regulatory hurdles in Vietnam that hinder market entry and long-term investment. 

Key concerns include administrative burdens, unclear regulations, permit and license difficulties, and work visa barriers.

“Vietnam has tremendous economic potential, and addressing regulatory challenges is key to fully realizing it,” said Meichle. 

"Streamlining procedures and establishing more transparent regulations will empower both Vietnamese and foreign businesses to succeed.

"This will position Vietnam as a leading investment destination in the region, benefiting domestic businesses, attracting international capital, and strengthening economic partnerships.”

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Tieu Bac / Tuoi Tre News

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