Most European businesses in Vietnam remain confident in Vietnam’s diplomatic ability to navigate global trade tensions, said Bruno Jaspaert, chairman of the European Chamber of Commerce in Vietnam (EuroCham), in EuroCham’s latest survey.

The findings of the latest Business Confidence Index (BCI), conducted by Decision Lab from 10 to 27 March, before a wave of major shifts in global trade policy, indicate that most European firms did not anticipate drastic tariff measures.

Business sentiment among European companies operating in Vietnam in the first quarter of this year showed modest signs of improvement compared to previous quarters as 42 percent of the respondents reported a neutral stance on the business environment – suggesting a preference for vigilance amid ongoing changes.

“This quarter’s Business Confidence Index captures a rare and revealing moment – just before the global trade winds shifted, we saw a sentiment that was steady but cautious, optimistic but watchful,” observed Thue Quist Thomasen, CEO of Decision Lab.

At the time of the survey, Vietnam’s solid economic growth and positive GDP forecasts (cited by 37 percent) provided a degree of reassurance.

The respondents also highlighted trade and investment opportunities (24 percent) and a rebound in consumer spending and tourism (18 percent) as favorable signs. 

Up to 68 percent of the European business leaders said they would recommend Vietnam as an investment destination, highlighting their long-term commitment. This figure reflects a seven-point drop from the last quarter of 2024.

However, circumspection remained prominent in the business psyche. Over half (52 percent) of the businesses cited global economic slowdowns and shifting trade dynamics as primary concerns.

Administrative procedures remain challenging

The respondents identified key areas where further progress would strengthen Vietnam’s appeal to foreign investors, with infrastructure development (37 percent) as the top priority for enhancing the Southeast Asian country’s investment attractiveness. 

Other points noted were streamlining administrative processes (29 percent), easing visa and work permit procedures for foreign experts (24 percent), as well as greater clarity in laws and stronger law enforcement (21 percent). 

Consistent with previous BCI reports, administrative procedures continue to pose major challenges for European businesses. Key obstacles include bureaucratic red tape, corruption, inconsistent law enforcement, and a lack of regulatory transparency. 

The issue of VAT refunds also remains significant, with 41 percent of the businesses experiencing occasional or frequent delays. Among them, 19 percent reported wait times of one to three months, and 16 percent experienced delays of six to 12 months. 

Compared to previous years, the businesses acknowledge Vietnam’s progress in areas such as infrastructure, technology, connectivity, and workforce developments. 

However, over 70 percent of the respondents reported seeing little to no improvement in market and investment conditions, cost management, operational efficiency, or administrative processes. 

Many European businesses expressed hopes for progress in Vietnam’s ongoing government restructuring process by 2026.

Key anticipated improvements include a shift to digital submissions and approvals (45 percent), faster processing times for administrative procedures (26 percent), and decentralisation of decision-making at local levels (25 percent). 

Regarding the provincial mergers, over 40 percent of the respondents believed these changes could eventually improve administrative efficiency and reduce regulatory complexity. 

Notably, 44 percent suggested their operations would function best if Vietnam reduced its number of provinces to below 30 – pointing to a preference for leaner governance.

Like us on Facebook or follow us on X to get the latest news about Vietnam!