European firms optimistic about business environment in Vietnam after easing social distancing

Positive signs and optimism were reflected in the EuroCham Business Climate Index (“Business Climate Index – BCI”) of the 3rd quarter.

Although the index remains low, BCI has recorded improvements in Vietnam's economic outlook. Nearly half of business leaders and investors (49%) expected that the economic outlook would stabilize and improve in the next quarter, compared with less than a fifth (19%) recorded in the second quarter.

Mr. Alain Cany, Chairman of EuroCham in Vietnam. (Photo: VNA)

However, leaders of businesses are still cautious about recruitment, investment and profit forecasts. Companies are taking a “wait and see” approach to arrange staff, with about one fifth of survey respondents saying they plan to hire more workers within the next three months.

Similarly, the proportion of businesses planning to maintain or increase investment capital in the fourth quarter (69%) was only 2 points higher than the previous quarter, with revenue forecast to increase.

Meanwhile, about half of the surveyed companies said they were still operating at a low frequency compared to the pre-pandemic period, while travel restrictions and staff shortages continue to affect two thirds of companies. This shows that there are still many issues to be resolved if Vietnam wishes to reach its full potential in trade and investment after the pandemic.

Mr. Alain Cany, President of EuroCham, commented: “Although BCI is still at a low level, the most important thing is that the index is currently trending in a positive direction. With the pandemic now under control in Vietnam, the optimism of European business leaders will continue to increase as companies return to normal operations and consumer confidence increases./.