Business confidence among European companies in Vietnam continues to improve, according to Eurocham's 11th quarterly EuroCham Business Climate Index (BCI) survey released on May 30.
The Business Climate Index conducted in May rose to the midpoint, from 48 to 50 points, following three quarters that had registered below 50.
This is the second consecutive increase, which suggests that European companies were regaining trust in the Vietnamese market.
The key indicators were an increase in revenues and orders, and optimism about the overall economic outlook.
Despite positive signs, the BCI remains at 50, far below the highpoint of 79 in 2011, and the improvements over the last two quarters remain limited, with an increase of two points per quarter.
More than half of the businesses that took part in the survey are active in the services industry, a quarter in manufacturing, and the rest in trading and other activities.
In line with the last survey, there has been a continued increase in respondents assessing their current business situation as positive, from 40 percent to 43 percent.
The previous quarter saw a rise from 26 percent to 40 percent, and the current level reflects improved business sentiment.
Looking to the future, the business outlook has seen significant improvement, with members having positive expectations rising from 30 percent to 43 percent.
This development may be linked to the ongoing EU-Vietnam FTA negotiations, the survey said.
Although business confidence has improved, 57 percent of respondents assessed their outlook as either "neutral" or "negative".
Still, the survey found that reported investment appeared to be improving, and that more companies intended to have a significant increase in investment. This doubled from last quarter's 7 percent to 13 percent.
Overall, investment plans look more positive than they did a year ago, with 76 percent of respondents either expecting to keep or increase their investment levels, compared to 72 percent a year ago.
The number of respondents expecting to cut investments further declined to 19 percent from last quarter's 24 percent.
This again indicates a returning faith in Vietnam 's medium-term future, and shows that Government initiatives are inspiring increasing confidence and optimism.
When asked about their expected number of orders and revenue in the medium-term, 84 percent of respondents said they would remain constant or would improve.
In addition, concerns about inflation are declining, with 65 percent of companies expecting inflation to have limited or no impact on their business in the medium-term, compared to 55 percent in the last quarter and up from 43 percent a year ago.
Respondents' appreciation of the macroeconomic situation is also improving.
In other words, 52 percent of the respondents believe the economy will stabilise and improve in the future, something which has not been seen in the Business Climate Index since 2011.-VNA
