Hanoi (VNA) - European businesses evaluate Vietnam as one of the top investment destinations, with 54% of those surveyed indicating a high likelihood of recommending Vietnam to other foreign enterprises.
On April 8, the European Chamber of Commerce in Vietnam (EuroCham) released the Business Confidence Index (BCI) report conducted by Decision Lab. The report demonstrates increased confidence in the Vietnamese economy among European businesses.
Specifically, the quarterly index reached 52.8 in the first quarter of the year, reaching the highest level since 2022. The BCI surveyed over 1,400 EuroCham members across various sectors, providing insights over time on the continuous growth effort of the Southeast Asian market.
This positive trend highlights the European business community’s view of Vietnam as a dynamic market with promising growth prospects, said EuroCham Chairman Dominik Meichle.
He emphasised that the index once again rose above the 50-point threshold, and reconfirms the country’s growing appeal. Continuous efforts to enhance stability and predictability will further strengthen Vietnam's global competitiveness and fully unlock its potential.
European businesses expressed optimism about Vietnam's economy in both the short and long term. One-third of the businesses reported optimism about the prospects for the second quarter, while nearly 40% remained neutral. Specifically, investor sentiment has turned positive in the second quarter, increasing by 6 points compared to the first quarter, reaching 45%, while pessimism stands at 10%. More than half of those surveyed predicted that order volumes and revenues would be higher in the second quarter of 2024, with 40% of businesses planning to expand their workforce. Additionally, 71% of businesses feel positive about Vietnam's long-term prospects over the next 5 years.
Thue Quist Thomasen, CEO of Decision Lab, emphasised that hard data from the Business Confidence Index paints a clear picture of steadily improving investor optimism. "Vietnam undoubtedly has the potential to become a premier investment destination in the region, and proactive, investor-focused policies will further accelerate Vietnam's development," Thue stated.
This report also highlights that Vietnam's skilled workforce is a significant draw for European investors. Specifically, 75% of EuroCham members employ at least 76% of their staff locally. Previously, from the fourth quarter of the BCI survey in 2023, only 40% of businesses rated the workforce's skill level as average. The strong hiring trend underscores a robust talent foundation critical for the country's future growth.
However, European businesses still face legal hurdles in entering the Vietnamese market and making long-term investments. Over half of respondents identified administrative burdens as a major obstacle to establishing and expanding operations. Additionally, 36% of businesses struggle with unclear regulations, creating uncertainty and hampering strategic planning. Moreover, 28% of respondents complained about delays in obtaining approvals, deterring new business projects and adding risk for investors.
To attract more foreign investment, European businesses suggested several key reforms. About 37% call for simplified, streamlined legal procedures to ease market entry and reduce bureaucracy. Enhancing the legal framework is also essential, with 34% emphasising the need for clear and consistent laws to create a predictable investment environment. Additionally, 28% support improving infrastructure such as roads, ports, and bridges to facilitate trade and logistics.
EuroCham Chairman Dominik Meichle believed that Vietnam's economy has an enormous potential but can only be fully realised when legal challenges are addressed. Simplifying procedures and establishing more transparent regulations will benefit both Vietnamese and foreign businesses. This will help Vietnam become a top investment destination in the region, benefiting local enterprises, attracting international capital, and strengthening economic partnerships, Dominik said./.
