European firms optimistic about Vietnam’s business environment

Workers at a manufacturing plant of mobile phone spare parts in Vietnam (Illustrative image. Source: VNA) 

HCM City (VNA) – European firms continued to be optimistic about the business environment in Vietnam, according to the EuroCham’s latest Business Climate Index (BCI).

Accordingly, the BCI for the first quarter of 2018 is 78 points, up 1 point from the previous quarterly survey.

However, the percentage of respondents rating the business situation as excellent dropped by nearly 10 percent, with an increase of 7 percent in respondents describing the situation as good. Negative responses were at almost the same level as in Q4 of 2017.

More respondents showed their confidence of a stable and continuously improving macroeconomic scenario in Vietnam with a 9 percent increase, while those expecting no change in the next quarter increased by nearly 10 percent.

The survey showed that inflation was not a major concern for EuroCham members, with 84 percent believing it will have either no or minor impact.

Regarding headcount, the number of businesses expecting to maintain the current size of their workforce remained at 40 percent, while 12 percent will significantly increase their workforce. Responses indicating intention to reduce headcount a little bit accounted for 5 percent compared to 10 percent in the previous quarter.

Meanwhile, 45 percent of the respondents said they intend to maintain their level of investment, a 9 percent rise.

EuroCham Co-Chairman Nicolas Audier said that the BCI survey results for Q1, 2018 continued to show positive expectations from EuroCham members toward Vietnam, albeit not at the same levels of optimism as in 2016.

“EuroCham hopes that this interest inspires the Vietnamese Government to improve the business environment further, particularly regarding the changes to the legal framework that will enable Vietnam to fulfil its commitments under the EU-Vietnam Free Trade Agreement, expected to come into force later this year,” he said.

Audier noted that even though the BCI score is very positive (78 out of 100), there is still quite some legal and regulatory work to do in Vietnam.

He added that EuroCham is confident that current hurdles to liberalisation will be surpassed and the next survey will again reflect an excellent outlook from the perspective of the European and Europe-related business community in Vietnam.-VNA