European enterprises more optimistic about doing business in Vietnam

Friday, 2020-08-28 17:40:30
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About 24% of European enterprises are seeing positive improvements in their performance. (Illustrative image)
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NDO – The latest Business Climate Index (BCI) survey released by the European Chamber of Commerce in Vietnam (EuroCham) showed that the index rose slightly from 33.6 percentage points in May to 34.4 percentage points in the second quarter of 2020, reflecting the more optimistic sentiment among European enterprises on the recovery of the Vietnamese market.

Previously, this index fell to its lowest level in the fourth quarter of 2019 at 27 percentage points and then increased to 33.6 percentage points in May.

In the second quarter of this year, business activities of enterprises were better than expected as the COVID-19 situation came under control. Only 51% of the enterprises said that their performance was negative in the second quarter, compared to 74% in the first quarter.

Notably, about 24% of enterprises are seeing positive improvements in their performance, signaling a gradual return to normal.

The survey also reveals that about a quarter of enterprises expected to see an increase in their orders for the next quarter. The optimism will hopefully serve as a driver for growth in Vietnam’s business environment in the third quarter of this year.

European enterprises are still exercising caution in their investment and headcount plans. Around 46% of European enterprises plan to keep the same headcount level for the next quarter while 45% of them are planning to reduce their future investment plans.

EuroCham Chairman Nicolas Audier said that optimism has returned and improved among the business community as the second quarter's business results were better than predicted, thanks to the control of the first wave of the COVID-19 pandemic. However, business leaders are becoming more cautious about their business prospects in the next quarter.

"Global trade will be unpredictable in the short term, but we believe that the EU-Vietnam Free Trade Agreement (EVFTA) and the operations of the European business bloc in Vietnam will be factors driving Vietnam's economy in the long term," said the EuroCham chairman.