European firms optimistic about Vietnam’s business climate

Leaders of European businesses have started 2021 with optimism about the trade and investment environment in Vietnam, according the Business Climate Index (BCI) for the first quarter of 2021 released by the European Chamber of Commerce (EuroCham) on April 30.

The index reached 73.9 points in Q1, the highest score recorded since Q3 of 2019, before the COVID-19 pandemic impacted the global trade and investment system.

The BCI survey also showed the sustained optimism about the business climate, up 47 points over the last 12 months.

When asked about Vietnam’s business climate outlook for Q2 this year, 67 % of the European enterprises considered it “excellent” or good“, rising 12 % from Q1.

The respondents were also more optimistic about their businesses’ performance in Vietnam this year. More than two-thirds of them, equivalent to about 68 %, expected their orders and revenue will maintain the same level or increase in the next three months, up 25 % from Q4 of 2020.

EuroCham members noted that improvements thanks to the EU-Vietnam Free Trade Agreement (EVFTA), which took effect on August 1 last year, has created favourable conditions for enterprises.

However, business leaders also expressed their concern about certain barriers like administrative procedures that will continue hampering their firms’ activities in the time ahead.

According to EuroCham Chairman Alain Cany, this time’s BCI indicates that Vietnam is continuing to open its economy though many countries are still hit hard by the COVID-19 pandemic. Vietnam is capable of ensuring businesses’ normal operations without many disruptions, which is helping fuel economic growth and European business leaders’ confidence.

The BCI rebounding to the pre-pandemic levels evidences a considerable achievement and that Vietnam is moving in the right direction to achieve the twin targets of combating COVID-19 and promoting economic growth, he said.

The BCI is a regular barometer of the business sentiment among European companies operating in Vietnam. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Vietnam.

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