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Confidence in Vietnam of European businesses

Confidence in Vietnam of European businesses

Wednesday 10, 04 2024
The latest data shows that European businesses continue to see Vietnam as a dynamic market with promising growth prospects.

Strong confidence among European businesses

The latest Business Confidence Index (BCI) indicates strong confidence among European businesses in the Vietnamese economy. The index reached 52.8 in the first quarter of this year, marking the highest level in two years.

Dominik Meichle, Chairman of EuroCham, commented: "This positive trend underscores the European business community's view of Vietnam as a dynamic market with excellent growth prospects."

This index once again rising above the 50 threshold confirms Vietnam's increasing attractiveness. Continuous efforts to improve stability and predictability will further enhance this country's global competitiveness and unleash its full potential.

Business Confidence Index over the years

Thue Quist Thomasen, CEO of Decision Lab - the entity conducting the BCI report, stated that data from BCI painted a clear picture - investors' optimism is steadily improving.

"Vietnam is certainly poised to become a premier investment destination in the region, and proactive policies focused on investors will further accelerate Vietnam's development" he emphasized.

The report results show that European businesses are signaling a strong likelihood of introducing Vietnam as a top investment destination. Significantly, more than half of the respondents are likely to recommend this country to other foreign businesses, ranking it 8th or higher in the top 10 markets recommended.

This highlights Vietnam's increasing attractiveness within the European business community and suggests additional potential for attracting investors.

Furthermore, European businesses also express optimism about Vietnam's economy, both in the short and long term. Specifically, while one-third of businesses feel optimistic about the next quarter's prospects and nearly 40% are neutral, other indices also indicate a promising trajectory.

Firstly, increasing optimism is notable. Businesses have a positive outlook for the upcoming quarter regarding the overall economy. The optimism level is rising while pessimism is only at 10%. Additionally, businesses anticipate higher revenues. More than half of those surveyed predict an increase in order quantity and revenue in the next three months. Moreover, many businesses plan to expand their workforce soon, and investment confidence is rising.

In the long run, this optimism is further reinforced, with over 70% of businesses feeling positive about their long-term prospects in Vietnam over the next 5 years. Vietnam's skilled workforce is a major attraction for European investors, with a majority of EuroCham members employing over two-thirds of local workers.

Legal barriers

While optimism remains high, European businesses report facing legal barriers in Vietnam that hinder market entry and long-term investment. Primary concerns include administrative burdens, unclear regulations, licensing difficulties, and visa barriers to work.

Specifically, over half of European businesses highlight administrative burdens as the biggest obstacle to establishing and expanding operations, with over one-third struggling with unclear regulations, creating uncertainty and hindering strategic planning.

Legal barriers

To attract more foreign investment, European businesses recommend streamlining management through reasonable procedures for easier market entry and reducing bureaucracy; strengthening the legal framework through clear and consistent laws to create a predictable investment environment.

European investors also hope for infrastructure improvements through better roads, ports, and bridges to support trade and logistics.

EuroCham Chairman Dominik Meichle assesses Vietnam's enormous economic potential, and addressing legal challenges is the key to fully realizing that potential. Simplifying procedures and establishing clearer regulations will benefit both Vietnamese and foreign businesses.

"This will help Vietnam become a top investment destination in the region, benefiting domestic businesses, attracting international capital, and enhancing economic partnerships," he emphasized.

Source: Decision Lab, theleader

Compiled by VietnamCredit

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