October 06, 2023

Vietnam’s business landscape is brightening, says EuroCham’s Q3 Business Confidence Index

[HO CHI MINH CITY, 9 October 2023] – The European Chamber of Commerce Vietnam’s (EuroCham) quarterly Business Confidence Index (BCI) has regained its upward trajectory in Q3 2023, offering a glimmer of hope for the Vietnamese business environment after a turbulent year. The BCI, which is conducted by Decision Lab, has provided a periodic pulse check on Vietnam’s economy since 2011.

 

To read the full Q3 2023 Business Confidence Index report, click here.

 

An overview of the BCI’s findings

 

The BCI nudged up to 45.1 in Q3 2023, from 43.5 the previous quarter. While still below the 50-point threshold for four straight quarters, this small rise indicates emerging positive economic momentum.

 

Click here to access the full BCI report.

Business sentiment appears to be in flux. Between Q2 and Q3, there was a three percentage point drop in pessimism regarding the current situation, while positive and neutral perspectives increased by six and four percentage points respectively. 

 

Furthermore, the Q3 survey revealed a shift in projections for the quarter to come. Compared to responses in the Q2 survey, there was an 11 percentage point rise in businesses anticipating economic stabilization and growth for the upcoming quarter. On the other hand, businesses projecting a negative trend reduced by five percentage points.

Approaching year-end, hope and caution persist. Though Vietnam’s Q3 GDP grew a promising 5.3% year-on-year, companies continue to be cautious. Expectations regarding increased revenue or orders remained stable, with no change from the previous quarter. Just 22% of companies plan to expand their teams in Q4. Only 16% expect an increase in investments.

 

Vietnam’s FDI outlook: bright spots and areas for improvement

 

Vietnam’s global investment appeal remains strong. A notable 63% of surveyed businesses positioned Vietnam within their top 10 FDI destinations. Even more striking, 31% ranked Vietnam among their top three, while an impressive 16% hailed it as their foremost investment destination. Reflecting this confidence, over half of those surveyed plan to increase their foreign direct investment in Vietnam by the end of the year.

 

Yet hurdles persist. A substantial 59% cited administrative difficulties as their main challenge when operating in Vietnam. Challenges such as uncertainties in rules and regulations, hurdles in permit acquisition, and strict visa and work permit requirements for foreign workers also stood out as prominent barriers.

 

To improve the nation’s FDI attraction, 58% of respondents said streamlining bureaucracy is key, 48% advocated for enhancing the regulatory environment, one-third called for upgrading transport infrastructure, and 22% emphasized easing visa and work permit requirements for foreign experts.

 

Sustainability in Vietnam: high priority, high hurdles

 

Sustainability is rising as a priority for European companies in Vietnam, with 80% citing ESG alignment as highly or moderately important. 

 

However, major obstacles remain when translating priorities into practice. Regulatory uncertainty, infrastructure gaps, and insufficient government support were cited as hindrances to implementing sustainability measures locally. 

 

Additionally, only 20% of firms are proactively preparing for impending EU green regulations, such as the Carbon Border Adjustment Mechanism. Meanwhile, 38% currently have no plans for alignment. This distinct lack of preparedness not only poses challenges domestically but can hinder international competitiveness, especially in the crucial EU market.

 

EuroCham’s 2023 Green Economy Forum (GEF) provides a timely opportunity to address these challenges on 2 November in Hanoi. Expanding on the success of EuroCham’s 2022 Green Economy Forum & Exhibition (GEFE), this forum promises to be a hotspot for knowledge-sharing, helping businesses and policymakers to stay abreast of EU green regulations and other pressing issues related to sustainability. By attending, companies can gain invaluable insights into how to navigate these evolving challenges and capitalize on opportunities for green growth.

 

The EU-Vietnam Free Trade Agreement’s dual impact: opportunities and obstacles

 

More than two years after its implementation, the EU-Vietnam Free Trade Agreement (EVFTA) is continuing to have a strong positive impact on Vietnam’s business landscape. Over 60% of companies called the deal beneficial, citing tariff cuts as the top perk, followed by improved competitiveness in Vietnam, reduced trade barriers, expanded partnerships with local firms, and increased access to the Vietnamese market. 

 

However, challenges persist. Discrepancies in customs valuations for imports, opaque and protracted customs clearance procedures, technical obstacles to trade, and an overarching uncertainty or lack of clarity concerning the agreement stand as barriers that curb its full effectiveness.

 

EuroCham Chairman Gabor Fluit’s comments:

 

“It’s clear: Team Europe stands firmly behind Vietnam,” said EuroCham Chairman Gabor Fluit, commenting on the BCI. “Nearly one-third of our members ranking Vietnam as a top-three investment location sends a powerful message about our faith in this partnership.”

 

However, he noted challenges remain. “While we saw promising Q3 GDP and FDI growth, issues persist – especially with exports and real estate. To progress, addressing administrative burdens, unclear regulations, and permitting hurdles is crucial. We remain committed to open dialogue to effectively tackle these issues together.”

 

Fluit emphasized sustainability as a standout finding. “Seeing that 80% of our members prioritize ESG alignment underscores a genuine commitment to responsible growth among businesses. By integrating green practices into business strategies, we pursue both development and progress.”

 

He said the alignment between European firms and Vietnam on sustainability objectives is commendable and pivotal. “This shared commitment will be highlighted at EuroCham’s 2023 Green Economy Forum (GEF) on 2 November. We’ll discuss actionable paths to a greener future. I urge all stakeholders to join us.”

 

Decision Lab CEO Thue Quist Thomasen’s perspective:

 

“After weathering challenges, Vietnam now shows signs of recovery and resilience,” said Decision Lab CEO Thue Quist Thomasen. “Retail and tourism have grown strongly, helping drive the economy forward. Resumed FDI growth also offers optimism, reinforcing Vietnam’s status as a global business hub.”

He noted that while exports and real estate still face hurdles, cautious optimism prevails. “This sentiment signals a possible turnaround in the country’s economic narrative.”

“While the BCI still indicates a slightly negative sentiment, it is positive to note the continued stability in the quarterly measurement. Following a three-year period of high volatility, this new stability indicates that European business leaders can now predict the year ahead and better plan for future investments. This is a positive development in itself.”

About the Business Confidence Index

 

The quarterly Business Confidence Index (BCI), which is conducted by Decision Lab, serves as a vital tool for understanding the perceptions of European and Europe-related companies and investors in the Vietnamese market. Conducted since 2011, the BCI collects feedback from EuroCham Vietnam’s extensive network of 1,300 members across a diverse range of sectors. This survey provides valuable insights into the current business landscape in Vietnam and offers a glimpse into future expectations.

 

Decision-makers, media, and business professionals see the BCI as a key indicator of economic activity in the country. It is a trusted source of information on the business environment in Vietnam, and its findings are widely used to inform government policies and investment decisions.

 

Về EuroCham Việt Nam

Since 1998, EuroCham Vietnam has served as the representative voice for European businesses in Vietnam, supporting a range of sectors from SMEs to multinational corporations. EuroCham plays a pivotal role for European businesses eyeing the Vietnamese market and for Vietnamese firms aiming for European expansion, offering a bridge to benefits under the European Union-Vietnam Free Trade Agreement.

 

With 1,300 members, EuroCham Vietnam is a leading foreign chamber in Vietnam, representing companies that employ over 150,000 people nationwide.

 

The organization also serves as an umbrella chamber, encompassing nine affiliated European business associations:

 

This diversity allows EuroCham to champion the interests of a broad spectrum of industries and businesses, amplifying their collective voice and influence.

 

For media inquiries and further information, please contact:

 

EuroCham Việt Nam

Mr. Dan Martin, Public Relations Officer 

dan.martin@eurochamvn.org

Tin tức khác

Xem tất cả

February 16, 2024

[Work @ EuroCham] GEFE EXHIBITION PROJECT MANAGER – based in Ho Chi Minh City

Đọc thêm

February 15, 2024

[Work @ EuroCham] Operations Officer – based in Central Vietnam

Đọc thêm

January 30, 2024

[Work @ EuroCham] GREEN GROWTH SECTOR COMMITTEE & SUSTAINABLE FINANCE SECTOR COMMITTEE INTERN – based in Ho Chi Minh

Đọc thêm

January 26, 2024

EuroCham and VAFIE Discuss EU Investment Trends and Challenges in Vietnam

Đọc thêm

January 26, 2024

EuroCham Vietnam and Ho Chi Minh City unite for sustainability

Đọc thêm

January 26, 2024

EuroCham’s Construction Sector Committee: spearheading sustainable development in Vietnam’s construction industry

Đọc thêm

January 26, 2024

[CORPORATE SUPPORT] A smart factory for smart materials: BASF celebrates the inauguration of its TPU plant at the Zhanjiang Verbund site

Đọc thêm

January 24, 2024

EuroCham Vietnam and Ho Chi Minh City unite for sustainability

Đọc thêm

January 24, 2024

[CORPORATE PARTNER] PwC – Asia Pacific climate actions not on track: Moving beyond commitment and towards transformation

Đọc thêm

January 19, 2024

[EXTENDED DEADLINE] [Work @ EuroCham] GEFE Project Officer and GEFE Project MarCom Officer – based in Ho Chi Minh

Đọc thêm

January 19, 2024

Economic Insights Unveiled at “Economic Outlook 2024” Business Luncheon organized by EuroCham and BritCham

Đọc thêm

January 19, 2024

EuroCham Vietnam’s latest Whitebook proposes recommendations for boosting investment for a greener, more sustainable economy

Đọc thêm

January 19, 2024

[SUPPORTED CONTENT] PWC recently launched report on the impact of Corporate Sustainability Reporting Directive (CSRD)

Đọc thêm

January 19, 2024

EuroCham Construction Sector Committee Meets with Ministry of Construction to Foster Industry Dialogue

Đọc thêm

January 18, 2024

High-Level Hungarian delegation meets with EuroCham Vietnam, CEEC, and Consulate General of Hungary

Đọc thêm

January 12, 2024

EuroCham Rings in 2024 with Festive Celebration in Hanoi

Đọc thêm

January 12, 2024

Ringing in 2024 with Cheer at EuroCham’s New Year Celebration in Ho Chi Minh

Đọc thêm

January 05, 2024

Successful EuroCham Vietnam advocacy outcome regarding Circular on Nutritional Labeling

Đọc thêm

January 05, 2024

Vietnam’s business confidence gains traction in Q4 2023 amid challenges: EuroCham Vietnam Business Confidence Index (BCI)

Đọc thêm

January 05, 2024

Vice-Chairman Minh Nguyen continues tenure on Prime Minister’s Advisory Council for Administrative Procedures Reform

Đọc thêm

December 19, 2023

[Work @ EuroCham] MEMBERSHIP ASSISTANT – based in Ho Chi Minh

Đọc thêm

December 19, 2023

EuroCham’s constructive engagement at the Ministry of Foreign Affairs’ 21st National Conference on Provincial Affairs

Đọc thêm

December 15, 2023

Memorandum of understanding signing ceremony on enhancing the regulatory environment and healthcare access towards promoting technological advancements in the medical device sector

Đọc thêm

December 15, 2023

[Sector Committee Spotlight] Mobility Sector Committee

Đọc thêm

December 15, 2023

EuroCham’s mission to Da Nang: strengthening ties and showcasing investment potential in Central Vietnam

Đọc thêm

December 14, 2023

[CORPORATE PARTNER] BASF launches Irgastab® PUR 71, a cutting-edge antioxidant improving regulatory compliance and performance for polyols and polyurethane foams

Đọc thêm

December 08, 2023

[CORPORATE PARTNERS] BASF engages young minds in chemistry with two new Virtual Lab experiments in Vietnamese

Đọc thêm

December 08, 2023

[Event Recap][Breakfast talk] EuroCham Construction Sector Committee’s Successful HCMC Breakfast Talk on Designing with AI!

Đọc thêm

December 08, 2023

Vietnam enhances climate role at COP28 with JETP Resource Mobilization Plan

Đọc thêm

December 08, 2023

[CORPORATE PARTNERS] The Corporate Sustainability Reporting Directive (CSRD) is resetting the value-creation agenda

Đọc thêm

Pour une expérience optimale, veuillez tenir votre mobile à la verticale !

Đối tác Bạch kim

Đối tác cao cấp vàng

Đối tác vàng

Đối tác Bạc

Đối tác dịch vụ cao cấp