European companies more confident in Việt Nam’s business environment following the end of lockdown

European companies ended 2021 more positive and optimistic about Việt Nam’s trade and investment environment, according to the Business Climate Index (BCI) from the European Chamber of Commerce in Vietnam (EuroCham).

The BCI reached the highest point following the fourth wave, with positive sentiment reaching 61 points. That represents a jump of 42 points since the third quarter of 2021, with business leaders welcoming the end of lockdowns and the re-opening of normal commercial operations.

The BCI remains below its pre-pandemic peak. However, it is clear evidence that confidence is returning to the market.

The BCI is a regular barometer of European business leaders and investors. Each quarter, EuroCham asks its over 1,200 members – including business leaders and investors in all sectors and industries – for their perceptions of Việt Nam’s trade and investment environment and their predictions for the prospects of their own companies. Since 2020, the fieldwork for the BCI has been conducted by YouGov Vietnam.

Over half (58 per cent) of European business leaders are now anticipating economic stabilisation and growth in the first quarter of 2022. That represents an eight-point rise in optimism. Meanwhile, less than one-in-five (17 per cent) now predict a deterioration – a figure which has almost halved since the last BCI.

Business leaders are also more confident about the prospects of their own enterprises in this post-pandemic ‘new normal’. Therefore, 43 per cent of European businesses surveyed plan to increase their investment in the first quarter of 2022, compared to just 17 per cent three months ago. Likewise, more than one-third (38.5 per cent) intend to increase their headcount – up around 15 per cent – while over half (51.5 per cent) are predicting a rise in orders and revenue, a rise of 7.5 per cent compared to the third quarter.

EuroCham Chairman Alain Cany said: “These latest figures are a vote of confidence in Việt Nam’s trade and investment environment now that the pandemic is back under control as well as in the Government’s clear direction that we learn to live with the virus.

“Business leaders welcome the return to life as normal and business as usual, and in particular the easing of entrance requirements for vaccinated foreigners who live and work here. Almost 90 per cent of our member companies reported that previous restrictions had an impact on their commercial operations. So, this new regulation will help to improve the business environment and increase the confidence of business leaders still further."

However, Cany noted that some sectors remain at risk of falling behind in the race to recover post-pandemic.

Tourism – one of Việt Nam’s spearhead economic sectors and one which is responsible for millions of jobs – remains restricted to guided tours, and this is keeping the brakes on economic growth.

Therefore, EuroCham encourages the Government to go further and faster in re-opening – at least in areas with high vaccination rates – so that Việt Nam can achieve its full potential as a leader in this and other industries and attract more foreign investment in 2022.

Thue Quist Thomasen, CEO of YouGov Vietnam, said: “Our data shows that confidence and optimism are returning as companies get back to work. European business leaders are planning to increase their staffing levels, investment plans, and revenues as a result now that the pandemic is back under control.

“The challenge now is to capitalise on this positive sentiment and ensure that enterprises in all sectors and industries can operate to their full potential. In doing so, European businesses will be able to make their greatest possible contribution to Việt Nam’s economic growth in 2022.”