The 13th quarterly EuroCham Business Climate Index (BCI) survey released on November 6 showed that business confidence and outlook among European businesses in Vietnam remains unchanged for the third time - stagnating at 50.
However, the report said investment plans and business orders are expected to increase, which in turn positively impacts recruitment plans. Another positive development is the expected reduced impact of inflation on business.
Specifically, the rate of respondents expecting to increase investments in Vietnam increased from 34 percent last quarter to 41 percent this quarter. Furthermore, the rate of respondents planning to “significantly increase investments” has doubled from last quarter's 8 percent, to 16 percent this quarter.
In line with this development, the expected number of business orders has continued to grow – to 67 percent (from 61 percent and 53 percent the past two quarters, respectively).
The positive development in investment plans and expected business orders has translated into increased recruitment plans, with the number of respondents expecting to increase their headcounts remains at 47 percent, it said.
Respondents remain somewhat confident in the macroeconomic outlook, with 47 percent expecting a 'stabilisation and improvement” of the situation and 35 percent expecting no change.
The initiatives undertaken by the Vietnamese Government to reduce inflation have been effective, which is clearly demonstrated by the BCI findings; the number of respondents expecting inflation to have a “significant or threatening impact” on their business has been substantially reduced (29 percent compared to 43 percent last quarter and 50 percent last year).
EuroCham Chairman Preben Hjortlund commented that it is worrisome to see that the BCI comes out at 50 for the third time. He added that it is interesting to see that so many of the respondents still fear that legislative changes could negatively impact their business in 2014.
“This clearly demonstrates the need to incorporate the business community in the legislative process and to take their opinions into account in order to avoid legislation having perverse effects when implemented. Finally, it is important to note the high level of respondents calling for the Vietnamese Government to take note of the Whitebook 2014, which will be published next week - on November 11,” he said.
Since its establishment with only 60 members in 1998, the European Chamber of Commerce in Vietnam (EuroCham) has grown to represent more than 750 European businesses, counting among its supporters many of the world's leading enterprises.
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