European businesses are more pessimistic about the business environment, but mainly due to external factors. According to the president of EuroCham, this is still an interesting time to invest in Vietnam.
According to the Doing Business Index (BCI) released by the European Chamber of Commerce in Vietnam (EuroCham), the confidence of European investors and businesses in Vietnam’s business environment has decreased slightly in the second quarter compared to the first quarter. BCI is conducted by YouGov Vietnam.
However, the BCI in the second quarter is still higher than the fourth quarter of 2021. EuroCham President Alain Cany said that this is still an “exciting and promising time to do business in Vietnam”.
Global instability
Specifically, after increasing in the first quarter, BCI fell 4.4 percentage points in the second quarter to 68.8 points. Contrary to the beginning of the year, dual factors such as the protracted war in Ukraine, the spike in commodity prices and the ripple effect of China’s Zero-Covid policy have dampened the expectations of the European business community in Vietnam.
However, BCI is still 7.6 percentage points higher than the last quarter of 2021 (61 points).
Compared to the first quarter, European business leaders also showed that confidence in Vietnam’s growth potential has decreased. 60% of respondents predict that Vietnam’s economy will stabilize or improve in the third quarter, while this figure was 69% the previous quarter.
In addition, 45% of survey respondents are very satisfied or satisfied with Vietnam’s efforts to attract and retain FDI, while 76% expect that their company will increase FDI into Vietnam before the end of the third quarter.
This may be because 55% of respondents said that Vietnam has improved its ability to attract and retain FDI since the first quarter.
Meanwhile, 79% of business leaders said their assessment of Vietnam’s green development potential has improved since the first quarter.
The survey also identified barriers to European investment in Vietnam and trade between the two sides. 35% of respondents think that reducing and simplifying administrative procedures is the most effective way to increase FDI, while 24% consider infrastructure development a key factor.
Similarly, 45% of survey respondents said that the main difficulties that foreign companies face are related to administrative procedures, which hinder their ability to take advantage of the Agreement. Vietnam – EU Free Trade (EVFTA).
“An exogenous continuum is causing global economic instability. This problem is not unique to Vietnam,” commented EuroCham President Alain Cany.
Promising destination
He said that Prime Minister Pham Minh Chinh’s commitments at COP26 and the Government’s national strategy on green growth show that Vietnam is seriously making the necessary changes for the green transition.
“Therefore, despite uncertainties in the global economy, this is an exciting and promising time to do business in Vietnam,” said EuroCham.
According to YouGov Thue CEO Quist Thomasen, BCI results show a slight decrease in the context that Vietnam has opened up and returned to normal business activities.
“However, Vietnam’s handling of the current situation is clearly a mitigating impact in the context of global economic uncertainty. The inflation rate maintains near target and the improvement in credit rating. The use of the country is a strong example,” he added.
According to him, the confidence of foreign investors in the Vietnamese market has remained stable during volatile times, so FDI inflows have been maintained. Vietnam’s green growth potential is also encouraging European investors.
“Therefore, the BCI results this quarter, as well as the Vietnamese market in general, should be evaluated positively,” the expert affirmed.
@ Zing News
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Source: Vietnam Insider