European firms express trust in Vietnam’s investment environment

European firms express trust in Vietnam’s investment environment

Despite the heavy impact of the fourth wave of Covid-19 leading to an 18 percent decline in their orders, European firms in Vietnam plan to stay.

Willingness to stay

The latest Business Confidence Index (BCI) survey conducted by the European Chamber of Commerce in Vietnam (EuroCham) during the current social distancing period shows that the index has dropped to its lowest level in the past decade, 15.2 points. Seventy-six percent of surveyed companies reported poor business results from June to August 2021. Twenty-nine percent of the companies said their business results were very bad. Most surveyed companies predicted slight improvements in the next three months.

The government is willing to support business efforts for production and trade recovery

While 71 percent of surveyed companies attributed their unsatisfactory production and business results to limitations in transportation and supply, 51 percent said market conditions were the main reason. Guru Mallikarijuna, Managing Director of Bosch Vietnam, said the company encountered numerous difficulties in implementing the “three-on-spot” and “one route, two destinations” quarantine policies, which have created additional costs for the company and adversely affected its workers’ health and spirit.

Vaccinations for workers are another problem. The EuroCham survey shows that 56 percent of companies (mostly in Ho Chi Minh City) have vaccinated their workers with one shot while most of the remainder said they had not received information about vaccination for their workers. “If this situation continues, our new investment projects will face risks and the company may have to consider moving to another country in the region. Our data show that 18 percent of companies in the manufacturing sector have moved part of production demand/orders to other countries, while 16 percent are considering future movements,” said EuroCham Chair Alain Cany. However, he added, no European company has decided to leave Vietnam and overall, EU investors are still optimistic about the future of the Vietnamese economy and are willing to further promote long-term operations in Vietnam.

Resolving difficulties

In order to help European firms overcome difficulties in the context of Covid-19, Prime Minister Pham Minh Chinh met recently with the head of the EU Delegation to Vietnam, the ambassadors of EU countries, and representatives of EuroCham and some European companies and corporations.

PM Chinh affirmed the Vietnamese government’s willingness to create favorable conditions for European companies to invest and do business in Vietnam. He also urged EU countries to facilitate Vietnamese investment in fields where the EU has demand, contributing to long-term bilateral investment and trade cooperation.

PM Chinh emphasized that Vietnam is taking various measures to control the pandemic. The government has established a special working group to deal with difficulties facing businesses and issued a resolution on support for enterprises, cooperatives and household businesses affected by Covid-19. The government has also provided guidance for relevant authorities to devise economic recovery plans and promote the economy’s adaptation to the pandemic situation in both short and long term. The PM appealed to foreign investors to join Vietnam’s fight against the pandemic.

For its part, EuroCham expects the newly issued government resolution will be helpful for businesses in terms of tax, fees and pandemic prevention.

VietNam Economic News