European firms optimistic about Vietnam’s long-term economic growth outlook: report
European firms optimistic about Vietnam’s long-term economic growth outlook: report
The Business Confidence Index (BCI) of European businesses in Vietnam declined slightly in the second quarter of 2024, but 70 percent of them expressed optimism about the Southeast Asian country's economic growth in the next five years, according to a report from the European Chamber of Commerce in Vietnam (EuroCham).
This illustration shows representatives of European businesses at an event held in Ho Chi Minh City, southern Vietnam. Photo: EuroCham |
The EuroCham on Monday announced its BCI report for the second quarter, providing a comprehensive picture of the business environment in Vietnam, according to a press release the agency issued said the same day.
Despite Vietnam’s strong gross domestic product (GDP) growth in the first half, at 6.42 percent, the BCI decreased slightly to 51.3 in the second quarter from 52.8 in the first.
The report was based on the BCI survey, which was conducted by Decision Lab, a leading market research company in Vietnam, and distributed to EuroCham’s network of 1,400 members, serving as a barometer of sentiment among European businesses operating in Vietnam.
Regarding current business conditions, a small number of the companies surveyed commented the economic situation as ‘very poor’ (down from eight percent in the first quarter to six percent in the second), while the number of the companies reporting it as ‘not good’ increased two percentage points to 26 percent.
Meanwhile, a majority – 68 percent – still maintained a neutral to positive view for their business conditions, suggesting an overall sense of stability.
In respect of the immediate outlook, 45 percent of the businesses showed cautious optimism about Vietnam's economy in the third quarter, while 23 percent voiced concerns.
However, for a long-term outlook, nearly 70 percent of the businesses expressed optimism about Vietnam's economic growth over the next five years.
“This confidence is further reflected in the fact that a comparable percentage would recommend Vietnam as an investment destination,” the press release said.
However, the survey also highlights “persistent regulatory challenges” that hamper growth and investment in Vietnam, including burdensome administrative processes, ambiguous regulations subject to varying interpretations, and difficulties in obtaining licenses, permits, and approvals.
In addition, difficulties in obtaining visas and work permits for foreign workers, and duplicate or inconsistent approvals across government levels are also among the obstructions.
In order to attract more foreign direct investment and stimulate economic growth, the businesses surveyed recommended that Vietnam should streamline administrative and procedural processes, enhance clarity and precision in laws to reduce arbitrary interpretation, develop core infrastructure, and simplify visa and work permit procedures for foreign experts, among others.
Dominik Meichle, chairman of EuroCham Vietnam, underscored that Vietnam's economic potential is undeniable and the European business community remains confident in the country’s long-term growth.
"While our survey points to areas for improvement, we believe that by working together to address administrative and regulatory hurdles, we can create a more efficient and attractive business environment that benefits both the European and Vietnamese business communities," the press release quoted Meichle as saying.
