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Eurocham recently unveiled its Q2 2024 Business Confidence Index (BCI). It was conducted by Decision Lab and distributed to EuroCham's network of 1,400 members. The highlight of the report shows the perspective on the economic landscape for European enterprises in Vietnam.

Despite the country's robust first-half GDP growth, the BCI experienced a marginal decline from 52.8 in Q1 to 51.3 in Q2 2024, underscoring the necessity for ongoing policy adjustments to maintain momentum.

“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,” EuroCham Chairman Dominik Meichle said.

Dominik Meichle, Chairman of European Chamber of Commerce in Vietnam (EuroCham) (Photo: EuroCham Vietnam).

Meichle added that this survey shapes our conversations with Vietnamese officials and EU policymakers.

"By bringing our members' perspectives to the table, we are identifying key areas for growth and strengthening the Europe-Vietnam partnership through open dialogue and teamwork," he shared.

According to Thue Quist Thomasen, CEO of Decision Lab, while 68% of respondents report neutral to positive current conditions, there is a slight increase in short-term caution, which needs to be addressed to continue the positive trend from the previous quarters.

"Still, the strong 6.42% GDP growth in the first half of 2024 and nearly 70% expressing long-term optimism indicate robust underlying confidence that may materialize in future readings,” Thomasen said.

The survey results also reflected ongoing challenges in the local business environment. For example, a majority (68%) maintain a neutral to positive outlook regarding their own business conditions, suggesting an overall sense of stability. Also, fewer companies report the economic situation as “very poor” (decreasing from 8% to 6%). However, those describing it as “not good” increased slightly (from 24% to 26%). Though overall sentiment towards Vietnam's economic outlook in Q3 2024 is cautiously optimistic (45%), individual businesses are more hesitant about their own prospects for the quarter, with 45 %remaining neutral and 23% expressing concerns.

Nearly 70% of 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.

Also, the survey highlights persistent regulatory challenges that hinder growth and investment including ambiguous regulations subject to varying interpretations; burdensome administrative processes; difficulties in obtaining licenses, permits, and approvals; challenges with visas and work permits for foreign workers; and duplicate or inconsistent approvals across government levels.

On a positive note, it reveals a growing commitment to sustainability among European businesses in Vietnam, with 7% having already achieved carbon neutrality. An impressive 37% have set targets to reach this goal by or before 2050, while an even more ambitious 18% aim to achieve carbon neutrality by 2030. The recent signing of the Direct Power Purchase Agreement (DPPA) decree offers a ray of hope because swift and successful implementation could address some of these challenges, particularly by improving access to clean energy sources and potentially providing better sustainability incentives.

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