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EuroCham members expect more from business environment

Released at: 16:18, 30/05/2017

EuroCham members expect more from business environment

Source: Eurocham

Business Climate Index (BCI) for Quarter 1, 2017, down slightly.

by Linh San

EuroCham has released the results of its Business Climate Index (BCI) for Quarter 1, 2017, with Vietnam’s index at 78, down seven points from 85 in the fourth quarter of 2016.

“The BCI survey results for Quarter 1, 2017 continue to show positive expectations from EuroCham members towards Vietnam but not at the same levels of optimism as last year,” said EuroCham Chairman Mr. Jens Ruebbert. “This does not mean that businesses are under alert or will not continue to explore such a high-potential economy as Vietnam, as shown in the results of the survey, where 90 per cent are either maintaining or increasing investments in the country.”

The sentiment of European and European-linked companies in Vietnam when it comes to conditions for business in the country is moderately positive. Sixty-seven per cent of respondents described their current business situation as “excellent” and “good”, approximately 5 per cent down from the previous quarter. A slight rise was seen in the “not good” and “very poor” responses (which previously had almost no bearing), with 9 per cent and 3 per cent, respectively, from 3 per cent and 2 per cent in the previous quarter.

When it comes to the future, a positive sentiment regarding next quarter’s business outlook continues. Positive answers have declined only slightly, with 9 per cent expecting an “excellent” outlook and 60 per cent the more moderately optimistic "good" outlook. While the “neutral” attitude stayed at the same level this quarter, the “not good” outlook jumped from 0 per cent to 7 per cent and “very poor” from 2 per cent to 4 per cent.

The number of EuroCham members expressing confidence in a stable and continuously improving macroeconomic scenario for Vietnam has fallen by around 10 per cent. Conversely, businesses that believe the macroeconomic scenario may deteriorate has increased from 11 per cent to 18 per cent. The number of respondents that expect no change in the next quarter remains close to the 40 per cent mark.

EuroCham members that intend to maintain their level of investment in the country represented 42 per cent of respondents, a 2 per cent increase from the previous quarter. Intentions to increase investments also remain substantial, rising 4 per cent for those looking to invest significantly compared to last quarter and a slight 6 per cent fall for those looking at moderate investment increases. Remaining figures were close to those in the previous quarter. 

“EuroCham believes that standards have risen and incoming European business will continue to raise the bar on matters related to the ease of doing business and competitiveness,” said Mr. Ruebbert. “This pertains to many of the matters that EuroCham has been in constant dialogue about with the government and also relate to our efforts to contribute to making this country ready to maximize the possibilities that the EU-Vietnam Free Trade Agreement (EVFTA) may bring as of 2018.”

In this BCI, EuroCham members still expressed a belief that regulatory reform is moving slower than desired, but about 20 per cent believe it has improved. “This BCI’s 7 per cent fall in the overall score is not indicative of disillusionment from our members,” Mr. Ruebbert explained. “In contrast, like any citizen or guest in Vietnam, it represents a stronger wish for more competitiveness, transparency, sustainability, and a better trained workforce. Good business opportunities are not enough anymore for the EuroCham business community, and this can be a good sign.”

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