European business sentiment declines in Vietnam driven by global headwinds

By Dat Nguyen   July 4, 2022 | 04:58 pm PT
European business sentiment declines in Vietnam driven by global headwinds
A container ship docks at Gemalink International Terminal in Ba Ria Vung Tau Province. Photo by VnExpress/Dang Khoa
The European Business Climate Index in Vietnam declined by 4.4 to 68.8 points between the first and second quarter due to rising prices globally and geopolitical tensions.

Vietnam's potential growth is also being viewed with less favor by European business leaders, as 60 percent of respondents predicted that the Vietnamese economy would stabilize or improve in the third quarter of 2022, compared to 69 percent who held this belief entering the second quarter, according to a report released Monday by the European Chamber of Commerce in Vietnam (EuroCham).

But most European business leaders remain upbeat about investing more in Vietnam, with 76 expecting their company to increase foreign direct investment (FDI) in Vietnam before the end of this quarter.

Positive views were expressed about Vietnam's prospects for green growth too, with 79 percent of participants saying their assessment of Vietnam's green development potential improved from the first quarter.

Regarding the link between green growth and FDI, nearly 90 percent of respondents believed Vietnam should increase green sector development to attract more foreign investment.

Some barriers remain in trade and investment, as 45 percent of participants said administrative procedures impede their ability to utilize the EU-Vietnam Free Trade Agreement (EVFTA), demonstrating the difficulty foreign companies face in navigating Vietnam's bureaucratic processes.

"Although the outlook for European business leaders has decreased since the last quarter, the factors affecting it are mostly beyond the Vietnamese government's control," said EuroCham Chairman Alain Cany.

He added that a "perfect storm" of external factors is contributing to global economic instability, and that the problem is not unique to Vietnam.

But as the Vietnamese government has shown its commitment to green growth, "it is an incredibly exciting and promising time to do business in this country," Cany said.

The Business Climate Index is quarterly survey conducted by EuroCham on its 1,200 business members in various sectors.

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