The Covid-19 pandemic has exerted negative impacts on many European businesses in Vietnam, with 90% of them saying that they are hit by the virus, according to the latest Business Climate Index (BCI) for the first quarter of 2020 released on April 8 by the European Chamber of Commerce (EuroCham).
Following similar trends around the world, where the impacts of Covid-19 have hit international trade and investment, the EuroCham BCI plunged to its lowest-ever score of 26% in the first quarter of 2020, down 51 points from a reading of 77% recorded in late 2019.
This drop in positive sentiment is a direct result of the impact of the Covid-19 pandemic. More than half of the respondents said the pandemic has a "significant" negative impact. Meanwhile, almost 80% said that their business had incurred higher costs from measures taken to protect their workers and prevent the spread of the virus.
| Chart: EuroCham BCI Survey, Quarter 1, 2020 |
Despite the negative financial impact of Covid-19, European companies are taking important measures to protect both the health and the livelihoods of their workforce. Four out of five business leaders are confident that they will be able to retain at least 70% of their staff over the next quarter. Meanwhile, 80% of businesses have asked their staff to work from home to prevent the spread of the virus.
EuroCham members, however, applauded the Vietnamese government's measures to mitigate the impacts. They welcomed government measures introduced in Directive 11 to support businesses during the pandemic. A deferral of tax and land rent was the most popular provision, with a suspension of social insurance contributions coming a close second. And around three-quarters said a deferral of other taxes such as corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT) and special consumption tax (SCT) would be the most welcome support for their companies.
“This data shows that the Covid-19 is having a deep and serious impact on European business in Vietnam. However, this is a global pandemic, and enterprises around the world are suffering from the impacts of this crisis. There is also no doubt that, without the swift and decisive actions of the [Vietnamese] government, the situation here could have been much worse,” EuroCham Chairman Nicolas Audier said. “For this reason, our members welcome the measures announced so far, which will provide a lifeline to companies and their workers during this difficult time.”
Covid-19 is a fast-moving health crisis, and it is creating unprecedented challenges for businesses of all shapes and sizes and in all sectors and industries. Therefore, further actions could soon be required to help both domestic and foreign enterprises weather this storm and get back to business as usual as soon as possible, Audier added.
