European businesses in Vietnam hope to return to normalcy in future: EuroCham

Up to 49% of surveyed European business leaders in Vietnam from different sectors hit by Covid-19 during different periods have high expectation about returning to the new normalcy in the coming time, according to the Business Climate Index (BCI) survey of the European Chamber of Commerce in Vietnam (EuroCham) for the second quarter. 

Source: BCI survey conducted by Decision Lab

The latest survey showed that 46% of respondents predict the business outlook for May-July would be very poor or not good while the others believed it would be good and excellent. 

Source: BCI survey conducted by Decision Lab

In particular, about 48% of companies in the primary and secondary sectors hoped their operation capacity would be restored in May-July, higher than a rate of 35% in April. Meanwhile, 51% of companies in tertiary sectors believed their operation capacity would reach more than 80% in the same period, higher than the portion of 39% in April.

Positive sentiment

During the Covid-19 pandemic, when social distancing and travel restrictions brought normal business operations to a halt, the EuroCham BCI fell to its lowest-ever score of 27% in the first quarter.

However, after the government implemented a world-leading public-health and economic response, Vietnam was able to return to business as usual much sooner than other countries, who continue to struggle with the impact of the virus.

As a result, the positive sentiment of European business leaders began to bounce back, recording a 7% jump between February and April to reach 34%.

Meanwhile, more than half of executives predicted that Vietnam’s macroeconomic climate would “stabilize and improve” in the next quarter – a significant rise compared to the first quarter, when just 10% anticipated an improvement.

The survey also found that more than a quarter of European enterprises had benefited from the government’s extension of tax, while around one in five had benefited from a reduction in land rent fees and a suspension of social insurance contributions.

Source: BCI survey conducted by Decision Lab

However, as the impact of Covid-19 has decreased somewhat, a large proportion (88%) felt negative effects as a result of the pandemic in the three months to April. Meanwhile, more than 50% said that a reduction in taxes such as corporate income tax (CIT), personal income tax (PIT) and value-added tax (VAT) would help them emerge stronger from the crisis.

Source: BCI survey conducted by Decision Lab. Chart: 9 out 10 business leaders expect to keep at least 70% of current staff in May-July.

“This data is further evidence that Vietnam is one of the international success stories of the Covid-19 pandemic. It also shows that the government’s effective and sure-footed handling has had a tangible impact on the confidence of European business leaders,” said Nicolas Audier, chairman of EuroCham.

The next challenge will be adapting to the ‘new normal’ where Covid-19 is present in other countries but where global trade remains essential to domestic economic growth. This will require imaginative solutions to address issues such as the return of foreign experts on whom many international companies depend, Audier added.