European businesses’ confidence in Vietnam slightly improves

(source: thitruongtaichinh.vn)

The EuroCham Business Climate Index survey released on March 7 showed that the Business Confidence Index (BCI) for Vietnam in the first quarter of 2013 increased from a record low of 45 in the previous quarter to 48 points.

The businesses participating in the survey are active in the services industry, manufacturing, trading and other activities.

However, the Index remained below the half-line, which raised concerns among entrepreneurs about their current business situation and outlooks as well as the impact of increased tax, fines and official scrutiny.

The survey saw an increase in respondents assessing their current business situation as positive from 26 per cent to 40 per cent. With respondents holding a neutral view remaining fairly stable at 36 per cent, there were still a quarter of respondents holding a negative view of their current business situation.

At the same time, the reported investment plans seem to be stabilising. About 73 per cent of respondents said they expect to keep their investment at similar levels to 2012, or to increase investment slightly. Up to 78 per cent reported that they are maintaining or increasing their investment, indicating a continued faith in Vietnam’s medium term future.

Besides, 68 per cent of respondents expect to either maintain or decrease headcount, compared with 56 per cent in the last quarter. Only 29 per cent expect to increase the number of employees compared with 40 per cent in the last survey. These figures show that businesses are looking for efficiency and trying to maintain flexibility by keeping their fixed costs as low as possible, especially in an uncertain environment.

Commenting on the survey, EuroCham Chairman Preben Hjortlund said that it is encouraging to see EuroCham’s BCI increase slightly, which reflects perceived stabilisation in the macroeconomics.

However, the index is still the wrong side of 50 and is down on the 79 level achieved two years ago, which requires the Government’s continued efforts to improve the underlying structural problems of the economy, he added.