European firms split on economic outlook

A worker assembles scooter parts at Piaggio Viet Nam. Half of the European businesses in Viet Nam remain confident about the country's economic future. — VNA/VNS Photo Danh Lam

This was the result of the 13th quarterly EuroCham Business Climate Index (BCI) survey, which was released on Wednesday.

However, investment plans and business orders are expected to increase, thus boosting recruitment, and inflation is likely to have a decreased impact on business, according to the report.

More respondents expected to increase investment in Viet Nam, with the figure jumping from 34 per cent last quarter to 41 per cent this quarter. Furthermore, the rate of respondents planning to "significantly increase investments" doubled from last quarter's 8 per cent. In line with this development, the expected number of business orders continued growing to 67 per cent.

Respondents remained conflicted about the macro-economic outlook, with 47 per cent expecting "stabilisation and improvement" and 35 per cent expecting no change. The findings demonstrate that initiatives undertaken by the Government to reduce inflation have been effective, as the number of respondents expecting inflation to have a "significant or threatening impact" on their business substantially declined (29 per cent compared to 43 per cent last quarter and 50 per cent last year).

EuroCham Chairman Preben Hjortlund said it was worrisome to see the BCI come out at 50 per cent for the third year in a row; moreover, he found it interesting to see that so many respondents feared that legislative changes would negatively impact their business in 2014.

"This clearly demonstrates the need to incorporate the business community in the legislative process and to take their opinions into account in order to avoid legislation having perverse effects when implemented. Finally, it is important to note the high level of respondents calling for the Vietnamese Government to take note of the Whitebook 2014, which will be published on November 11," he said.

Since its establishment with only 60 members in 1998, the European Chamber of Commerce in Viet Nam (EuroCham) has grown to represent more than 750 European businesses, counting among its supporters many of the world's leading enterprises.