Sentiment picks up among European investors as Vietnam starts to re-open

November 09, 2021 | 18:21
Business leaders are more optimistic about Vietnam’s business environment following the ending of lockdowns and the new normal of post-pandemic trade and investment. The growth in positive sentiment was revealed in the third-quarter Business Climate Index (BCI), a regular barometer of the perceptions of business leaders from the European Chamber of Commerce (EuroCham).
Sentiment picks up among European investors as Vietnam starts to re-open
Green shoots of growth in positive sentiment as Vietnam begins to re-open. Photo: The Piaggio factory in Vinh Phuc

The BCI saw a small but encouraging uptick to reach 18.3 points. That represents a three-point rise from its historic low of 15 points during the depths of the fourth wave of COVID-19 in September.

Though the index remains low, the BCI uncovered improving perceptions about Vietnam’s economic outlook. Just under half of business leaders and investors (49 per cent) now predict a stabilising and improving economic outlook next quarter, compared to less than a fifth (19 per cent) in Q2.

However, business leaders remain cautious concerning their own recruitment, investment, and profit projections. Companies are taking a "wait-and-see" approach to staffing, with around one-fifth planning to hire more workers in the next three months – a figure consistent with the last quarter. Likewise, the proportion of business leaders planning to maintain or increase their investment in Q4 (69 per cent) is just two points higher than in Q3, with revenue projections seeing a similar increase.

Meanwhile, around half of companies are still operating at reduced levels compared to before the pandemic, while prolonged travel restrictions and staff shortages continue to affect two-thirds of companies. This indicates that there are still issues to be addressed if Vietnam is to reach its full potential in post-pandemic trade and investment.

Alain Cany, chairman of EuroCham, said that, “Though the BCI remains low in historic terms, the most important thing is that the index is now moving in the right direction. With the pandemic now back under control in Vietnam, the confidence and optimism of European business leaders should continue to climb as companies get back to normal and consumer confidence rises."

“However, despite this positive progress, business leaders are still encountering challenges in their commercial operations. With two-thirds of companies suffering from the impacts of travel restrictions and staff shortages, this highlights the urgent need to speed up the entrance of vaccinated experts and accelerate the vaccination of domestic workers," he said.

By EuroCham

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