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| Vietnam's global investment attractiveness remains strong. (Photo: Viet An) |
The confidence index rose to 45.1 points in the third quarter of 2023, from 43.5 in the previous quarter. Although the figure has remained below 50 points for four consecutive quarters, this small increase has shown a positive sign in the economy.
The report shows that business sentiment appears to be changing. Pessimism about the current situation fell by 3% in the second and third quarters, while positive and neutral views rose by 6% and 4%, respectively.
In addition, the third quarter survey showed a change in forecasts for the coming quarter. Compared to the results collected in the second quarter, the number of businesses expecting economic stability and growth in the coming quarter increased by 11%. At the same time, those forecasting negative trends decreased by 5%.
According to EuroCham, as the year comes to a close, hope and caution are still needed.
Although GDP growth in the third quarter was more positive, up 5.3% compared to the same period last year, companies remained cautious. Expectations for revenue or orders increased steadily, unchanged from the previous quarter.
Meanwhile, just 22% plan to expand their teams in the fourth quarter, and just 16% expect to increase investment.
Vietnam’s global investment appeal remains strong. This survey shows that 63% of participating businesses ranked Vietnam in the top 10 destinations for foreign direct investment (FDI). More notably, 31% ranked Vietnam in the top 3, of which an impressive 16% praised Vietnam as a top investment destination.
EuroCham believes that sustainability is increasingly becoming a top priority for European companies in Vietnam, with 80% saying ESG compliance is highly or moderately important.
However, major obstacles remain when it comes to turning priorities into reality. Regulatory uncertainty, infrastructure gaps and inadequate support are seen as obstacles to implementing sustainable measures at the local level.
Additionally, only 20% of businesses are proactively preparing for upcoming EU green regulations, such as the Carbon Border Adjustment Mechanism.
Meanwhile, up to 38% still have no plans to link up. This lack of preparation not only poses domestic challenges but can also hinder international competitiveness, especially in important markets such as the EU.
EuroCham’s Green Economy Forum 2023, which will be held on 2 November in Hanoi, will provide a timely opportunity to address these challenges. The forum promises to be a knowledge-sharing hotspot, helping businesses and policymakers keep abreast of EU green regulations and other pressing sustainability issues.
By attending this forum, companies can gain insights into how to overcome growing challenges and capitalize on opportunities for green growth.
However, challenges remain. Differences in customs valuation of imports, unclear and lengthy customs clearance procedures, technical barriers to trade and uncertainty and lack of clarity related to the agreement are barriers that limit the full effectiveness of the agreement.
Commenting on the BCI for the third quarter, EuroCham Chairman Gabor Fluit emphasized: “It is very clear that European businesses have confidence in Vietnam. Nearly a third of our members ranked Vietnam as one of the top three investment destinations, sending a strong message of our confidence in this partnership.”
However, Mr. Gabor Fluit noted that challenges remain.
“While we see promising GDP and FDI growth in the third quarter, issues remain – particularly in the areas of exports and real estate. Addressing administrative burdens, regulatory ambiguity and licensing barriers is critical to making progress. We remain committed to dialogue to effectively address these issues together,” he said.
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