Inside a company at Yen Phong Industrial Park, Bac Ninh province (Photo: VNA) EuroCham Chairman Gabor Fluit commented that there was definitely a positivetrend underway, and while there was a long way to go for a full recovery,businesses were feeling more hopeful.
“The European business community is increasingly optimistic that the mostchallenging economic period is now behind,” he said.
The last quarter of 2023 saw a marked increase in satisfaction among the businesses, with firms confident in their current situation rising from 24% inQ3 to 32% in Q4.
In Q4, Vietnam’s investment hotspot status increased significantly.An impressive 62% of those surveyed ranked Vietnam among their top ten globalinvestment destinations, with 17% placing it at the very top. This strongendorsement was matched by 53% of respondents anticipating increased foreigndirect investment (FDI) in Vietnam by the end of that quarter.
Last year, the potential of the EU – Vietnam Free Trade Agreement (EVFTA) wasincreasingly realised by businesses. By Q4, a significant 27% ofcompanies reported experiencing “moderate” to “significant” benefits from theagreement, a marked increase from just 18% in Q2.
They said the foremost advantages of the trade pact were “tariff reductions oreliminations” (42%), “increased market access to Vietnam" (27%), and “improvedcompetitiveness in Vietnam” (25%), indicating substantial economic impacts.
However, the BCI survey also revealed challenges in fully leveraging the EVFTA’spotential. About 13% of the respondents cited “uncertainty or lack of understandingof the agreement” as a primary obstacle, suggesting a need for more clarity andeducation around the agreement’s provisions.
Gabor Fluit said that amidst increasing economic competition in the region andthe world, Vietnam should work to complete its policy and strategy so as tolure and maintain foreign direct investment from Europe.
He suggested vital areas to focus on are simplifying administrative procedures,investing in infrastructure to reduce logistics costs, and upgrading the skillsof the workforce.
Along with the EVFTA, other bilateral and regional trade pacts are expected toplay a key role in transforming the current economic recovery into long-termand balanced growth, he said, adding throughout this ongoing process, EuroChamVietnam committed to playing a supportive role.
Meanwhile,Decision Lab CEO Thue Quist Thomasen said Vietnam’s long-term economictrajectory suggests a promising path of continued growth, while in the shortand medium term, the country is showing its trademark ability to deliver a stablebusiness climate even in turbulent times.
Thefifth quarterly measurement within the range of 40-50 index points demonstratedthe continued stability and potential improvement in 2024 will underpin thecase for further FDI in the country, he added.
Theoutlook for Q1 of 2024 is also positive, with 29% of enterprises viewingtheir business prospects as “excellent” or “good” – a sign of diminishing concerns asextreme worries fell from 9% to 5%. Up to 31% of companies plan to expand theirworkforce in Q1, and 34% intend to increase their investments. Thestatistics signal a strong momentum for growth and opportunity as Vietnambegins 2024.
The quarterly BCI serves as a vital tool for understanding theperceptions of European and Europe-related companies and investors in theVietnamese market. Since 2011, the BCI has collected feedback from EuroCham Vietnam’s extensive network of1,400 members across a diverse range ofsectors, providing valuable insights into thecurrent business landscape in Vietnam and offering a glimpse into future expectations./.
VNA
