Hanoi (VNA) – The European Chamber of Commerce inVietnam (EuroCham) on July 10 announced its Business Confidence Index (BCI) report forVietnam in the second quarter of 2023, showing a 9% increase in the number ofbusiness leaders who positively assess their business prospects for the thirdquarter of 2023 compared to their assessment for the second quarter.

In the second quarter, a modest decline of 4.5 points were recorded in European business confidence towards the Vietnamese market, withthe current score of 43.5 reflecting prevailing market conditions, according tothe report.

It said that businesses are prudently assessing thelandscape, focusing on optimising revenue and orders, with a marginal increaseof 4% in the proportion of companies anticipating a decline in these areas.

Additionally, there is a proactive approach, as 7% more companiesplan to carefully manage investments in the upcoming quarter. It is intriguingto note that despite these challenges, workforce planning remains stable,reflecting a resolute commitment to maintaining stability regardless of theprevailing conditions.

It underlined that despite the challenges, Vietnam continuesto attract foreign investors, with 48% of the respondents expecting an increase intheir company’s foreign direct investment (FDI) in the country next quarter.However, a total of 40% of the businesses express no plans for elevated FDI,marking a 4% increase from the previous BCI. Nevertheless, Vietnam remainsfirmly positioned among the top five investment destinations for over one-thirdof the businesses, underscoring its enduring appeal, it said.

In the current cautious business climate, respondentshighlight regulatory reforms and the availability of skilled labour as crucialdrivers for their companies’ growth, it said, adding that regulatory reformsare deemed the primary factor contributing to the growth in the service sector,while the manufacturing sector places significant emphasis on the availabilityof skilled labour.

The survey reveals that over half of the businesses surveyedhave benefited from the European Union-Vietnam Free Trade Agreement (EVFTA).Among these beneficiaries, 35% of business leaders have reported gains fromtariff reductions. Despite these gains, businesses continue to face challengesin fully capitalising on the agreement, with administrative procedures and alack of understanding remaining the main barriers to the full capitalisation.

Commenting on the BCI, EuroCham Chairman Gabor Fluit said that Vietnam’seconomy relies heavily on manufacturing and exports, and it has taken a big hitfrom the tough global situation. This decline in exports and orders has had amajor impact on European businesses and the overall business community. The BCIclearly shows this current gloomy outlook, he said.

To address these challenges, the Vietnamese government has swiftly takenpractical steps, particularly by expediting key infrastructure projects. EuroChamcommends these efforts, which will surely bring a substantial long-term boostto the economy, he stated.

By taking prompt andcomprehensive action, Vietnam can not only attract foreign investment but alsoensure a resilient economy capable of overcoming future obstacles, he said,stressing that EuroCham is fully committed to providingsupport through ongoing dialogue and policy consultations every step of the way./.