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Bright outlook for Vietnam’s economy – EuroCham report

The Saigon Times

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HCMC – The European Chamber of Commerce Vietnam (EuroCham) has released its Business Confidence Index (BCI) for the third quarter of 2023, offering a positive perspective on Vietnam’s business environment after a challenging year.

In Q3, the BCI rose to 45.1 from 43.5 in the previous quarter. Although this signifies a small uptick and hints at emerging positive economic momentum, it marks the fourth consecutive quarter of staying below the 50-point threshold, according to analysts.

Business sentiment appears to be shifting. Between the second and third quarters, pessimism regarding the current business situation decreased by three percentage points, while positive and neutral perspectives increased by six and four percentage points, respectively.

The Q3 survey also found a change in expectations for the final quarter of the year. Compared to responses in Q2, there was an 11-percentage-point increase in businesses anticipating economic stability and growth in the coming months. Meanwhile, businesses projecting a negative trend fell by five percentage points.

Despite these optimistic sentiments, businesses remain cautious. Expectations concerning increased revenue or orders remained stable compared to the previous quarter, with only 22% of companies planning to expand their teams in Q4.

Vietnam’s appeal for global investment remains robust, with 63% of the surveyed businesses ranking Vietnam among the top 10 destinations for foreign investment. Over half of the surveyed companies plan to increase their direct investment in Vietnam by the end of the year.

However, 59% of respondents cited administrative difficulties as their primary challenge in Vietnam. These difficulties include uncertainties in rules and regulations, obstacles in obtaining permits, and strict visa and work permit requirements for foreign workers.

To enhance Vietnam’s attractiveness for foreign investment, 58% of respondents stressed the need to reduce red tape, 48% called for an improved regulatory environment, one-third wanted better transport infrastructure, and 22% urged the easing of visa and work permit requirements for foreign experts.

The BCI, conducted by Decision Lab, has provided periodic insights into Vietnam’s economy since 2011.

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