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Thursday, July 25, 2024

European businesses have lower confidence in Vietnam market

By Ngoc Hung

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HCMC – European businesses operating in Vietnam are exhibiting reduced confidence in the local market, resulting in a 4.5-point decline in their Business Confidence Index (BCI) from the current score of 43.5, according to a recent survey conducted by Decision Lab.

EuroCham Vietnam released the BCI for the second quarter on July 10, serving as a crucial tool for understanding the perspectives of European companies and investors in the Vietnamese market. There were 1,300 European businesses across various sectors in Vietnam participating in the survey.

Gabor Fluit, chairman of EuroCham, said, “Vietnam’s economy heavily relies on manufacturing and exports, and it has been significantly affected by the challenging global situation. This decline in exports and orders has had a major impact on European businesses and the overall business community.”

The report pointed out the pressing concern of power shortages, which had a significant impact on businesses during the survey period. Approximately 60% of respondents experienced the repercussions of these shortages on their operations, leading to reduced efficiency, decreased productivity, and disruptions in production and services.

Consequently, the report highlighted the necessity of implementing long-term solutions to ensure power supply stability, which remains a priority for sustaining business performance and overall economic resilience.

The BCI also indicated a challenging outlook, with a notable 10% increase in negative responses regarding the current business situation. Securing visas and work permits for foreign workers continues to pose persistent challenges, with over 80% of surveyed businesses encountering various difficulties.

The prolonged processing time for obtaining visas and work permits emerges as the most pressing issue. Nearly half of the surveyed companies face challenges in justifying the hiring of foreign workers, hindering knowledge transfer to Vietnamese personnel in three-quarters of the companies surveyed.

A positive aspect in the survey is that over half of the participating businesses reported benefiting from the European Union-Vietnam Free Trade Agreement (EVFTA). Among these beneficiaries, 35% of business leaders have reported making gains from tariff reductions.

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