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Vietnam restores European businesses’ confidence after Covid-19: EuroCham

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HCMC – European business leaders have become more positive about Vietnam’s trade and investment environment as the coronavirus outbreak in the country has been contained, according to the Business Climate Index survey, a regular barometer of the business sentiment among European companies operating in Vietnam released by the European Chamber of Commerce in Vietnam (EuroCham) on Wednesday.

In the middle of the Covid-19 outbreak, the EuroCham index fell to its lowest-ever score of 27% in the first quarter of this year because social distancing measures and travel restrictions halted normal business operations.

However, after the Government rolled out a “world-leading public health and economic response”, Vietnam was able to return to business-as-usual much sooner than other countries, who continue to struggle with the impact of the virus, according to EuroCham.

As a result, the positive sentiment of European business leaders began to bounce back, recording a 7% jump between February and April this year to reach 34%.

Meanwhile, more than half the executives predicted that Vietnam’s macroeconomic climate would “stabilize and improve” in the next quarter, a significant rise compared to the first quarter, when just 10% anticipated an improvement.

The BCI also found that more than a quarter of European enterprises had benefitted from the Government’s postponement of tax, while some one in five had benefitted from a reduction in rent and a suspension of social insurance payment.

Despite these positive signs, however, European enterprises continue to face challenges, according to EuroCham.

The chamber said the impact of Covid-19 has lessened a little, but as many as 88% of the executives felt the negative effects of the pandemic in the three months to April.

Meanwhile, more than 50% of business leaders said that a reduction in taxes, such as corporate income tax, personal income tax and value-added tax, would help them emerge stronger from the crisis.

Almost nine of 10 business leaders are expecting to retain at least 70% of their current staff between May and July this year, according to the survey.

Only 16% of executives predicted that they would incur a loss of more than 50% of their revenue due to Covid-19.

EuroCham Chairman Nicolas Audier said in a statement that Vietnam is an international success story in the way it handled the Covid-19 pandemic and the Government’s effective and surefooted handling has had a tangible impact on the confidence of European business leaders.

“The next challenge will be adapting to the ‘new normal’ where Covid-19 is present in other countries but where global trade remains essential to domestic economic growth,” said Audier.

He added that this would “require imaginative solutions to address issues”, such as the return of foreign experts on whom many international companies depend.

“EuroCham is grateful for the advice and support we have received from the Government on this matter, and we remain committed to promoting Vietnam as an open, competitive and attractive place to do business to encourage more European investment and trade in the future,” he said.

By Gia Phong

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