Business confidence among European companies in Vietnam continues
to improve, according to Eurocham’s 11th quarterly EuroCham Business
Climate Index (BCI) survey released on May 30.
The Business
Climate Index conducted in May rose to the midpoint, from 48 to 50
points, following three quarters that had registered below 50.
This is the second consecutive increase, which suggests that European
companies were regaining trust in the Vietnamese market.
The key indicators were an increase in revenues and orders, and optimism about the overall economic outlook.
Despite positive signs, the BCI remains at 50, far below the highpoint
of 79 in 2011, and the improvements over the last two quarters remain
limited, with an increase of two points per quarter.
More than
half of the businesses that took part in the survey are active in the
services industry, a quarter in manufacturing, and the rest in trading
and other activities.
In line with the last survey, there has
been a continued increase in respondents assessing their current
business situation as positive, from 40 percent to 43 percent.
The previous quarter saw a rise from 26 percent to 40 percent, and the current level reflects improved business sentiment.
Looking to the future, the business outlook has seen significant
improvement, with members having positive expectations rising from 30
percent to 43 percent.
This development may be linked to the ongoing EU-Vietnam FTA negotiations, the survey said.
Although business confidence has improved, 57 percent of respondents
assessed their outlook as either “neutral” or “negative”.
Still, the survey found that reported investment appeared to be
improving, and that more companies intended to have a significant
increase in investment. This doubled from last quarter’s 7 percent to 13
percent.
Overall, investment plans look more positive than
they did a year ago, with 76 percent of respondents either expecting to
keep or increase their investment levels, compared to 72 percent a year
ago.
The number of respondents expecting to cut investments further declined to 19 percent from last quarter’s 24 percent.
This again indicates a returning faith in Vietnam ‘s medium-term
future, and shows that Government initiatives are inspiring increasing
confidence and optimism.
When asked about their expected number
of orders and revenue in the medium-term, 84 percent of respondents
said they would remain constant or would improve.
In addition,
concerns about inflation are declining, with 65 percent of companies
expecting inflation to have limited or no impact on their business in
the medium-term, compared to 55 percent in the last quarter and up from
43 percent a year ago.
Respondents’ appreciation of the macroeconomic situation is also improving.
In other words, 52 percent of the respondents believe the economy will
stabilise and improve in the future, something which has not been seen
in the Business Climate Index since 2011.-VNA