The Business Climate Index (BCI), which measures the confidence of European enterprises in Vietnam, climbed to 86 in the third quarter of this year, representing an increase of nine points from the previous quarter, the European Chamber of Commerce in Vietnam (EuroCham
) has said.
According to the responses to the latest EuroCham BCI survey, 71.5% of the respondents described their current business situation as “excellent” and “good”. Only 5.5% classified the present state of the market as “not good”, while there were no responses describing it as “very poor.”
When it comes to the business outlook, up to 80.7% of respondents had a positive perception, with 16.5% of responses being “excellent”. Only 2.7% of responses were negative.
Regarding the macroeconomic outlook for Vietnam in the next quarter, EuroCham members are confident that macroeconomic stability is likely to continue, with almost 60% of the respondents expecting “stabilization and improvement”. Only 4.6% of respondents expected deterioration.
In regards to headcount, the number of businesses expecting to maintain the current size of their workforce was roughly 42%, decreasing eight percentage points in comparison with the last quarter.
On the other hand, around 52% declared their intention to increase their number of employees, of which approximately 16% said to be willing to hire significantly in the near future. The number of businesses manifesting intention to reduce their number of employees was only 2.8%.
Up to 39% of respondents showed intention to increase their investment in the Southeast Asian country and 17% planned to invest significantly. Meanwhile, divesting businesses were marginal, with less than 1% stating their intention to do so, a considerable drop from 7% last quarter.
Most responding businesses intend to maintain their level of investment in the country, with this group representing roughly 41% of the total.
Regarding Green growth, a section that was added in the latest BCI survey, a majority of almost 58% responded negatively to the question whether rising air pollution levels in Vietnam could encourage them to move their business outside of the country.
Roughly 18% stated that they could consider doing so and 25% were unsure.
When asked which regulatory changes would have the strongest impact to attract foreign investment in the clean and renewable energy sector, a majority of 29.6% showed preference for “Favorable conditions for investors in clean and renewable energy field”.
Up to 27% of respondents preferred “Tax incentives” and “Liberalization of the state-controlled electricity sector” was chosen by 20% of the respondents.
Up to one fourth of respondents expected a significant increase in orders/revenue in the fourth quarter of this year while 53.2% expect s mall increase. Nearly 20% said they expected their orders/revenue to maintain the same level and only 1.8% expected a reduction.
“The results for Quarter 3/2016 show positive expectations for the near future and consistent satisfaction with the present situation. EuroCham members maintain a positive view on the Vietnamese market and their business operations in the country, a result which does not differ from our last survey,” EuroCham Chairman Michael Behrens commented.
“This is a good sign for the current implementation of the EU-Vietnam Free Trade Agreement, which is expected to strongly enhance European business and investment,” he added.
The Business Climate Index (BCI) is a regular barometer of the business sentiment among European companies operating in Vietnam. It provides early signals of turning points in economic activity and tracks movements in business confidence.
Through quarterly survey, representatives of EuroCham’s member companies provide their input on how they assess the business situation and outlook in Vietnamese market.