Confidence of European firms in Vietnam returns after Covid-19

By Thuy Dung - Jul 27, 2020 | 09:25 AM GMT+7

TheLEADEREuropean business leaders were more positive about Vietnam’s trade and investment environment in the first few months after Covid-19, according to data from the Business Climate Index (BCI) of the European Chamber of Commerce in Vietnam (EuroCham).

During the middle of the Covid-19 pandemic, when social distancing and travel restrictions brought normal business operations to a halt, the EuroCham BCI fell to its lowest-ever score of 27 per cent in the first quarter of 2020.

However, after the government implemented 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.

Confidence of European firms in Vietnam returns after Covid-19

As a result, the positive sentiment of European business leaders began to bounce back, recording a 7 per cent jump between February and April 2020 to reach 34 per cent.

Meanwhile, more than half of 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 per cent 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 around one-in-five had benefitted from a reduction in rent and a suspension of social insurance contributions.

Despite these positive signs, challenges remain for European enterprises. While the impact of Covid-19 has lessened a little, a large proportion (88 per cent) felt negative effects as a result of the pandemic in the three months to April.

More than 50 per cent said that a reduction in taxes such as CIT, PIT and VAT would help them emerge stronger from the crisis.

Nicolas Audier, chairman of EuroCham, stated that this data is further evidence that Vietnam is one of the international success stories of the Covid-19 pandemic. It also shows that the government’s effective and sure-footed 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. This will require imaginative solutions to address issues such as the return of foreign experts on whom many international companies depend, he said .