Vietnam's economic rise fuels European optimism

The European Chamber of Commerce in Vietnam’s (EuroCham) most recent business confidence index, has signaled optimism in Vietnam's economy. 

The quarterly index, known as BCI, reached 52.8 in the first quarter this year.

It is the highest level since the third quarter of 2022, showing a clear sign of increased confidence within Vietnam’s European business community.

This positive trend underscores the European business community's view of Vietnam as a dynamic market with promising growth prospects, said EuroCham Chairman Dominik Meichle.

He added: "The index once again rising above the 50 threshold reaffirms the country's growing appeal. Continued efforts to enhance stability and predictability will further strengthen Vietnam's global competitiveness and unlock its full potential.”

"The hard data from the BCI paints a clear picture - investor optimism is steadily improving," said CEO Thue Quist Thomasen of Decision Lab, the organization conducting the survey. 

“Vietnam certainly has the capacity to become the region's preeminent investment destination, and proactive, investor-focused policies will further accelerate its rise.”

According to the report, European businesses signal a strong likelihood of recommending Vietnam as a top investment destination.

A significant 54 per cent of those surveyed indicated a high likelihood of recommending the country to other foreign businesses, giving ratings of 8 or above out of 10.

This highlights Vietnam's rapidly growing appeal within the European business community, while also suggesting potential to further increase its attractiveness to investors.

European businesses express optimism about Vietnam's economy, both in the near and long term. While a third of businesses feel optimistic about their individual next quarter outlooks, and nearly 40 per cent are neutral, several key indicators point toward a promising trajectory.

These includes optimism on the rise, more revenue expected, jobs outlook robust while 40 per cent of businesses plan to expand their workforce in the next three months and investment confidence rises.

Looking to the long term, this optimism strengthens, with 71 per cent of businesses feeling positive about their long-term prospects in Vietnam over the next five years.

While optimism remains high, businesses face regulatory hurdles in Vietnam that hinder market entry and long-term investment.

Key concerns include administrative burdens, unclear regulations, permit and license difficulties and work visa barriers.

The report showed that over half of respondents cite administrative burdens as a major obstacle to both establishing and expanding operations. Over 1/3 businesses grapple with confusing rules, creating uncertainty and impeding strategic planning.

To attract more foreign investment, businesses pinpointed several key reforms.

These includes simplify administration when 37 per cent call for streamlined procedures to ease market entry and reduce red tape; strengthen legal framework through clear and consistent laws for a predictable investment climate.

They also suggest enhance infrastructure while some advocate for the enhancement of roads, ports, and bridges to support trade and logistics.

"Vietnam has tremendous economic potential, and addressing regulatory challenges is key to fully realizing it," said Meichle.

"Streamlining procedures and establishing more transparent regulations will empower both Vietnamese and foreign businesses to succeed. This will position Vietnam as a leading investment destination in the region, benefiting domestic businesses, attracting international capital, and strengthening economic partnerships."