EU firms show optimism about Vietnam’s business climate in 2021

The BCI picked up 6 points in the fourth quarter of 2020 to reach 63.6 percentage points for the whole year, the highest since the outset of COVID-19. The index stood at a record low of 27 percentage points in the first quarter of last year, following the first wave of COVID-19 in Vietnam.

The BCI steadily grew throughout the year as the result of Vietnam’s successful containment of the novel coronavirus and the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) which took effect in August. The two factors have improved confidence in local economy and boost business activities.

According to the BCI report, about 57% of surveyed EuroCham members believed the Vietnamese economy is likely to stabilise and improve in the first quarter of 2021, compared to 39% in the third quarter of last year.

A more optimistic sentiment is also seen among European business leaders compared to the last three months of 2020. One third of the surveyed company members forecast that the number of their employees would increase in this quarter while 57% planned to maintain the same level of headcount. Some 30 percent believed investment is likely to expand and 43% expected increases in the volume and revenue of orders.

Some 70% said they have benefited from the EVFTA since the trade deal entered into force last year. About 33%, however, said public administrative procedures are likely to be their biggest obstacle to maximize advantages from the pact.

EuroCham Chairman Nicolas Audier said the latest BCI provides a positive outlook on Vietnam’s business climate and perspectives for 2021. Confidence of the business community on the economy has been strengthened over the last year, showing the Vietnamese government’s swift response to COVID-19 and promotion of the EVFTA, he said, adding that these would lay basis for the country’s economic growth over the next five years.

European business leaders expect growth in both investment and trade brought about by the EVFTA, he continued, they also expect that several barriers would be removed to ensure the smooth and successful implementation of the trade deal.