European bizs confident in Vietnam’s economic prospects

Vietnam saw a significant rise in business sentiment in the fourth quarter (Q4) last year, reflecting resilience amidst a turbulent global landscape, according to the quarter’s business confidence index (BCI) report released recently by the European Chamber of Commerce (EuroCham) in the country.

The BCI score surged from 46.3 in Q4 2023 to 61.8 in Q4 2024, marking a pivotal shift from a neutral to a positive sentiment in both current and future outlooks. The surge is despite ongoing operational hurdles and global economic uncertainties.

Vietnam’s strong performance is, in part, attributed to the country’s continued growth trajectory, its improving infrastructure, and its emergence as a regional hub for both trade and investment.

For much of the past two years, the BCI, conducted by Decision Lab, hovered around the neutral midpoint of 50, dipping below it on occasions.

The Q4 2024 report, however, marks a pivotal shift as the score reached its highest level since early 2022.

According to the survey, 42 per cent of respondents reported feeling positive about the current business situation, with 47 per cent anticipating similarly optimistic conditions for the upcoming quarter.

More prominently, 56 per cent of respondents foresee improvements in Vietnam’s macroeconomic outlook in the first quarter of 2025, a press release from the chamber said.

Many respondents referenced the ‘double transformation’ of digital and green transitions as key drivers of optimism. Businesses that have embraced these trends reported significant growth, with some even citing a 40-per cent increase in revenue compared to the previous year.

The trend toward sustainability, spurred by both government policy and global pressures, is becoming a significant factor in shaping business strategies across multiple sectors.

Three-quarters of survey respondents indicated they would recommend Vietnam as an investment destination.

While the overall sentiment is positive, operational challenges continue to be a significant concern for European businesses in Vietnam. As in previous surveys, the top three operational obstacles identified were administrative burdens, unclear regulations and difficulties in obtaining licenses and permits.

The complexities of visa requirements for foreign workers and experts topped the list of administrative challenges, with 42 per cent of responses highlighting this as a primary concern.

Tax-related issues were also cited by 30 per cent of respondents, with further challenges related to import/export and investment registration procedures.

Many respondents to the survey expressed optimism that these reforms would lead to significant improvements in administrative processes, with 43 per cent expecting streamlined procedures in the long term, particularly with the adoption of digital platforms and reduced paperwork requirements.

However, 36 per cent of respondents also expressed concerns about potential delays in processing applications during the restructuring phase.

Another area where businesses are expecting significant improvements is in infrastructure. Nearly 40 per cent of respondents anticipate that infrastructure upgrades will not only reduce the cost of regional distribution but also bolster connectivity for import and export flows.

Furthermore, 12 per cent foresee transformative improvements in employee travel, enabling businesses to optimise operations and attract talent across regions.

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