Leaders of European businesses in Vietnam were more positive about their firms’ performance in the third quarter of 2020, according to the Q3 Business Climate Index (BCI) released by the European Chamber of Commerce (EuroCham).
The index, conducted by YouGov Vietnam, rebounded in Q3, jumping 24 points to reach 57.5 – the highest score since the outbreak of the global COVID-19 pandemic.
In Q1, when COVID-19 first hit international trade and investment, the BCI fell to 26 points. It saw a slight increase in Q2 as Vietnam became one of the global success stories of the pandemic.
Now, with businesses able to operate with far fewer restrictions and the EU-Vietnam Free Trade Agreement (EVFTA) entering into force on August 1, the confidence of European business leaders has seen a strong resurgence, according to EuroCham.
Business leaders were more positive about their own enterprise in Q3, with 40 percent describing their performance as either “Excellent” or “Good” – more than double the 18 percent recorded in the previous three-month period.
EuroCham said Q4 looks to be even more promising, with 44 percent predicting a strong end to 2020. Meanwhile, most companies are anticipating stabilisation in their headcount (65 percent) and investment plans (57 percent), with just under half (44 percent) expecting to see an increase in their revenue and orders.
With the EVFTA entering into force in Q3, the BCI also asked EuroCham members about its impact on their business and investment plans. One-third said that the agreement was an important part of their decision to invest in Vietnam, with the top two factors predicted to drive growth being tariff reductions and greater market access for investors.
Chairman of EuroCham Nicolas Audier said: “Despite a difficult 2020 for international trade, our data shows that Vietnam’s swift and effective response to the global pandemic has paid dividends. European business leaders feel more positive both about their own enterprises and Vietnam’s trade and investment environment, and report a sense of cautious optimism going into Quarter Four.”
“The implementation of the EU-Vietnam Free Trade Agreement in August has, no doubt, helped to boost this growing confidence. Our data shows that falling tariffs and growing market access are important to our members, and will help to spur new foreign-direct investment from the EU in the future,” he added.
The BCI is a regular barometer of EuroCham members and their perceptions of the trade and investment environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Vietnam.