42% of European businesses predict that FDI inflows into Vietnam will increase by the end of 2022

The Business Climate Index shows that European businesses' confidence in Vietnam's business and investment environment has slightly decreased. However, the president of EuroCham said that Vietnam is still bringing great investment opportunities.

The latest results of the Business Climate Index (BCI) in the third quarter of 2022 announced by the European Business Association in Vietnam (EuroCham) on October 17 showed that, in the third quarter of 2022, the confidence of the European businesses in terms of investment and business environment fell to 62.2 percentage points, amid the global economic downturn.

According to the report, although Vietnam's economy in the third quarter grew a record at 13.67% year-on-year, BCI fell for the second consecutive quarter, corresponding to a decrease of 6.4 percentage points. compared to the second quarter and 10.8 points compared to the first quarter of 2022.

This comes as volatile effects from global economic conditions continue, such as persistent inflationary pressures, worldwide labor shortages and sluggish global growth.

About 42% of survey respondents predict that Vietnam's economy will stabilize or improve in the fourth quarter of 2022. This is a decrease of 18 percentage points compared to the previous quarter, when up to 60% held this view.

However, when asked about their own business prospects in the fourth quarter of 2022, 45% of European business leaders gave a positive answer, down only 4 points compared to the previous quarter. Furthermore, the index of 'investment plan expectations', 'orders' and revenue remained relatively stable compared to the previous quarter.

As for foreign direct investment trends, 42% of surveyed European businesses predict that their companies will increase FDI inflows into Vietnam by the end of 2022. They also indicate that Vietnam can increase this level of FDI by easing administrative difficulties (68%), improving infrastructure (53%), developing human resource capacity (39%), and reducing visa barriers for professionals. foreign country (39%).

On the other hand, although a quarter of the respondents identified green growth as a key factor in attracting FDI into Vietnam, the number of respondents positively assessed Vietnam's green potential. Male has decreased from 44% to 32%. To promote green development, the BCI analysis team recommends that Vietnam need to improve its legal framework (92%), infrastructure (87%) and investment incentives (86%).

Bright future is ahead. Vietnam offers great investment opportunities for European businesses and we are excited about the country's prospects in the medium to short term. Through the EU-Vietnam Free Trade Agreement and our shared commitment to sustainable development, Vietnamese and European companies have a lot of growth potential.

EuroCham President Alain Cany emphasized that it is true that the current situation is less optimistic than at the beginning of 2022 due to external factors slowing down global growth. The fourth quarter may also be less positive than the second or third quarter of the year. However, these BCI results are very encouraging. Vietnam will certainly be in a better position in the next two or three years, proving its position as one of the most dynamic business and investment destinations.

In the current uncertain global economy, BCI in Vietnam is still 10.2% higher than before the pandemic, in the fourth quarter of 2019 and 1.2% higher than in the fourth quarter of 2020.

The Business Climate Index (BCI) is the leading survey of the European business and investment community in Vietnam. To better understand the Vietnamese market, EuroCham has invited more than 1,200 members, representing almost every sector of the Vietnamese economy, to provide quarterly updates on the assessment of Vietnam's business environment. Nam and made a forecast on the business performance of enterprises in Vietnam. Decision Lab YouGov is the unit that conducts research and aggregates BCI data.