Business confidence index of European businesses in Vietnam surged

The Business Confidence Index (BCI) of European businesses operating in Vietnam jumped significantly from 46.3 in Q4 2023 to 61.8 in Q4/2024, according to EuroCham’s latest report, released on January 8.

Over the past two years, the BCI largely hovered around the neutral threshold of 50, occasionally dipping below the level. However, the Q4/2024 report marks a pivotal moment as the index climbed to its highest point since early 2022.

This surge reflects the optimistic sentiment of the European business community regarding Vietnam's economic outlook. It also underscores the country’s remarkable resilience amidst global volatility, affirming its emerging position as a regional hub for trade and investment.

An attractive investment destination

Survey results from the EuroCham reveal that 42 per cent of respondents view the current business climate positively, while 47 per cent anticipate continued optimism in the upcoming quarter. Notably, 56 per cent expect improvements in Vietnam’s macroeconomic prospects during Q1 2025.

“This is a clear sign that European businesses are increasingly confident in Vietnam's economic future”, Mr. Bruno Jaspaert, Chairman of EuroCham Vietnam stated.

"This significant rise in confidence reflects widespread recognition of Vietnam’s political and economic transformation over recent years. The country’s sustained GDP growth further solidifies its status as a vital link in Southeast Asia’s trade and investment landscape", he affirmed

The surge in business confidence is attributed to several factors, particularly Vietnam's ongoing economic reforms and its central role in the global shift towards sustainable development. Many businesses surveyed identified the "dual transition" — encompassing digital transformation and green transition — as pivotal to their positive outlook.

Companies embracing these trends reported robust growth, with some even achieving revenue increases of up to 40 per cent year-on-year. Sustainability, driven by Vietnam's governmental policies and international green standards, has become a critical component of business strategy across multiple sectors.

Another notable finding is that 75 per cent of surveyed business leaders stated they would recommend Vietnam as an ideal investment destination. This data underscores the growing recognition of Vietnam’s strategic importance as an investment hub in Southeast Asia. With rapid growth and expanding infrastructure, Vietnam continues to establish itself as an attractive destination for European businesses seeking to expand operations in the region.

“The growing confidence of European enterprises in Vietnam as an appealing investment destination highlights the country's strong foundation in trade and economic policies,” the EuroCham Chairman remarked. “Despite facing global challenges, Vietnam's favorable investment environment is generating new opportunities for European businesses, particularly in key sectors such as technology, manufacturing, tourism, and renewable energy,” Mr. Bruno Jaspaert added.

Agreeing, Mr. Thue Quist Thomasen, CEO of Decision Lab, noted that survey data highlights a growing positive perception among European businesses of Vietnam as an attractive destination for foreign investment projects.

Accordingly, the majority of surveyed businesses have plans to expand their operations in Vietnam. Approximately one in four companies indicated they are considering partnerships with Vietnamese manufacturers or service providers, while over one-fifth of surveyed businesses expressed intentions to increase their presence in the country.

Additionally, 30 per cent of other businesses plan to strengthen their import - export activities or relocate production to Vietnam to leverage the country’s trade advantages. This trend aligns with the global shift in trade dynamics, especially in the context of recent disruptions to global supply chains.

Challenges remain

Although the overall outlook is trending positively, operational challenges remain a significant concern for European businesses in Vietnam. According to the report, the three most pressing obstacles identified are administrative burdens, unclear regulations, and difficulties in obtaining permits.

Among administrative issues, complexities related to visa requirements for foreign professionals top the list, with 42 per cent of surveyed businesses highlighting this as the most critical problem. Tax-related issues, including VAT refunds, were noted by 30 per cent of businesses, alongside challenges in import/export procedures and investment registration.

"Vietnam is at a pivotal juncture. These persistent administrative hurdles are testing business operations, but we remain optimistic about the government's commitment to creating a more business-friendly environment. Initiatives such as the streamlining and restructuring of government apparatus signal promising progress", Mr. Jaspaert commented.