The European Chamber of Commerce in Vietnam (EuroCham) hosted a press conference to announce the results of the second quarter EuroCham Business Climate Index Vietnam survey. The survey showed that business confidence and outlook among European businesses in Vietnam fell by 9 points to 70 points.
This is the third time EuroCham conducted a survey in business confidence and outlook in Vietnam. Among the EuroCham members that participated in the survey, business confidence appeared to have dampened.
Compared to the last survey, the respondents were more cautious this time although the responses remained largely positive: The majority of businesses assessed their current situation as ‘good’ or ‘neutral’. The survey conducted among around 200 companies who represent more than 750 EuroCham members doing business in Vietnam.
The number of businesses describing their situation as ‘neutral’ rose from 19 percent to 28 percent while responses stating a ‘good’ or ‘excellent’ business situation came down to 56 percent from 64 percent last time.
When asked about their investment plans for 2011, respondents remained largely optimistic with 51 percent wanting to increase their investment and 26 percent planning to keep the same level. However, compared to the last quarter, the companies wanting to ‘significantly increase’ their investments sunk from 32 percent to 18 percent.
When asked about the growth of Vietnam’s economy, the answers were mixed: 53 percent of respondents expected growth to be 6 percent or lower (up from 26 percent last time). Outlook for the growth of their own business sector remains positive, with 47 percent of respondents expecting 8 percent or more growth. This presents a slight decrease from the last survey, but is still positive.
Speaking about Vietnam’s attractiveness to European enterprises, EuroCham Chairman Alain Cany said: “Previously, China was the destination for European investors. However, European investors in China are redirecting their investments. This is a rare opportunity for Vietnam to attract this source of capital.”
When asked about inflation, with 72 percent, the majority of our businesses is expecting very high inflation of more than 10 percent. Mr. Alain Cany said “The fall of Business Climate Index appears to be largely due to increasing concerns about rising inflation.
EuroCham Executive Director Matthias Duehn added that “In particular, our members are increasingly concerned about inflation.”
As for the VND/USD exchange rate, 52 percent expect the VND to depreciate by 6-8 percent or remain unchanged by mid-2011, while 57 percent expect the currency to depreciate 8 percent or more against the USD by the end of the year. This represents a continuing lack of confidence in the Vietnamese currency by European Businesses.
As regards power cuts in Vietnam, 74 percent of respondents have been impacted by recent power cuts, although the majority of respondents noted the impact as ‘minor’.
Positively, EuroCham members expect the Vietnam - EU Free Trade Agreement (FTA) to be signed. 60 percent of European businesses surveyed stated that they would see a positive impact to their business arising from this agreement.
Ha Linh
Vietnamese
