On 14 July 2016, EuroCham has released the results of the Business Climate Index (BCI) of Quarter 2, 2016. The Survey suggests a positive sentiment of EuroCham members on the business environment in Vietnam, with a 77 index.
Overall, the assessment on business situation among European companies in the last quarter is good, with 66.7% of the respondents describing it as “excellent” and “good”, and only 12.5% classifying it as “not good” and “very poor”.
The positive perception of the current business performance amongst respondents may have spilled over to a positive business outlook perspective, with 9.4% of responses being “excellent” and 54.2% “good”, in regards to Question 2: “Based on the business performance of recent Quarters, Business Outlook for your Enterprise in the next quarter”.
In regards to the Macroeconomic Outlook for Vietnam in the next quarter, from our members’ point of view, macroeconomic stability will likely continue, as 56.3% of respondents indicated “stabilization and improvement”. 9.4% of respondents expected deterioration and 34.4% think that it will not change. The survey was released before the UK Referendum on EU Membership on 23 June; therefore results have no connection with this event.
Headcount Development and Investment plan
Around 49% of the respondents expected the number of orders or revenue to increase slightly in the next quarter. 15.6% of them were even more optimistic, expecting a significant increase of revenue in the next quarter. Therefore, when they were asked about investment and headcount development plan, responses were also positive, consistent with the expected business orders. Specifically, 43.8% of respondents answered that they would increase investment, while 43.7% expected an increase in headcount.
A very small amount of respondents said that they would reduce their headcount (4.1%), while 50% would maintain the same level. This result was similar regarding investment plans, as 40.6% of the surveyed businesses responding that investment will be maintained at the same level for next quarter.
EuroCham Chairman Michael Behrens commented: “The results for Quarter 2 2016 show positive expectations for the near future and consistent satisfaction with the present situation. EuroCham members maintain a positive view on the Vietnamese market and their business operations in the country, a result which does not differ from our last survey. This is a good sign for the current implementation of the EU-Vietnam Free Trade Agreement, which is expected to strongly enhance European business and investment”
Respondents - Who they are
The survey was sent out to 883 members of the European Chamber of Commerce in Vietnam including some of the largest European investors in the country.
Other issues Proposed by the Respondents
The survey engaged responding members, asking them to suggest questions for next quarter’ Business Climate Index. Among these questions were:
Do you feel that the current reforms have created an environment that is more or less conducive to foreign investment?
Do you feel the administrative procedures have improved or worsened in clarity and simplicity?
Do you see next quarter’s expected new regulations and laws having positive, neutral or negative impact on your business?
Do you see next quarter’s expected new regulations and laws having positive, neutral or negative impact on the overall business environment and investment climate?
Two headaches are corruption and violation of intellectual property rights, what do you think?