COVID-19 has had a significant, negative impact on European business in Vietnam, according to the latest Business Climate Index (“BCI”) from the European Chamber of Commerce (“EuroCham”). The BCI is a regular barometer of how European business leaders see the trade and investment environment in Vietnam and the prospects of their own enterprises. Each quarter, the chamber asks its membership to answer a range of questions covering issues such as their investment plans, revenue projections, and workforce levels.
Following similar trends around the world, where the impacts of COVID-19 have hit international trade and investment, the EuroCham BCI plunged to its lowest-ever score of 26 per cent in the first quarter of 2020. That represents a fall of 51 points from the 77 per cent recorded in late 2019. This drop in positive sentiment is a direct result of the impact of COVID-19: Over 90 per cent of business leaders said that COVID-19 has had a negative impact on their enterprise, with more than half reporting a ‘significant’ negative impact. Meanwhile, almost 80 per cent said that their business had incurred higher costs from measures taken to protect their workers and prevent the spread of the virus.
Despite the negative financial impact of COVID-19, European companies are taking important measures to protect both the health and the livelihoods of their workforce. Four out of five business leaders are confident that they will be able to retain at least 70 per cent of their staff over the next quarter. Meanwhile, 80 per cent of businesses have asked their staff to work from home to prevent the spread of the virus.
EuroCham members also welcomed Government measures introduced in Directive 11 to support businesses during the pandemic. A deferral of tax and land rent was the most popular provision, with a suspension of social insurance contributions coming a close second. The chamber also asked European business leaders what other measures would be most helpful for their enterprises, and around three-quarters said a deferral of other taxes such as CIT, PIT, VAT and SCT would be the most welcome support for their companies.
Commenting on the BCI, EuroCham Chairman Nicolas Audier said:
“This data shows that COVID-19 is having a deep and serious impact on European business in Vietnam. However, it is important to remember that this is a global pandemic, and enterprises around the world are suffering from the impacts of this crisis. There is also no doubt that, without the swift and decisive actions of the Government, the situation here could have been much worse. For this reason, our members welcome the measures announced so far, which will provide a lifeline to companies and their workers during this difficult time.
“COVID-19 is a fast-moving health crisis, and it is creating unprecedented challenges for businesses of all shapes and sizes and in all sectors and industries. Therefore, further actions could soon be required to help both domestic and foreign enterprises weather this storm and get back to business as usual as soon as possible. EuroCham is committed to Vietnam’s long-term economic growth, and our members remain available to share their insights and recommendations to help minimise the disruption of COVID-19 on business operations and – above all – to protect the health and wellbeing of people in Vietnam.”