06:00 | 25/04/2020 Cooperation
(VEN) - European firms operating in Vietnam are suffering under the impact of Covid-19 but are appreciative of government measures to limit the spread of the pandemic while trying to maintain economic growth.
The EuroCham Business Climate Index (BCI), a barometer of sentiment among some 800 European firms operating in Vietnam, plunged to its lowest-ever score of 26 percent in the first quarter of 2020, down from 77 percent recorded in late 2019.
More than 90 percent of business leaders said Covid-19 has had a negative impact on their firms, with more than half reporting a significant negative impact. Meanwhile, almost 80 percent said their business had incurred higher costs due to measures taken to protect their workers and prevent the spread of the pandemic.
The biggest impact of the Covid-19 pandemic is the disruption of supply chains, and the most worrying is the sharp drop in orders due to the global economic downturn.
According to BCI, some 74 percent of businesses said the situation is expected to get worse in the second quarter due to the complicated and unpredictable developments of the pandemic. More than half said businesses will need more than six months to get back on their feet.
Despite the negative financial impact of Covid-19, European companies are taking important measures to protect 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 percent of their staff over the next quarter.
Welcoming government measures
EuroCham members applauded the Vietnamese government’s support measures introduced in Instruction 11/CT-TTg on urgent tasks and solutions to remove obstacles for trade and production activities, ensuring social security in response to Covid-19.
According to European companies in Vietnam, a deferral of tax and land rent is the most popular provision, followed by a suspension of social insurance contributions. About three-quarters of those surveyed said a deferral of other taxes, such as corporate income tax, personal income tax, value-added tax and special consumption tax would also benefit businesses.
EuroCham Chairman Nicolas Audier said Covid-19 is having a deep and serious impact on European companies in Vietnam. “However, it is important to remember that this is a global pandemic, and businesses around the world are suffering from the impact 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 businesses and their workers during this difficult time,” Audier said.
He also said 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 businesses 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 minimize the disruption of Covid-19 on business operations and to protect the health and wellbeing of people in Vietnam,” he affirmed.