European firms express confidence in Vietnam’s long-term prospects

06:00 | 29/07/2021 Cooperation

(VEN) - The resurgence of Covid-19 has hit the confidence of European firms in Vietnam’s short-term economic outlook and its business environment. However, the companies remain optimistic about the country’s long-term prospects and suggest that the Vietnamese Government accelerate a mass vaccination drive.

Confidence about future prospects

New data from the Business Climate Index (BCI) of the European Chamber of Commerce in Vietnam (EuroCham) show that the resurgence of Covid-19 has undermined the confidence of European business leaders.

european firms express confidence in vietnams long term prospects
Business confidence will rebound as soon as Vietnam can achieve mass vaccinations

Before the resurgence, the BCI had almost climbed back to pre-pandemic levels, reaching 73.9 percentage points in the first quarter of the year. However, the spread of new variants has greatly affected economic activities. The index dropped almost 30 points in the second quarter to 45.8, reflecting increased pessimism about the short-term outlook. Only some 20 percent of EuroCham members believe the Vietnamese economy will stabilize and improve in the next quarter.

However, EuroCham members remain optimistic about future prospects of their own companies. About 56 percent of respondents anticipate an improved or neutral performance in the third quarter, while 80 percent plan to maintain or increase their employees and investment.

Thue Quist Thomasen, CEO of YouGov Vietnam, said that despite the short-term shock, Vietnam’s long-term prospects remain positive. European business leaders are planning to maintain or increase their staff and investment, reflecting continued confidence in Vietnam’s business and investment environment.

Accelerating vaccinations

One of the factors boosting European firms’ optimism about Vietnam’s long-term prospects is the mass vaccination drive. According to the BCI, 58 percent of business leaders agree that failure to vaccinate their employees in 2021 will have a significantly negative impact on their business. Meanwhile, 44 percent have not been instructed or approached by authorities to start or prepare for vaccinations.

With full vaccination requiring two shots, at least 190,000 doses will be needed just to vaccinate the direct staff of the 430 respondents. The true number of doses required could reach over half a million if all European companies and their staff were taken into account.

As many as 399 respondents said they are willing to cover the cost of vaccinating their own staff, with 259 being happy to cover the cost of vaccinating staff families.

EuroCham Chairman Alain Cany said local lockdowns, social distancing and travel restrictions are not permanent solutions and will cause significant economic damage in the long term. He therefore reaffirmed the urgent need for Vietnam to accelerate vaccinations. European firms are ready to cover the cost of vaccinating their own staff to help accelerate vaccinations and reduce the financial burden on Vietnam, Cany said, adding that EuroCham is making greater efforts to support Vietnam in procuring sufficient vaccine doses.

EuroCham Chairman Alain Cany said business confidence will rebound as soon as Vietnam can achieve mass vaccinations.

Lan Ngoc