Vietnam's biz confidence gains traction in Q4 2023: EuroCham

While this uptick signals gradual stabilisation, it is vital to highlight that the BCI has remained below the midpoint since Q4 2022. Notably, over one-third of businesses anticipate underperformance, underlining a cautious outlook amid persistent market weaknesses, the chamber said in a release.

“There’s definitely a positive trend underway. While we still have a long way to go for a full recovery, businesses are feeling more hopeful,” chamber chairman Gabor Fluit commented.

“The European business community is increasingly optimistic that the most challenging economic period is now behind us,” he added.

As Vietnam’s business landscape transitioned from Q3 to Q4 2023, subtle yet telling shifts in sentiment emerged. While there was a slight 2 percentage point dip in overall optimism for economic stability and growth, this was more than offset by a drop of 14 percentage points in expectations of an economic downturn.

The last quarter of 2023 saw a marked increase in satisfaction among businesses: firms confident in their current situation rose from 24 per cent in Q3 to 32 per cent in Q4.

The outlook for Q1 2024 is also positive, with 29 per cent of businesses viewing their prospects as ‘excellent’ or ‘good’—a sign of diminishing concerns, as extreme worries fell from 9 per cent to 5 per cent.

Looking ahead, Vietnam’s business sector is poised for growth. Thirty-one per cent of companies plan to expand their workforce in Q1 2024, and 34 per cent intend to increase their investments, a clear uptick from 2023. These statistics signal a strong momentum for growth and opportunity as Vietnam begins 2024, the chamber said.

In Q4 2023, Vietnam’s investment hotspot status increased significantly. An impressive 62 per cent of those surveyed ranked Vietnam among their top ten global investment destinations, with 17 per cent placing it at the very top. This strong endorsement is matched by 53 per cent of respondents anticipating increased foreign direct investment in Vietnam by the end of Q4.

The survey also highlights Vietnam’s strategic position in the Association of Southeast Asian nations (ASEAN) region. While only a small fraction (2 per cent) consider it an ‘industry leader’, a noteworthy 29 per cent rank it among the ‘top competitive countries’ in ASEAN. The majority (45 per cent) view Vietnam as a competitor, albeit acknowledging certain challenges.

While 32 per cent of respondents recognise good proficiency in the workforce, this number indicates that a majority perceive room for improvement in skills and expertise. Similarly, the 24 per cent satisfaction rate regarding workforce availability suggests that while there is a pool of talent, it might not fully align with the specific requirements or scale desired by international businesses.

The findings also show that 40 per cent of respondents view Vietnam’s workforce as moderately proficient, indicating a blend of basic and intermediate skills. In addition, 50 per cent rate the workforce’s availability as moderate, reflecting some challenges in finding qualified candidates.

These results suggest that further development and training could enhance workforce proficiency and availability to better meet the demands of the global market, the chamber revealed.

Fifty-two per cent of respondents identify ‘administrative burdens and bureaucratic inefficiencies’ as one of the top three hurdles, spotlighting the impact of red tape on business operations.

Thirty-four per cent of businesses highlight ‘unclear and variably interpreted rules and regulations’ as a major challenge, emphasising the need for clarity and consistency in legal frameworks.

Securing necessary licences, permits, and approvals is a concern for 22 per cent of respondents, pointing to procedural barriers in business activities.

Moreover, 20 per cent cite the ‘lack of qualified local expertise in specialised fields’ as a critical issue, suggesting a talent gap that needs addressing.

Furthermore, 19 per cent of companies find ‘visa regulations, work permits, and labour rules for foreign employees’ challenging, reflecting the complexities of managing an international workforce under the current legal system.

A notable 54 per cent of respondents call for ‘administrative and bureaucratic streamlining’, indicating that easing bureaucratic processes could significantly enhance the business environment.

Additionally, 45 per cent stress the importance of ‘strengthening the legal system and regulatory environment,’ while 30 per cent see ‘infrastructure development, including roads, ports, and bridges,’ as essential for attracting foreign direct investment.

Fibre2Fashion News Desk (DS)