European companies that do business in Vietnam are becoming more
pessimistic, with a new European Chamber
of Commerce (EuroCham) survey showing confidence falling to a record low in the
fourth quarter amid concerns over inflation and the impact of increased taxes,
fines and official scrutiny.
The EuroCham Business Climate
Index (BCI) survey, released on November 2, also showed a further drop in
respondents assessing their current business situation as positive from 30 per
cent to 26 per cent.
More than a third of businesses
continue to have a negative view of their current situation. At the same time
the neutral assessment of the current situation grew to 37 per cent - up by 7
points compared to last quarter.
“During the past 12 months,
EuroCham’s BCI has declined from 56 to 45 points - a drop of 11 points. This
indicates a declining confidence in Vietnam as an investment destination for
European business,” said EuroCham chairman Preben Hjortlund.
“We remain hopeful that recent
developments such as the beginning of negotiations for the FTA between Vietnam
and the EU will encourage Vietnam to improve its competitiveness and
attractiveness and turn around the declining business climate,” he added.
EuroCham executive director Paul
Jewell said the further drop of EuroCham's BCI was caused by slow progress on
many of the issues that we have flagged in the past.
Half of surveyed European
companies remain expecting inflation to have a significant impact on their
business in the medium-term. Meanwhile, 72 per cent of respondents think that
they will see a further deterioration of an already difficult economic situation.
This is a rise by 12 points since last quarter and it shows that the measures
taken to stabilize the economy do not ease the concern of the business
community about the macroeconomic outlook.
In addition, European companies
said that the current downturn in the economy impacts Vietnamese government tax
revenues, thus resulting in cases of increased fines, auditing visits and
customs duties. More than two third of respondents have experienced a form of
increased scrutiny and 10 per cent of the respondents find that this threatens
their business in Vietnam.
“Increased official scrutiny and
fines have certainly played a role in terms of this quarter’s overall decline
of the Business Climate Index and it is therefore of utmost importance that
these issues are addressed,” EuroCham said in a statement.
Bao Tram | vir.com.vn
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