EuroCham index shows slight rise in confidence

Results of the 19th quarterly EuroCham Business Climate Index (BCI) survey, conducted in July, show that business confidence, outlook and expectations for the future among European businesses in Vietnam rose slightly from the previous quarter.

During the second quarter of 2015 the BCI rose to 77 points from the previous quarters' score of 75. The score was in line with the results of the previous two quarters.

This indicated stabilisation at a higher rate than previously, expressing an improved confidence in the business climate by participants of the survey.

In response to the question of how businesses perceived their general business situation. 57 per cent of respondents said it was "good", a notable rise from the previous quarter's 45 per cent.

Twenty-seven per cent perceived the business situation as "neutral". "Excellent", "not good" and "very poor" business situations were reported by 6 per cent, 8 per cent and 3 per cent, respectively.

The greater majority of respondents, like the previous quarter continued to perceive their business outlook as "positive", but the number (as during the previous quarter) saw a decline from 57 per cent last quarter to 55 per cent.

The second largest group of respondents remained "neutral" in their outlook at 27 per cent, a decline from 30 per cent last quarter. The remaining participants were divided between 8 per cent expecting "excellent" conditions and 8 per cent expecting "poor" conditions, with 1 per cent of participants reporting "very poor" conditions.

In the participants' assessment of the macroeconomic outlook for Vietnam, 52 per cent expected stabilisation and improvement, a decline from last quarter's 63 per cent. Participants expecting the situation not to change grew from 25 per cent to 33 per cent. A slightly larger number of participants from previous quarter expected deterioration of the macro- economic conditions, shifting from 12 per cent to 14 per cent.

Little fear of inflation

Two out of three (66 per cent) of the participants in the BCI expected that inflation would have a minor impact on their business over the months to come, and 19 per cent had concerns about the significant impact to their business due to inflation. The remaining 15 per cent believed no noticeable impact would come from inflation. The participants expected that over the next six months the market would see a reduction in inflation from 5.25 to 3.40 per cent.

For headcount development the largest group constituting 48 per cent of participants said that they were considering a slight increase in the number of employees. The second largest group at 35 per cent said they expected to maintain the number of employees at the current level. This was also true for investment plans in the medium term, where the largest group remained unchanged at 41 per cent. This was followed by the second largest group at 39 per cent expecting to maintain their level of investment.

In terms of expected orders/revenue, the largest group with 55 per cent of participants said they expected a slight increase. The second largest group at 21 per cent said they expected to maintain the same level.

The profile of the participants of the BCI survey varied and the number of employees ranged from less than 50 to above 500. The largest group of respondents during this quarter were engaged in the service sector and the second largest group of respondents were in manufacturing.

When asked how internet reliability had affected their business, 47 per cent replied that their business has been "notably affected", with the second largest group of participants at 31 per cent stating that it had "somewhat affected" their business.

Only 2 per cent of users said they noticed "no interruption" at all and 13 per cent said the interruptions were "hardly noticeable". At least 8 per cent said their business was "severely affected".

As for how households/non-businesses were affected by internet reliability, similarly 42 per cent reported "noticeable slowdowns". The second largest group at 33 per cent had more or less "loss of access", with the group of "somewhat affected" coming in as the third largest group at 17 per cent.

At least 8 per cent said the reliability issues were "hardly noticeable" and 1 per cent reported "no interruptions at all".

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