Vietnam remains attractive among foreign investors, with 48 per cent of European business leaders still expecting their investment in Vietnam to increase, according to the latest Business Climate Index (BCI) report from Decision Lab and released by the European Chamber of Commerce in Vietnam (EuroCham) on July 10.

Nevertheless, a level of negative sentiment could also be seen regarding FDI expectations, with about 4 per cent more businesses saying they are not planning any increase in investment.

There is also a 4 per cent rise in those who expect only a marginal increase, while there is a decline among those who expect only a moderate or slight increase.

More than one-third of businesses still have Vietnam in their top 5 investment destinations.

However, 53 per cent and 50 per cent of businesses say that unclear rules and administrative issues are the most significant regulatory obstacles for them doing business in Vietnam, respectively. This is an increase against the previous quarter. At the same time, visa issues seem to have been somewhat addressed in the second quarter of the year, as 6 per cent fewer businesses report it as a problem.

Improving the regulatory environment and businesses’ access to financing were the most significant ways to enhance Vietnam’s FDI appeal, according to the report.

The quarterly survey showed that the BCI dropped by a slight 4.5 points from the first quarter, to 43.5 points in the second. The fall could be attributed to low scores in the transportation and logistics, automotive, and energy sectors.

Compared to the first quarter, 5 per cent more businesses think that the macro-economic conditions will deteriorate, reflecting the drop in the BCI. While there was a 2 per cent increase in the number of business leaders thinking the economy will improve or stabilize, only 10 per cent of those say it is likely to improve.

Those who gave negative responses on the current situation grew 10 per cent and the negative sentiment about the next quarter grew 6 per cent. However, business leaders seem to still have some confidence in their business in the next quarter, with 9 per cent feeling more positive about business in the third quarter.

Regarding the implementation of the EU-Vietnam Free Trade Agreement (EUVFTA), more than half of businesses say they have benefitted from the agreement. The EUVFTA could realize its intended purpose of reducing tax barriers to trade and increasing access to the Vietnamese market, with 35 per cent of these business leaders saying that they benefitted from the tariff reductions on imports from Vietnam.