Vietnam remains an attractive destination for FDI projects from European businesses, with over 3 per cent of European business leaders citing the country as one of their top three investment hotspots worldwide in the latest Business Climate Index (BCI) report from Decision Lab and released by the European Chamber of Commerce in Vietnam (EuroCham) on April 11.

Based on feedback from EuroCham Vietnam’s 1,300 members, who collectively represent almost every sector in the country’s dynamic economy, the quarterly survey delivers indispensable insights into the current state of Vietnam’s business environment and provides a snapshot of what to expect in the future.

Around 36 per cent of surveyed European enterprises ranked Vietnam either first within their top three or one of their top five investment destinations globally, according to the report.

The BCI held steady at 48.0 points in the first quarter of 2023. Though it remains at the same level as when 2022 drew to a close, there are promising indications that European business stakeholders are experiencing a positive shift in their economic outlook.

The report shows that Vietnam’s business environment outlook for 2023 is displaying promising signs of betterment. Specifically, the number of respondents who are sanguine about the economy has risen by 8 points, signaling growing faith in its prospects.

A notable uptick in the number of individuals anticipating stability and growth in the economy was observed. The number of individuals expecting a downturn, meanwhile, fell 6 per cent, but those forecasting an upturn in revenue and orders rose 7 per cent.

The report noted that Vietnam has emerged as a top destination for FDI and domestic investment.

Feedback from survey respondents revealed that the simplification of regulations, sustainable development measures, investment incentives, and labor development programs play an important role in creating prime conditions for long-term economic success.

The survey results indicate that the European business and investment community is broadly content with the level of attention policymakers have given to business needs in Vietnam, with a third of respondents expressing significant or moderate satisfaction.

“This positive feedback is testament to the government’s ongoing commitment to fostering a business-friendly environment in the country,” the report said.

European businesses also expect that tourism will be one of the three leading industries ready for growth in the second quarter, with 38 per cent of respondents believing the sector has high growth potential. This may be the result of the boom in the number of tourists and upcoming reforms to visa procedures.

Some 21 per cent of respondents said food and beverages and renewable energy will be sectors expected to grow during the period.

Respondents suggested that Vietnam improve the stability of its legal framework and tax regulations to enhance its appeal as a dynamic investment destination. These measures would help to strengthen the faith among investors in the country’s economic prospects.

The report also recommended that Vietnam invest in human resources development initiatives to raise its attractiveness as an FDI destination and build its competitive advantages in the global market.