09 October 2023

EuroCham assessed that Vietnam's global investment attractiveness remains strong, in particular, Vietnam is ranked in the Top 10 FDI destinations.

The quarterly Business Confidence Index (BCI) of the European Business Association in Vietnam (EuroCham) has just released its assessment that Vietnam's global investment attractiveness remains strong. 63% of surveyed enterprises ranked Vietnam in the Top 10 FDI destinations.

More notably, 31% ranked Vietnam in the Top 3, of which an impressive 16% praised Vietnam as the top investment destination. To further reinforce this belief, more than half of those surveyed anticipate increasing foreign direct investment in Vietnam as 2023 draws to a close.

Still, obstacles exist. According to EuroCham, 59% said that administrative difficulties are the main challenge when operating in Vietnam. Other obstacles such as uncertainty in rules and regulations, barriers to obtaining permits, and strict visa and work permit requirements for foreign workers are also highlights.

To improve the country's FDI attraction, 58% of respondents said that streamlining the bloated apparatus is the most important factor, 48% supported strengthening the regulatory environment, 1/3 called for upgrading transport infrastructure and 22% highlighted the relaxation of visa and work permit requirements for water professionals outside.

In addition, according to EuroCham's report, sustainability is increasingly becoming a top priority for European companies in Vietnam, with 80% saying ESG compliance is important at a high or moderate level. However, there are still major obstacles to turning priorities into reality. It is regulatory uncertainty, infrastructure vulnerabilities and inadequate government support that are seen as obstacles to implementing sustainable measures locally.

Besides, only 20% of businesses are actively preparing for upcoming EU green regulations, such as the Carbon Border Adjustment Mechanism. Meanwhile, 38% currently have no plans to link. This lack of preparation not only poses domestic challenges but can also hamper international competitiveness, especially in important markets such as the EU market.

EuroCham President Gabor Fluit said, "One third of EuroCham members ranking Vietnam as one of the top three investment destinations sends a strong message of our confidence in this partnership. However, he noted that challenges remain.

"Although we see Vietnam's GDP and FDI growth rates in Q3 as promising, problems persist – especially for exports and real estate. To make progress, addressing administrative burdens, unclear regulations, and licensing barriers is critical. We remain committed to dialogue to effectively address these issues together," EuroCham President Gabor Fluit said.

In the Business Confidence Index report, EuroCham also stated that after being implemented, the EU-Vietnam Free Trade Agreement (EVFTA) is continuing to have a strong positive impact on Vietnam's business context.

Specifically, EuroCham pointed out that more than 60% of businesses think the agreement is beneficial, of which the top benefit is tax cuts, followed by improved competitiveness in Vietnam, reduced trade barriers, expanded partnerships with local companies and increased access to the Vietnamese market.

However, the EuroCham report also challenges persist. According to EuroCham, differences in customs valuation for imports, unclear and lengthy customs clearance procedures, technical obstacles to trade and uncertainty and lack of clarity related to the agreement are barriers limiting the full effectiveness of the agreement.

Source: congthuong.vn