The latest wave of COVID-19 in Vietnam has dipped the confidence of European business leaders, according to new data from the European Chamber of Commerce’s (EuroCham) Business Climate Index (BCI).
Before the current spike in infections in Vietnam, the BCI had almost climbed back to pre-pandemic levels, reaching 73.9 in Q1. However, this latest outbreak and the spread of new variants have seen the index fall almost 30 points in the second quarter, to 45.8 points. This is a significant drop, though not as steep as during the first outbreak of the pandemic in 2020.
The current wave has also led to increased pessimism about the short-term outlook of Vietnam’s business environment. Just one-fifth of EuroCham’s members believe that the economy will stabilise and improve in the next quarter, that’s down from almost two-thirds (61 per cent) in Q1.
However, business leaders remain confident about the prospects of their own companies. More than half (56 per cent) anticipate an improved or neutral performance in the third quarter. And 80 per cent plan to maintain or increase their headcount and investment. This suggests that, despite short-term challenges, European business leaders remain confident in Vietnam’s long-term prospects.
The BCI also shows the urgent need for Vietnam to roll out vaccinations. More than half of the business leaders predict that their companies would see a significant, negative impact if their staff could not be vaccinated in 2021. Meanwhile, 44 per cent have not been approached to prepare for vaccination.
EuroCham and its nine business associations asked their members if they would be willing to cover the cost of vaccinating their own staff. Out of the 430 who responded – representing around one-third of the chamber’s total membership and around 95,000 staff – 399 said they would be prepared to do so.
With full vaccination requiring two shots, this suggests that at least 190,000 doses will be needed just to vaccinate the staff of these companies alone. However, the true number of doses required could reach over half a million if all European enterprises and their staff were taken into account.
Meanwhile, 259 of those who responded are also willing to cover the cost of vaccinating the families of their staff members.
Commenting on the data, EuroCham chairman Alain Cany said that, “The EuroCham’s BCI reaffirms the urgent need for Vietnam to accelerate vaccinations. Local lockdowns, social distancing, and travel restrictions are not permanent solutions and will cause significant economic harm in the long term, as our data shows.”
Cany further added, “There is no route out of this wave without an ambitious and accelerated mass vaccination programme which will enable normal life to resume. European companies are prepared to cover the cost of protecting their own staff – this will help to speed up vaccination while also reducing the financial and administrative burden on the state. But we need access to sufficient supplies. EuroCham is using all the tools at our disposal to support Vietnam in procuring enough doses, and we are confident that businesses will rebound as soon as we can achieve mass vaccination.”
The BCI is a regular barometer of European business leaders and their views of the trade and investment environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Vietnam. The fieldwork and data collection for the BCI is conducted by YouGov Vietnam.