Vietnam remains top FDI destination for European businesses: Report

15 Apr '23

2 min read

Pic: Shutterstock/OMG_Studio

Insights

European business leaders consider Vietnam as an attractive destination for foreign direct investment, a report said.
Vietnam was ranked as a top investment destination globally by 36 per cent of respondents, and the BCI remained unchanged at 48.0 in Q1 2023.
Enhancing political stability, regulatory frameworks, and tax regimes could boost Vietnam's appeal.

European business leaders continue to view Vietnam as an attractive destination for foreign direct investment (FDI), with 3 per cent more citing it as one of their top three investment hotspots worldwide, as per a recent report. Vietnam was ranked as one of the top investment destinations globally by 36 per cent of the respondents, either as their first choice, within their top three, or among their top five.

In the first quarter of 2023, the Business Climate Index (BCI), which measures the business outlook of the European business and investment community in Vietnam, remained unchanged at 48.0. Although it maintained its level from the end of 2022, there are promising signs that European business stakeholders are experiencing a positive change in their economic prospects.

Despite the improved outlook, there is still caution among European business leaders. While the number of respondents who are optimistic about the nation's economy has risen by 8 points, the economy is still fragile, and caution is warranted. Furthermore, regulatory ambiguity, inefficient administration, and challenges related to visas and work permits persist for international enterprises operating in Vietnam.

Complicated customs procedures pose an added obstacle for the manufacturing sector, whereas visa and work permit difficulties are a prominent challenge for service firms. Other industries, including transportation, pharmaceuticals, and renewable energy, are impeded by insufficient anti-corruption legislation, the report said.

The BCI participants emphasised the importance of enhancing political stability, regulatory frameworks, and tax and tariff regimes to enhance Vietnam’s attractiveness as a thriving investment destination. Such efforts would effectively address the apprehensions of foreign enterprises and enhance their confidence in the country’s economic potential.

Despite the challenges, Vietnam has emerged as a leading destination for foreign investment and domestic enterprises. Prime conditions for long-term economic success have been created by regulatory simplification, sustainable development measures, investment incentives, and workforce development programmes, according to feedback received from survey participants.

According to the survey findings, the European business and investment community seems to be satisfied with the level of attention policymakers have devoted to business needs in Vietnam. About one-third of the participants expressed notable or moderate contentment, which is a validation of the government’s continuous dedication towards creating a conducive business atmosphere in the country.

The European Chamber of Commerce in Vietnam (EuroCham)’s BCI, which is conducted by Decision Lab, is the premier metric for gaining insight into the European business and investment community’s perceptions of the Vietnamese market.

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