Things are tough, but should be better: EU firms in Vietnam

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European businesses in Vietnam are concerned about the current business situation, but a majority of respondents in a EuroCham survey expects the macroeconomic environment to stabilize and improve.

Business confidence for the third quarter is stuck at midpoint, according to results of the latest EuroCham Business Climate Index (BCI) survey released this week. The survey was conducted this month.

The confidence index remained at 50 points on a scale of 100 for the second quarter after recording the lowest score of 45 in the last quarter of 2012.

Compared to the second quarter survey, less respondents falling from 43 percent to 38 percent- assessed their current business situation as positive, while 28 percent said they had a negative view compared with 25 percent in the last survey.

The survey also found that 45 percent of respondents think other markets in Southeast Asia represent better business destinations than Vietnam. Up to 20 percent said they have considered shifting their business to another ASEAN market in the past six months.

"It is interesting - worrying - to see that so many of the respondents perceive other ASEAN markets as business destinations with better potential," EuroCham Chairman Preben Hjortlund was quoted as saying in a press release.

"This further underlines the importance of Vietnam continuing and intensifying efforts to improve the underlying structural problems of the economy," Hjortlund was quoted as saying.

The survey, however, found a slight improvement in overall economic outlook, with 60 percent of the respondents expecting the macroeconomic environment to stabilize and improve, compared with 52 percent in the last survey.

The positive trend was also reflected in the increase in number of respondents (to 61 from 53 percent) who expected business orders and revenues to rise in the medium term.

However, this does not mean increased recruitment, the press release said, explaining that the number of respondents expecting to increase hiring was roughly the same as that of those expecting to layoff employees.

More than half the businesses that participated in the survey are active in the services industry, a quarter in manufacturing and the rest in trading and other activities, the press release said.

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