COVID-19 has had a significant, negative impact on European business in Vietnam, according to our latest Business Climate Index (“BCI”) data.
The BCI is a regular barometer of how European business leaders see the trade and investment environment in Vietnam and the prospects of their own enterprises.
Each quarter, we ask our membership to answer a range of questions covering issues such as investment plans, revenue projections, and workforce levels.
Following similar trends around the world, where the impacts of COVID-19 have hit international trade and investment, the EuroCham BCI plunged to its lowest-ever score of 26% in the first quarter of 2020. That represents a fall of 51 points from the 77% recorded in late 2019.
This drop in positive sentiment is a direct result of the impact of COVID-19: Over 90 per cent of business leaders said that COVID-19 has had a negative impact on their enterprise, with more than half reporting a ‘significant’ negative impact. Meanwhile, almost 80%said that their business had incurred higher costs from measures taken to protect their workers and prevent the spread of the virus.
Despite the negative financial impact of COVID-19, European companies are taking important measures to protect both the health and the livelihoods of their workforce. Four out of five business leaders are confident that they will be able to retain at least 70% of their staff over the next quarter. Meanwhile, 80% of businesses have asked their staff to work from home to prevent the spread of the virus.
EuroCham members also welcomed recent Government measures to support businesses during the pandemic. A deferral of tax and land rent was the most popular provision, with a suspension of social insurance contributions coming a close second. We also asked our members what other measures would be most helpful for their enterprises, and around three-quarters said a deferral of other taxes such as CIT, PIT, VAT and SCT would be the most welcome support for their companies.