European companies look to expand production in the North: EuroCham Vietnam
A recent report indicates strong potential for business expansion, with nearly 80% of companies already operating 1-3 offices or manufacturing facilities in Vietnam.
As many as 67% of European companies surveyed view Vietnam as an attractive investment destination and plan to set up new production facilities in the North, according to the latest report from the European Chamber of Commerce in Vietnam (EuroCham Vietnam).
This finding comes from EuroCham's Business Confidence Index (BCI) for the third quarter.
| EuroCham Vietnam members gather for a meeting in Ho Chi Minh City. Photo: EuroCham Vietnam |
The report shows strong potential for business expansion, with nearly 80% of companies already operating one to three offices or manufacturing facilities in Vietnam. Of those planning to expand, more than half intend to develop new facilities in northern Vietnam or open additional offices in major cities such as Hanoi, Ho Chi Minh City, Danang, and Cantho.
The report highlights a positive long-term outlook, with 69.3% of businesses optimistic about a favorable business environment over the next five years. This reflects a resilient business sentiment despite ongoing economic challenges stemming from Typhoon Yagi and operational hurdles.
In the aftermath of the storm, EuroCham's latest survey found that almost half (47.4%) of companies expect the macroeconomic situation to improve in the coming quarter. The BCI rose from 45.1 points in Q3 2008 to 52 points this year, indicating a strong year-on-year recovery despite the challenging external conditions.
| EuroCham's Business Confidence Index (BCI) for the third quarter |
The report also notes that Typhoon Yagi severely impacted infrastructure and agriculture in Northern Vietnam. The government expects GDP to fall by 0.15% this year, with estimated losses of US$1.63 billion.
Urgent need for climate action
The survey highlighted three major obstacles for European companies: administrative burdens, unclear regulations, and difficulties in obtaining permits. Additionally, businesses reported persistent hurdles in tax-related processes and compliance with fire regulations.
Following the new Decree on the Mechanism for Direct Power Purchase Agreements (DPPA) issued in July, nearly 30% of respondents to the EuroCham survey expect to benefit from renewable energy projects, reinforcing Vietnam's commitment to a green transition. In particular, a quarter of service providers and companies with more than 100 employees will benefit moderately or significantly.
While almost half (47.4%) of companies express confidence in a full transition to renewable energy by 2050, gaps remain in policy understanding and implementation. Digital transformation is also identified as a key area for improvement, particularly in addressing human resource challenges and streamlining administrative procedures.
According to EuroCham Vietnam's chairman, the impact of the typhoon highlights the urgent need to address climate change. Additionally, the upcoming Green Economy Forum and Exhibition (GEFE) 2024, scheduled for October 21-23, will provide a timely platform to foster necessary dialogues on how Vietnam can remain competitive while transitioning to a greener and more sustainable future.
