European business stakeholders' confidence in Viet Nam's investment environment declined slightly in the second quarter of this year, according to the Business Climate Index (BCI) released by the European Chamber of Commerce in Viet Nam (EuroCham) on Monday.

Following a first-quarter rise, the BCI dropped 4.4 points in the second quarter to 68.8 points. In contrast with earlier in the year, compounding factors such as the continuing conflict in Ukraine, commodity price spikes, and the ripple effect of China's zero-COVID policy have dampened expectations among Viet Nam's European business community.

Viet Nam's potential growth is also being viewed with less favour by European business leaders. Up to 60 per cent of respondents predicted that the Vietnamese economy would stabilise or improve in the third quarter of 2022, compared with 69 per cent who held this belief entering the second quarter.

The survey also identified barriers to European investment in Viet Nam and trade between the two sides are issues relating to reducing administrative procedures and infrastructure development.

Up to 45 per cent of participants said that the main difficulties that foreign companies encountered were related to administrative procedures, which hindered their ability to utilise the Viet Nam - EU Free Trade Agreement (EVFTA).

Although the outlook for European business leaders had decreased since the last quarter, the factors affecting it were mostly beyond the Vietnamese Government's control, EuroCham Chairman Alain Cany said.

“With this BCI, Viet Nam's path to improving its investment and business environment is clearly outlined. Green growth is the way of the future, not just because it will help build a prosperous foundation for Viet Nam's economy and people, but also because it will support the country’s transformation into one of the world's strongest markets,” he said.

Although the BCI has fallen, it remains 7.6 points higher than in the fourth quarter of 2021, when it measured 61.0 points. Respondents also gave positive views on Viet Nam’s prospects for green growth. According to the findings, 79 per cent of participants said their assessment of Viet Nam's green development potential improved from the first quarter. Regarding the link between green growth and FDI, nearly 90 per cent of respondents believed Viet Nam should increase green sector development to attract more foreign investment.

In addition, 45 per cent of surveyed people were significantly or moderately satisfied with Viet Nam's efforts to attract and retain foreign direct investment (FDI), while 76 per cent expected their company to increase FDI to the country before the end of the third quarter. It is attributed to the fact that 55 per cent of respondents said Viet Nam improved its FDI attraction and retention capabilities since the first quarter. — VNS