EuroCham Vietnam business confidence grows, 38% expect DPPA benefits

EuroCham’s Business Confidence Index (BCI) for Vietnam rose to 52 in the third quarter of 2024 from 51.3 in Q2, despite the severe impacts of super typhoon Yagi.

The growth confirmed the index’s recovery trend after seeing a decline in the previous quarter, according to a Eurocham release on Tuesday.

It said the small rise in BCI showed that cautious optimism continued to be widely shared among businesses. This momentum, coupled with the spike in GDP growth in H1/2024, indicated an early but still weak market recovery.

The damage caused by super typhoon Yagi, which has severely impacted the infrastructure and agricultural sectors in northern Vietnam, has led the Vietnamese government to forecast a 0.15-percentage-point reduction in GDP growth for 2024, with estimated losses reaching $3.3 billion, the EuroCham noted.

Yet, its latest BCI survey, conducted after the typhoon ravaged large swathes of the country from September 12 to 25, showed that nearly half (47.4%) of the respondents were confident their companies will see improvement in the coming quarter.

Moreover, long-term optimism remains high, with 69.3% expecting a favorable business climate over the next five years.

The survey found that EuroCham respondents shared the same top three concerns now as they did in previous quarters: administrative burdens, unclear regulations, and difficulties in obtaining licenses and permits.

About the direct power purchase agreement (DPPA) mechanism, the survey found 38% of businesses had benefited or were expecting to benefit in various degrees – marginally, slightly, moderately and significantly.

Regarding Vietnam’s green transition, 47% of survey respondents said they were “somewhat confident” or “very confident” in their ability to fully transition to renewable energy by 2050.