The second quarter of 2021 saw the fourth time that the BCI had dipped below the midpoint level of 50 - PHOTO: COURTESY OF EUROCHAM

HCMC - The fourth Covid-19 wave has led to European firms losing confidence in Vietnam, according to new data from the EuroCham Chamber of Commerce (EuroCham).

Prior to the fourth Covid-19 wave, which began in late April, the EuroCham’s Business Climate Index (BCI) had almost climbed back to pre-pandemic levels, reaching 73.9 in the first quarter of 2021.

However, the index fell almost 30 points in the second quarter to 45.8. According to EuroCham, this was a significant drop, though not as steep as during the first outbreak of the pandemic in 2020.

This was only the fourth time the index had dipped below the midpoint level of 50 in over a decade of the quarterly survey.

The latest outbreak has also led to increased pessimism about the short-term outlook of Vietnam’s business environment among European businesses.

In the second quarter of this year, only one-fifth (19%) of EuroCham members believed that the economy will stabilize and improve in the next quarter, down from almost two-thirds (61%) in the first quarter.

Approximately 45% of European business leaders expected the economy to deteriorate in the following three months, compared to just 4% in the first quarter.

Overall, there was "caution and concern" among business leaders, as they expected a difficult period ahead, EuroCham stated in the survey.

The BCI survey also showed that the vaccination progress in Vietnam is one of the major concerns among European companies.

More than half of business leaders (58%) agreed that their employees not being vaccinated in 2021 would have a significantly negative impact on their business. Meanwhile, 44% have not been instructed or approached by authorities to start or prepare for vaccinations.

“The EuroCham BCI reaffirms the urgent need for Vietnam to accelerate vaccinations. Local lockdowns, social distancing and travel restrictions are not permanent solutions and will cause significant economic harm over the long term, as our data shows,” said EuroCham chairman Alain Cany.

Some 17% of EuroCham members have donated to Vietnam’s national vaccination fund.

According to Cany, European companies are willing to cover the cost of vaccinating staff members and their families. This will help speed up vaccination while also reducing the financial and administrative burden on the State.

“European companies are prepared to cover the cost of protecting their own staff. There is no route out of this fourth wave without an ambitious and accelerated mass vaccination program, which will enable normal life to resume,” the EuroCham chairman said.

The BCI is a regular barometer of European business leaders and their views of the trade and investment environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions over the economic outlook in Vietnam.