As the global economy continues to face significant turbulence, the confidence of European businesses operating in Vietnam remains cautiously optimistic, albeit tempered by concerns over fluctuating tariffs and geopolitical uncertainties. According to the latest Business Confidence Index (BCI) released by EuroCham Vietnam, the index stands at 64.6 for the first quarter of 2025, reflecting a relatively stable outlook yet underscoring notable apprehensions within the business community.
On April 16, 2025, the VN-Index saw a decline of 17.49 points (1.42%), settling at 1210.3 points, while the VN30-Index dropped by 17.51 points (1.34%) to 1293.25 points. The HNX-Index also fell, closing at 209.41 points, down 0.83 points (0.4%), and the HNX30-Index decreased by 1.3 points (0.31%) to finish at 411.28 points. These figures illustrate a challenging environment for investors as external pressures mount.
The EuroCham survey, conducted from April 4 to April 9, 2025, involved 183 European companies operating in Vietnam and was initiated shortly after announcements regarding tariff changes from the United States. The findings revealed that 47% of respondents do not engage in direct business with the U.S. yet still experience instability primarily due to indirect effects within the global supply chain. Over 70% of businesses reported a “High” or “Very High” level of volatility, which has stalled many strategic plans.
Moreover, the survey indicated that, on average, 25% of business operations are currently at risk, prompting many firms to contemplate defensive strategies such as cost reductions, workforce streamlining, or even relocating operations. Most businesses anticipate a profit decline ranging from 10% to 30%, with a 20% reduction being the most frequently cited figure. Despite these challenges, the situation has not escalated to a crisis level.
Bruno Jaspaert, Chairman of EuroCham, emphasized during a recent panel discussion on the impact of U.S. tariffs that the European business community remains committed to Vietnam, seeking to adapt amidst the current uncertainties in import and export activities. He stated, “European businesses have long-term investments in Vietnam and will not retreat due to short-term fluctuations.” This sentiment reflects a broader cautious optimism among European investors.
In light of these developments, the Vietnamese government has maintained its GDP growth target of 8% for 2025, showcasing its determination to foster economic growth despite external pressures. The government’s commitment is bolstered by ongoing reforms aimed at enhancing the business environment, particularly in the real estate sector. FDI capital registered in this area surged to $4 billion in 2024, a significant increase from $1 billion in 2023, indicating a robust interest from foreign investors.
Furthermore, the Ministry of Science and Technology, led by Deputy Minister Pham Duc Long, has underscored the necessity for state-owned enterprises (SOEs) to embrace digital transformation. He noted that the essence of digital transformation lies not only in technology adoption but also in creating new business models that can drive sustainable growth. “The nature of growth above 10% cannot come from merely scaling up; it fundamentally must come from breakthroughs in business models,” he stated.
To successfully transition to a digital business model, SOEs require decisive leadership and a clear strategy that emphasizes data utilization as the core of digital transformation. The Ministry is committed to supporting SOEs by establishing conducive policies and ensuring competitive advantages. This supportive framework aims to empower SOEs to play a pivotal role in shaping Vietnam’s digital economy.
As Vietnam navigates through these tumultuous times, the potential for growth remains significant. The government’s focus on enhancing transparency and regulatory frameworks is expected to attract further foreign direct investment. For instance, the recent legal reforms in the Land Law of 2024 and the Housing Law of 2023 have contributed to a more favorable investment climate, encouraging the participation of foreign investors in the capital markets.
In addition, the stock market, while currently facing challenges, holds substantial potential for development. The goals set for market capitalization to reach 120% and corporate bond debt to account for 25% of GDP by 2030 highlight the ambitions of Vietnam to elevate its financial markets.
In this context, PGT Holdings (HNX: PGT) has emerged as a promising investment opportunity. The company acts as a strategic financial advisor, facilitating partnerships between Vietnamese firms and Japanese investors, such as the collaboration between Pomina Steel (POM) and Nansei Steel from Japan. This partnership exemplifies the potential for cross-border investments that can drive economic growth.
Recently, PGT Holdings organized the "Stock Investment Tour/Trade Promotion: Connecting Values Together for Development" event from March 19 to March 23, 2025, further solidifying its role as a key player in promoting trade and investment opportunities in Vietnam.
Despite the myriad challenges posed by global instability and fluctuating tariffs, the resilience of European businesses in Vietnam and the proactive measures taken by the Vietnamese government signal a robust commitment to navigating these uncertain waters. The focus on digital transformation, regulatory improvements, and fostering international partnerships will be crucial as Vietnam aims to secure its position as a competitive player in the global economy.
As the markets adapt and evolve, the ongoing dialogue between the government and the business community will be essential in shaping a sustainable economic future for Vietnam, ensuring that it remains an attractive destination for investment and innovation.
