European Business Confidence Surges, Reinforcing Vietnam's Position As A Strategic Market

More than half of the European businesses surveyed (54%) identified Vietnam as their primary strategic market and operational base, while another 18% regarded it as a key growth destination. Rather than serving merely as a manufacturing hub, Vietnam is increasingly viewed as a platform for manufacturing, sourcing, regional services, and future expansion across Southeast Asia…

According to the Q2 2026 Business Confidence Index (BCI) released by the European Chamber of Commerce in Vietnam (EuroCham) on 15 July 2026, business confidence among European companies operating in Vietnam rose sharply to 79.7 points in Q2 2026, up 7 points from 72.7 in Q1 2026. This figure is only slightly below the seven-year record high of 80.0 points recorded at the end of 2025, despite ongoing global supply chain disruptions and shifting international trade dynamics.

This marks the 15th edition of EuroCham’s BCI survey and represents one of the most comprehensive reports to date, conducted in partnership with DXL Research and Consulting.

Strong Business Performance Drives Broad-Based Confidence Recovery

EuroCham’s survey found that 63% of European businesses in Vietnam reported positive business conditions during Q2 2026, while 69% expect favorable conditions to continue into the next quarter – the highest level of optimism recorded in several quarters.

Mr. Bruno Jaspaert, Chairman of EuroCham, commented:

“This quarter’s results demonstrate the remarkable resilience of both Vietnam’s economy and the European businesses operating here. The first half of 2026 was marked by significant uncertainty. We entered the year facing complex geopolitical challenges, yet despite global instability, our member companies significantly exceeded their own expectations. The index shows that when conditions become more difficult, our business ecosystem adapts and seizes growth opportunities.”

What stands out in this quarter’s results is not merely the headline figure, but the foundation of the recovery. The 11-percentage-point increase in optimism compared with expectations expressed just three months earlier was driven by tangible business performance rather than abstract expectations.

Among companies reporting improved results:

• 36% cited higher revenue, stronger sales, and improved operating profitability that consistently exceeded internal forecasts.
• 32% attributed improved prospects to expanding order books and securing major new contracts.
• 24% highlighted stronger domestic consumer demand.

Growth was broadly distributed across multiple sectors – including manufacturing, tourism, real estate, and exports -indicating that the recovery is being driven by several economic engines simultaneously rather than a single leading industry.

According to EuroCham’s analysis, the tourism and hospitality sector recorded the strongest improvement, rising 8.7 points to 90.4, well above the overall index. The food and agriculture sector posted a more modest gain of 5.5 points.

Mr. Xavier Depouilly, CEO of DXL Research and Consulting, observed:

“Confidence has recovered across all sectors, confirming that the decline recorded in the first quarter was broad-based but ultimately temporary. Although the pace of recovery varies by industry, the overall trend is consistent.”

Vietnam’s macroeconomic performance has also reinforced positive business sentiment. GDP expanded by 8.18% during the first half of 2026. In the IMD World Competitiveness Ranking, Vietnam climbed to 27th place globally. Furthermore, FTSE Russell’s expected upgrade of Vietnam to Secondary Emerging Market status in September 2026 is viewed as a significant catalyst for international institutional investors.

Mr. Jaspaert added:

“When Vietnam’s strong economic growth is combined with its rise to 27th place in the IMD World Competitiveness Ranking and its anticipated FTSE Russell upgrade this September, the picture becomes clearer than ever. What truly differentiates Vietnam in an increasingly competitive region is a government that not only talks about growth but also translates its ambitions into national resolutions and actively pursues structural reforms.”

Particular attention has been drawn to Resolution No. 10-NQ/TW, issued on 8 June 2026, which redefines Vietnam’s FDI attraction strategy by shifting the focus from low-cost labor and production volume toward high technology, advanced innovation, and sustainable growth. This policy direction strongly aligns with the priorities of European investors, whose operations typically involve technology-intensive and knowledge-based value chains.

Regarding Vietnam’s strategic position, 54% of respondents identified Vietnam as their primary strategic market and operational base, while 18% considered it an important growth market. Rather than functioning solely as a manufacturing location, Vietnam is increasingly recognized as a regional platform for manufacturing, sourcing, business services, and expansion throughout Southeast Asia.

Global Uncertainty Has Not Undermined Business Confidence

The report also notes that this growing confidence has emerged despite an exceptionally challenging global environment.

Nearly 46% of surveyed CEOs reported significant negative impacts on their international operations, while approximately one-third experienced mixed effects across different areas of their businesses. This suggests that external shocks affect companies differently depending on their size, industry, and supply chain exposure.

Notably, medium-sized enterprises appear to be the most vulnerable. Without the financial strength of multinational corporations or the agility of smaller local businesses, they bear a disproportionate share of rising compliance and logistics costs.

The report identifies higher transportation and logistics costs as the most significant challenge, cited by 78% of affected businesses, followed closely by rising energy costs (76%).

To adapt:

• 53% of affected companies have increased supply chain buffer times.
• 25% have extended lead times by more than two weeks.
• Nearly two-thirds reported reduced net profitability.
• Meanwhile, 14% benefited from increased manufacturing orders as global companies diversified production into Vietnam.

Administrative Costs Remain An Unresolved Challenge

Despite the encouraging outlook, the Q2 2026 BCI also highlights persistent structural challenges.

53% of businesses reported that regulatory delays, inconsistent policy implementation, and limited tax administration transparency are no longer simply operational inconveniences but major obstacles to long-term expansion plans.

Specifically:

• 33% said administrative procedures delayed project implementation.
• 29% diverted resources away from core business activities to manage compliance.
• 27% believed regulatory complexity weakened their competitiveness.

Talent shortages continue to intensify, with 38% of respondents identifying workforce availability as one of their three most urgent operational challenges, representing a steady increase since Q4 2025.

Intellectual property protection also remains a concern. Among companies holding registered IP rights:

• 32% reported encountering IP-related challenges.
• 28% cited weak dispute resolution mechanisms.
• 18% experienced delays in administrative procedures.

During the first six months of 2026, Vietnam introduced or amended more than 80 laws, representing an ambitious pace of legal reform. While these reforms support long-term economic development, they also create significant compliance challenges for foreign-invested enterprises.

Mr. Jaspaert explained:

“As our businesses become increasingly sophisticated, they require an equally sophisticated legal environment. Predictable regulations, efficient administration, and consistent enforcement are essential to safeguarding investment capital.”

He further noted that although the extensive legal reforms mark the beginning of a new era of economic growth, keeping pace with this “wave of legal reform” has effectively become a full-time compliance challenge for foreign companies. EuroCham’s role is therefore to serve as a bridge between practical business experience and policymakers, helping ensure that these reforms translate into lasting investor confidence.

Concluding, Mr. Jaspaert stated:

“The confidence reflected in the Q2 2026 Business Confidence Index is highly encouraging, but confidence alone is not enough. By maintaining this positive momentum, we can support Vietnam’s continued rise as Asia’s leading destination for high-quality, sustainable, and future-oriented investment.”