The European Chamber of Commerce in Vietnam (EuroCham) has called on the government to focus on long-term plans to mitigate power shortages, which it fears are cyclical.
Power shortages were among the concerns raised by EuroCham in its second quarter Business Confidence Index report.
A survey of its member companies found the recent power shortage significantly affected their business.
While the situation has improved thanks to the heavy rains in recent weeks, 60% of the companies said the shortage had created challenges for them, with 10% saying they have been seriously affected.
According to EuroCham, reliable power supply is a central requirement for the business sector and overall economic resilience.
The Government should focus on making long-term plans since power shortages are likely to occur in cycles, EuroCham president Gabor Fluit said.
Between late May to mid-June this year the northern region was crippled by regular blackouts as electricity demand shot up even as hydropower, one of the two main sources, decreased due to drought.
European businesses also said Vietnam’s infrastructure is poorer than that of many neighboring countries, with 53% rating it inadequate.
But the bright spot is that the Government is taking active measures to address this problem like accelerating key infrastructure projects, they said.
The survey also found that business optimism has increased slightly and Vietnam continues to be considered an attractive destination for foreign investors.
Some 48% of respondents expected their companies’ direct investment in the country to rise sharply in the next quarter.