Vietnam’s business environment strongly improves

SGGP
Last year, Vietnam recorded many positive results in business environment improvement. However, in the context of the global and regional reforms, these results were quite modest, especially, competitiveness 4.0 of Vietnam still ranked sixth among countries in the ASEAN.
At the World Economic Forum (WEF), Vietnam was considered as the economy with the best improvement in ranking in the Global Competitiveness Index. Vietnam’s Competitiveness 4.0 rose by 3.5 points from 58 points to 61.5 points, higher than the global average of 60.7 points and climbed by 10 notches from the 77th place to 67th place as eight out of 12 pillars increased and went up by several notches.

According to the World Intellectual Property Organization’s ranking, Vietnam gained three notches in the Global Innovation Index (GII) with six out of seven pillars rallying. The WEF’s tourism competitiveness of Vietnam advanced four notches from the 67th place to the 63rd place with a slight increase of 0.12 points from 3.78 points to 3.9 points. The World Bank’s Ease of Doing Business Index also recorded an increase of 1.2 points from 68.6 points to 69.8 points with five out of ten indicators increasing.

Many areas have undergone strong reforms, such as tax payment procedures and social insurance jumped by 22 notches from the 131st place to the 109th place; credit access edged up by seven notches from the 32nd place to the 25th place; compliance burden escalated 17 notches from the 96th place to the 79th place; the level of information technology application soared by 54 notches from the 95th place to the 41st place; quality of vocational training gained 13 notches from the 115th place to the 102nd place; growth in innovative enterprises advanced 22 notches from the 90th place to the 68th place; the number of enterprises with innovative ideas increased by 13 notches from the 52nd place to the 39th place.

In comparison with the quality of business environment of Vietnam five years ago, many fields have had institutions being improved significantly, even increasing by hundreds of notches compared to many countries in the world, including power access rocketed 107 notches to the 27th place out of 190 countries; tax payment procedure surged 64 notches to the 109th place; the level of investor protection moved up 29 notches to the 97th place.                         

The improvements in the quality of the business environment have also been recognized by the business community. The provincial competitiveness survey conducted by the Vietnam Chamber of Commerce and Industry has reflected positive impacts of institutional reforms on the business community, such as unofficial costs have been decreased; the business environment has been more equal; the administrative reform has continued to make progress.

More and more enterprises said that the State officials were more friendly; the time for administrative procedures has been shortened; civil servants have worked more effectively. On the contrary, fewer and fewer enterprises have had to pay unofficial costs or suffered multiple or duplicate inspections.

In general, ministries, departments, and provinces have been aware of their responsibilities and participated more actively and positively to improve rankings of indicators under their authority. Owing to that, the quality of the business environment and national competitiveness has been improved, positively affecting on business activities of enterprises.

However, in comparison with global and regional reforms, the country’s business environment improvements remained quite modest. Vietnam’s competitiveness 4.0 only ranked sixth among countries in the ASEAN after Singapore, Malaysia, Thailand, Indonesia, and the Philippines. Tourism competitiveness increased slowly and there were up to six out of 14 pillars declining. The GII of Vietnam tended to slow down with four out of seven pillars dropping last year.

Noticeably, although the quality of the business environment made improvements, the level of improvement was little and slow. In the past five years, the country had gone up 8 notches, or around 1.2 notches every year.

Even some fields that have been strongly improved, basically they were still at a low level and there was plenty of room for reform. Currently, five out of ten indicators of the business environment in the WB’s ranking were at the 90th place out of 190 countries. Many indicators were at low levels, including business start-up at the 115th place out of 190 countries or the bankruptcy indicator at the 112th place out of 190 countries.

Compared to countries in the ASEAN, Singapore has maintained steadily the second place since 2016; Malaysia has upgraded its ranking continuously in the last two years; Thailand speeded up in 2017 with 20 notches and continued to gain 6 notches last year. the Philippines climbed up to 29 notches last year. This showed that other economies tended to reform more rapidly and drastically than Vietnam. In the ASEAN, Vietnam ranked fifth after Singapore, Malaysia, Thailand, and Brunei.

In the near future, the requirement and the room for institutional reform to improve the quality of the business environment and competitiveness are still large. The institutional reform in recent years has shown determination, effort, and solutions to reform, improve the investment environment, promote innovation, and increase the competitiveness of the Government and ministries.

By Phan Duc Hieu – Translated by Bao Nghi

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