11:02 | 27/11/2019 Finance - Banking
(VEN) - Vietnam has made significant progress in improving its business climate, as reflected in various international reports and rankings.
Better in credit, construction permits
The World Bank (WB) Group’s latest Doing Business 2020 study, issued last month, gave Vietnam 69.8 points, compared with 68.6 the previous year. While Vietnam secured the 70th spot among 190 economies in the ease of doing business ranking, dropping one spot from 69th place, it improved its ranking in five of the 12 criteria examined. The five areas were: starting a business, arranging for construction permits, getting electricity connections, getting credit and paying taxes. In terms of dealing with construction permits, getting credit and accessing electricity, Vietnam was ranked in 25th to 27th place in the report.
The annual index ranks economies based on 12 aspects of running a business: starting a business, arranging for construction permits, getting electricity connections, registering a property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, employing workers and contracting with the government.
Vietnam improved access to credit information by distributing data from retailers, giving it an extra five points. It also made tax payment easier by upgrading the information technology infrastructure used by the General Department of Taxation, pushing it to 69 points from the previous 61.
In the Southeast Asia region, Vietnam ranked fifth after Singapore, Malaysia, Thailand and Brunei, which have undertaken rapid and drastic reforms. Singapore has maintained second position since 2016, while Malaysia and Thailand have risen to 12th and 21st on this year’s report, respectively.
Nguyen Minh Thao, head of the Central Institute for Economic Management (CIEM)’s Business Environment and Competitiveness Committee, said Vietnam has made significant improvements in providing electricity (moving from 96th to 27th) and paying taxes (167th to 109th). Other areas witnessed minor improvements or remained unchanged compared to last year.
According to the latest Global Competitiveness Report released by the World Economic Forum (WEF) in August 2019, Vietnam ranked 67th out of the 141 countries studied, up 10 places compared to the previous ranking. The Global Competitiveness Index (GCI) is based on 12 pillars: institutions, infrastructure, information and communication technology adoption, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism, and innovation capacity.
Among the 12 pillars, Vietnam declined only in terms of health care, while the score for macroeconomic stability remained unchanged and the scores for other pillars improved compared with the previous year. In terms of ranks, the three pillars of infrastructure, health and financial system fell slightly, while increases were seen in all other pillars.
Promoting reforms further
Given international economic integration, Vietnam needs to make greater efforts to take advantage of opportunities and resolve difficulties.
CIEM Deputy Director Phan Duc Hieu said a gain in score is a recognition of reforms, but successful reforms must be demonstrated by further increases in global rankings, showing that Vietnam outperforms many other countries.
Economists say that to increase in rankings, Vietnam needs to accelerate reforms. In particular, the country needs to create breakthroughs in improving the business environment, state management agencies need to shorten the time and reduce costs of conducting administrative procedures by promoting online public services.
Ministries and departments should implement solutions seriously in terms of cutting business conditions and promoting specialized inspections. In addition, they should replicate modern management models following international practices.