Vietnam’s efforts to improve business environment remain inconsistent: Experts

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Ngoc Thuy 20:01, 2019/10/28

If improvements are measured only by year-on-year statistics and without comparison to the rest of the world, Vietnam would lack motivation for reform and fall behind others in a rapidly changing world.

Vietnam’s efforts to improve its business environment remain inconsistent, resulting in lower ranking in the World Bank’s latest Doing Business report in spite of getting a higher score, according to Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM).

Overview of the conference. Source: Ngoc Thuy.

“The government has been pushing for reform, but the pace of improvements has been slow compared to other countries,” Cung said at a workshop on October 28 jointly held by CIEM and Aus4reform, a program from the Australian government with the aim of helping Vietnamt improve business environment towards a more market-based economy.

Cung added if improvements are measured only by year-on-year statistics and without comparison to the rest of the world, Vietnam would lack motivation to carry out reforms and fall behind others in a rapidly changing world.

Nguyen Minh Thao, head of the CIEM’s Business Environment and Competitiveness Department, said over the last four years, Vietnam’s Doing Business scores have been increasing steadily, in which “strong reform efforts were acknowledged by the World Bank in 2017 when the country climbed from the 82th to 68th place, but then slipped one notch in each subsequent year to the 70th in 2019.”

After four years, two areas which saw major improvements are “Getting electricity”, rising 69 places from the 96th to the 27th, and “Paying taxes”, going from the 167th to the 109th.

Others indicators witnessed improvements, including “Getting credit”, “Starting a business”, and “Enforcing contracts” with increases of seven, six and one places, respectively.

“Resolving insolvency” also ranked higher in 2019 at the 122nd compared to the 125th in 2016, due to “other countries getting lower ranks, as Vietnam has seen no reforms in this area for many years, resulting in a low rate of enterprises resuming operations,” Thao said.

“In ASEAN, Vietnam’s rank of “Resolving insolvency” is only above Laos',” Thao added.

Particularly, four indicators slipped down their respective ranks, including “Trading across borders”, down 11 ranks, “Protecting minority investors” falling 10 ranks, “Registering property”, five ranks, and “Dealing with construction permit”, one rank.

According to Thao, such lower rank in “Trading across border” was due to slow reform progress in specialized inspection in trading activities, leading to wider gap to other countries in the region.

“In some areas there have been new barriers for enterprises, or no reform was made,” Thao said.

With regard to “Dealing with construction permit”, Thao said there is a major difference between regulations and law enforcement. “Time consuming in issuing construction permit is a big concern for enterprises,” Thao said.

Overall, Vietnam’s business environment ranked 5th in ASEAN, much lower than Singapore at the 2nd place, Malaysia at the 12th and Thailand at the 21st, "making it challenging for Vietnam to break into ASEAN's top four business friendly environment as stated in government's Resolution No.02 released in early 2019," added Thao.

Thao cited recent studies conducted by the CIEM showing that business conditions are becoming barriers to enterprises’ development, while unofficial costs remain common in most areas, putting burden on the business community.

Dau Anh Tuan, director of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI), said enterprises listed administrative procedures related to lands, taxes and social insurances as the most cumbersome.

Tuan added that more people are voicing concern over procedures of post business registration, in which 31% paid unofficial costs in the process of business registration, 29% facing difficulties applying for certificates of technical standards, and 16% waiting for over a month to get full legal authorization for operation.

Notably, Tuan said judicial reform in provinces/cities remains slow as VCCI’s survey revealed less than 50% of enterprises take legal steps to settle disputes.

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