Actively improving business environment and competitiveness

After five years of implementing the Government’s Resolution No.19 on major tasks and solutions to improve the business climate and enhance national competitiveness, Vietnam has achieved many positive results, contributing to removing difficulties and obstacles.

Administrative procedure reform has contributed to enhance the enterprises' competitiveness.
Administrative procedure reform has contributed to enhance the enterprises' competitiveness.

The business environment has been improved, creatingfavourable condition for enterprises to develop their production and businesses. Management agencies also learnt many lessons for the subsequent years.

Positive assessments

Since 2015, Vietnam’s business climate index has been continuously improved. The year 2017 witnessed a significant jump in the World Bank (WB)’s business ranking chart for the country, from 82nd in 2016 to 68th among 190 economies. In 2018, despite a decrease of one place in the WB’s ranking, Vietnam improved in six of ten indicators.

In addition to Indonesia, Vietnam has been one of the countries to undertake the most reforms (42) over the past 16 years. Over the past five years, Vietnam has implemented 18 notable reforms, particularly tax payments, health insurance and electricity access indexes.

From 2014 to 2017, in spite of unsustainable changes in Vietnam’s position in the global competitiveness index rankings, the country’s national competitiveness points were continuously improved. In the context of a dramatic change in technology, political polarisation and fragile economic recovery, the World Economic Forum (WEF) officially adopted the new method and announced the 2018 Global Competitiveness Report with the new Global Competitiveness Index 4.0. According to this ranking, Vietnam's competitiveness index dropped four places, from 74th to 77th position. This result showed that the driving forces for innovation and creation to catch up with the 4.0 trendin Vietnam are ineffective. In particular, administrative procedures are still a serious barrier, while the entrepreneurialculture is declining, the level of exchanges and diversification is still low and commercialisation is limited.

Vietnam was ranked 45th out of 126 economies in the Global Innovation Index (GII) 2018 by the World Intellectual Property Organisation (WIPO), up two places compared to 2017. Over the last five years, the rankings of Vietnam’s innovation pillars have been improved continuously. Among 30 low middle-income countries, Vietnam ranked second in terms of the index.In addition, WIPO assessed that Vietnam would continue to have better results in innovation than its growth level (GDP).

In the last year, the majority of ministries and agencies developed decrees on business conditions that were approved by the Government. Accordingly, unnecessary, irrational and unclear conditions were cut and reduced.

Lessons and experience

So far, in general, ministries, agencies and localities have realised the necessity of business environment reform under the Resolution No.19 and have more proactively and creatively implemented the reform. Enterprises have been more confident in and have had greater expectations of the implementation of the Government’s goals and solutions to improve the business environment.

However, it is crucial to remove the limitations and obstacles in the business and investment environment that are hindering the development of businesses, including the fact that the level of improvement of the business environment is not uniform, while the quality of the cut and reduction of business conditions remains too low.

In addition, the reform of regulations on management and specialised inspection is still too few compared to the requirements and the application of information and technology and the implementation of electronic transactions also remain low.

Resolution No.19 identified clear, specific and measurable objectives as well as measures, policies and action plans for ministries, agencies and localities. The PM and Government have timely and consistently instructed the ministers and heads of relevant agencies and localities.

The implementation of the Resolution has received the strong participation and response from business associations to proactively reflect problems and difficulties as well as irrationalities and inconsistencies in the relevant legal documents.