Vietnam needs more drastic reforms to bolster enterprise development

Monday, 2018-12-03 16:25:37
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A garment factory of the Bac Giang Garment Company (Photo: Thanh Lam)
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NDO - The Vietnamese government has been making significant efforts to improve the business environment, aiming to bring Vietnam into the group of ASEAN’s four most competitive economies.

Such efforts can be seen in the promulgation of Resolution 19 on improving the business climate and enhancing competitiveness in 2014 and Resolution 35 on supporting business development in 2016.

Stamp of reform

Five years after implementing Resolution 19 and two years after Resolution 35, the business environment in Vietnam has seen marked improvements, as the procedures to participate in the market have been simplified and businesses are now able to save a great deal of time and costs.

A wave of new businesses has been triggered. In 2016 more than 110,000 enterprises were established, followed by 126,000 in 2017 and 121,000 in the first eleven months of 2018.

Over the past five years, Vietnam’s position on the World Bank’s Doing Business rankings has improved remarkably, ranked at 78th position in 2014, 90th in 2015, 82nd in 2016, 68th in 2017 and 69th in 2018. Although Vietnam dropped one notch in 2018, eight out of ten indicators recorded higher scores, such as starting a business and access to electricity.

As part of the efforts to cut costs for businesses, a number of provinces have built public service centres where all administrative procedures are handled in a single place and closely monitored in order to minimise civil servants’ dishonest behaviour. The model has become a good practice to be replicated and create a transparent and effective mechanism for citizens and businesses to file their complaints on the responsibilities of administrative officers. Meanwhile, dialogues are regularly being held between government agencies and businesses.

To guarantee equal business opportunities and access to resources, as soon as the Law on Support for Small and Medium Enterprises took effect on January 1, 2018, the government took aggressive actions and urged the relevant ministries and agencies to formulate documents guiding the implementation of the law. Furthermore, the legal framework and procedures concerning investment in agriculture have also been fine-tuned and simplified, helping to boost credit to this sector.

According to Nguyen Dinh Cung, Director of the Central Institute of Economic Management, the government’s reforms are going in the right direction and becoming more substantive.

He added that the largest difference in this term is the aggressiveness of the Prime Minister and his deputies in directing ministries and agencies to implement the resolutions on improving the business environment, which has bolstered the confidence of enterprises and the market.

A breakthrough needed

Despite the encouraging results, there remain a number of drawbacks in the business climate which are hindering the operation of enterprises.

According to experts, Vietnam still has a lot of room for further reform because the situation in which the higher levels are full of determination while the lower levels show little determination is still prevalent.

In the future, it is necessary for the government, ministries, agencies and local authorities to take bolder actions in the common effort to improve the business climate and enhance the competitiveness of the country.

In order to better implement the tasks outlined in Resolutions 19 and 35, those concerned need to understand the methodology and measures to improve the indicators, make feasible plans, assign clear duties, and apply IT in a substantive manner. In addition, the implementation of these tasks should be aligned with personnel affairs, especially the role of those in leadership positions in making decisions and cooperating with other agencies. The results must be measured subjectively and have the feedback of enterprises.

Although challenges abound, the goal of having one million active enterprises by 2020 could still be realised if ministries and agencies make bold efforts to remove the obstacles.