Vietnam's business climate falls slightly in international rankings

In the 2018 Global Competitiveness Report released by the World Economic Forum (WEF), Vietnam got higher scores than in some previous years, but it still fell by three grades to 77th among 140 ranked countries.

Meanwhile, in Doing Business 2019 Report, Vietnam ranked 69th, sliding one place in one year.

According to CIEM’s head Nguyen Dinh Cung, WEF has changed its ranking method this year, giving the same scores to all factors with emphasis on reform and creativity. The growth of economies in the world will depend heavily on these factors.

Meanwhile, Vietnam’s level of innovation and creativity, both institutional and innovation capability, remained at the same level as last year.

“This is really a big concern which shows that Vietnam needs to improve the business environment and build national innovation and creative capability,” Cung said.

“There is no other way for Vietnam except to improve the business environment to create fair competition. Enterprises will have to innovate to exist. If they exist on the basis of relationship and the ‘ask-and-grant’ mechanism, creativity will be destroyed,” he said.

The government has vowed to cut 50 percent of business conditions, called ‘sub-licenses’, in order to create an open business environment for enterprises. However, the results remain very modest. Almost no change has been made in business conditions related to land investments.

Dang Dinh Dao, former head of the Economics & Development Research Institute, cited a report from the General Statistics Office as saying that in the first nine months of the year, the number of newly set up businesses increased by 2.8 percent (the figure was 15.4 percent the same period last year), while the number of businesses suspending their operation went up by 48.1 percent (9.4 percent), and the number of dissolved enterprises rose by 32.1 percent (4.4 percent).

This means that for every 100 enterprises which are newly established or return to operation, 77 enterprises cease operating or are dissolved.

About 97 percent of Vietnam’s businesses are small and medium sized, with 70 percent of them micro. Because of the small scale, many of them follow a ‘hit and run’ business strategy, and don’t have long-term development plans.

“Since Vietnamese enterprises are tiny, they try to expand business, but don’t think of utilizing high technologies to upgrade production capacity,” Dao said.

Dao surveyed enterprises’ demand for technology application in one province. He found that 70-80 percent of local businesses said they did not need technology.

RELATED NEWS

VN competitiveness continues to climb

Vietnam getting more competitive

Mai Thanh