Business environment improved but yet to hit targets: experts

Vietnam’s business had improved remarkably over the past five years since the Government took action to cut conditions and raise national competitiveness, however, it had not yet reached its targets.-Photo vov.vn

The Government’s Resolution No 19 aims to tackle difficulties for businesses and create favourable conditions for investors. The aim was to raise the country’s business environment to the same level as Singapore, Malaysia, Thailand and the Philippines.

Speaking at the conference, head of the Central Institute for Economic Management (CIEM)’s Business Environment and Competitiveness Committee Nguyen Minh Thao said that during the first year of implementation in 2014, only the Ministry of Finance’s tax and customs sectors, Electricity of Vietnam and HCM City implemented the resolution.

However, the number of ministries and localities involved had increased over the years, said Thao.

“Most business environment indicators have improved in the past five years,” said Thao.

The business start-up index had risen, building permits maintained good rankings, while access to electricity had increased,” she added.

Property ownership registration in 2018 improved for the first time in five years, and Vietnam’s logistics performance in 2018 had improved at its highest rate in the past decade.

Thao said bankruptcy was the low point for the business environment, with the country currently ranked 133rd out of 190.

"Although there have been improvements, most of the indicators have not yet reached the ASEAN 4 average in terms of scores and rankings, although the gap has been narrowing," she said.

In the ten indicators for 2018, electricity access was the most impressive having risen from 66th in 2017 to 27th this year. The index of business establishment also increased from 123rd to 104th.

However, the index of tax dropped from the 86th in 2017 to 131st this year.

Hoang Thi Lan Anh, an official from the General Department of Taxation, said that the sector’s index had fallen because many reforms had not been recognised.

However, Vice Chairman of Vietnam’s Tax Consultants’ Association Nguyen Dinh Cu said there were still many problems in the taxation system, including crossover regulations and policies that made it difficult for people to keep up with the latest legislation.

Nguyen Dinh Cung, director of CIEM, said although some targets had not been met, improvements had been seen.

“The overall business environment in Vietnam is up about 30 levels, narrowing the gap compared to the ASEAN 4. However, the results are uneven, marking a large gap among indicators in ministries and localities,” said Cung.

"If the agency in charge of the index is aware of the reforms and the minister is determined to change the target, we will reach it. If they hesitate and are not determined, the results will not be as expected,” he added.

For example, the Ministry of Industry and Trade has cut business conditions for industries such as rice and gas, and that has created new business opportunities for private firms.”

Regarding the business start-up index, Cung remarked that although it had risen 19 places this year, it still ranked above 100.

"The problem is that this index is related to many different agencies that all are waiting for reforms. In my opinion, the Ministry of Planning and Investment should be the driving force in reforming this index, not only co-ordinating but also pushing other ministries,” he said.

The director also emphasised that the court played an extremely important role in the business environment, with two indices dealing with disputes and bankruptcy proceedings, because businesses would have disputes. The most important thing was to solve the problems quickly and fairly in order to strengthen investor confidence.

"We’ve reformed rapidly, but the world is moving faster and there is a competition in the race for prosperity by improving the business environment and enhancing national competitiveness. There is still much work to be done to sustain and promote the achievements of the past five years," said Cung.