“Can do” attitude a winner

It has jumped 10 positions in the World Bank’s annual evaluation of global economies’ business start up abilities.

However, unstable macroeconomic growth remains a big constraint.

The World Bank last week released its annual Doing Business 2011 report investigating regulations to enhance business activity for small- and medium-sized enterprises (SMEs) and those that constrain it, reporting that Vietnam ranked at 78th among 183 countries.

In Doing Business 2011, the World Bank compared the business environments in nine different areas including starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

It is the highest position the country has been ranked at since the first World Bank report launched in 2002.

“We saw an impressive improvement in Vietnam this year,” said Neil Gregory, acting director of global indicator and analysis at the World Bank.

Vietnam is one of 10 economies improving the most in the ease of doing business in 2009 and 2010, according to the Doing Business 2011.

Accordingly, the country had three administrative reforms that making a better business environment, including reforms in starting a business, dealing with construction permits and getting credit.

In 2009 and 2010, the government created a one-stop shop combining the process of obtaining a business and tax licence. At the same time, the authority to register buildings was transferred from local authorities to the Department of National Resources and Environment, cutting about 50 per cent of costs to register newly completed buildings. Vietnam has improved its credit information system by allowing borrowers to examine their credit reports and rectify erroneous information.

Karim Balayachi, co-author of Doing Business project, said the reforms in Vietnam would make it easier to start a business in the country, cutting costs and easier access to commercial bank loans.

“The reforms reflect efforts of the governments in removing administrative obstacles for business activity,” said Ngo Hai Phan, standing deputy director at the Prime Minister’s Special Task force of Project 30.

He said the reforms were part of Project 30, a master plan of administrative procedure simplification in state management fields for 2007-2010.

The reduction of construction administrative procedures saves about $70 million for enterprises each year, according to Project 30’s Special Task force.

The government completed selection of 258 administrative procedures for simplification. The Special Task Force estimates the simplification of those procedures would save the country at least VND5,700 billion ($300 million) each year.

However, while Vietnam’s ranking has improved, it does not reflect the general picture of the country’s business environment.

Nguyen Dinh Cung, deputy director at Central Institute of Economic Management, said the World Bank’s report just reflected several changes of administrative reforms but not mentioned the current macroeconomy that was threatening by high inflation, trade deficit and dong devaluations.

The World Bank also states the report Doing Business 2011 does not measure all aspects of the business environment such as macroeconomic stability, corruption, level of labour skills, proximity to markets, regulations specific to foreign investment or financial markets.

Cao Sy Kiem, chairman of Vietnam Association of Small and Medium Enterprises, said the current business environment was affected by high inflation, which was 7.58 per cent in October, and high lending interest rates.

“Enterprises are still difficult to access loans at commercial banks due to high lending interest rates. Current unstable macroeconomy is major issue constraining the improvement of local business environment,” said Kiem.