Resolution 19: improving business environment but a long way to go

Doing Business indicators have been improving significantly since implementing Resolution 19

Strengthening economic growth

Improving the business environment and strengthening economic growth have been the top priorities of the government in recent years. The Vietnamese government has taken many actions, noticeably the issuance of different versions of Resolution 19 on improving the business environment and national competitiveness.

This is an effort to create a strategic institutional transformation with the main focuses on regulatory and administrative reforms and the improvement of the business environment.

“Resolution 19 sets out the very first improvement goals for business environment and national competitiveness in terms of global rankings, as well as develops our policy-making and policy implementation in line with international practices,” Deputy Minister of the Planning and Investment Nguyen Van Trung emphasised.

“This is the new approach of the government, which have been highly appreciated and supported by the domestic and foreign business communities. This approach also engages enterprises in the implementation process, as well as help Vietnam measure and monitor improvements, determine development gaps between the domestic business environment and national competitiveness and those of regional and global economies,” added Trung.

Vietnam’s efforts to improve the business environment in recent years have yielded remarkable results. Vietnam’s Doing Business ranking has consistently improved during the last four years, including the 14-step improvement witnessed in 2017(from 82th to 68th out of 190 economies), the 12-step improvement in innovation (from 59th to 47th out of 127 economies), and the 5-rank leap of national competitiveness (from 60th to 55th out of 137 economies). These are the biggest ranking improvements so far.

Ousmane Dione, the World Bank’s country director for Vietnam, highly appreciated the government’s approach in comparison with regional and international economies. He said that the private sector has been becoming a major growth motivation of Vietnam, and there are many places for this sector to further develop effectively and improve its competitiveness.

A recent survey from the World Bank's experts showed that firms usually spend 76 per cent of their time to prepare customs documents before importing goods to Vietnam. Simplifying administrative procedures and reducing costs are major targets of the Vietnamese government to facilitate entrepreneurship as well as promote the efficient implementation of the new Resolution 19.

"We highly appreciate the goals Vietnam set forth to create a dynamic enterprise sector and a competitive economy," Dione noted.

Difficulties still remaining

Nguyen Dinh Cung, director of CIEM The outcomes of the implementation of Resolution 19 are clear and different from previous efforts. They will have a positive and actual impacts on business activities, such as: improving trust by the market and businesses and the quality of the national and provincial business environment, as well as the business results of enterprises, contributing to economic growth and poverty reduction.

Assessing the implementation of Resolution 19,Nguyen Dinh Cung, director of the Central Institute of Economic Management (CIEM), said that the targets set forth are very high but feasible. Additionally, they offer clear, specific, and measurable objectives, as well as concrete solutions and allocate clear responsibility.

“The outcomes of the implementation of Resolution 19 are clear and different from previous efforts. They will have a positive and actual impacts on business activities, such as: improving trust by the market and businesses and the quality of the national and provincial business environment, as well as the business results of enterprises, contributing to economic growth and poverty reduction,” noted Cung.

However, the pace of implementation is still uneven across the country, with some localities being very slow. As a result, many goals remain unfulfilled and the development gap between Vietnam’s business environment and national competitiveness and those of other countries in the region has yet to be bridged.

Moreover, the achieved results are still far from the targets. Vietnam has yet to reach the average ranking of the ASEAN-4 countries, and the number of abolished business conditions is still lower than the target of 30-50 per cent.

The number of goods and products that have to go through pre-clearance specialised inspection only decreased by half the target set forth. The number of goods and products that have to go through specialised inspection decreased only slightly unremarkably compared to the target of cutting them by at least half.

Sharing international experiences, Catherine Masinde, the World Bank’s manager of business regulations, macro, trade, and investment, raised several key issues for Vietnam to consider.

The high level vision has to be translated into key performance targets and detailed action plans at all levels. Institutionalised leadership, a transparent and effective system of interaction between government agencies and subnational units, periodic reporting and escalation, as well as arbitration mechanisms at different levels are needed to support implementation.

Additionally, incentives have to be in place, as well as Vietnam needs to ensure peer-learning, financial incentives, recognition and public sector performance, public commitments, and annual, bi-annual public performance reports.

Cung suggested the government to create pressure and exercise stronger administrative discipline to improve indicators with low ranking and score, or those that made no progress in the past few years, especially starting a business, registering property, and cross-border trading. Government agencies should abolishing at least one third or half of the existing business conditions in all industries and sectors.