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Created Date: 7/7/2013 5:15:00 PM

VN business environment lags behind region

[26 October 2012] - "Viet Nam needs to reform its business regulatory climate if it hopes to reach the level of other economies in the Asia-Pacific region," World Bank country director for Viet Nam Victoria Kwakwa said in a meeting on 24 October 2012 held to launch a new report by the World Bank and the International Finance Corporation (IFC).

[26 October 2012] - "Viet Nam needs to reform its business regulatory climate if it hopes to reach the level of other economies in the Asia-Pacific region," World Bank country director for Viet Nam Victoria Kwakwa said in a meeting on 24 October 2012 held to launch a new report by the World Bank and the International Finance Corporation (IFC).

 

Entitled Doing Business 2013: Smarter Regulations for Small- and Medium-Sized Enterprises, the annual report evaluates the ease of doing business around the world by assessing the complexity and costs of regulatory processes and the strength of legal institutions in each country.

 

The report ranked Viet Nam 99th out of 185 economies worldwide, a ranking unchanged from last year's report.

 

Singapore topped the global rankings on ease of doing business for the seventh consecutive year and China made great strides in improving business regulations for local enterprises to be ranked second, followed by New Zealand, the US and Denmark.

 

In the past eight years, Viet Nam has carried out institutional or regulatory reforms in eight of the 10 areas of business regulation covered by the report. However, Kwakwa noted, other countries in the region had made more rigorous improvements than Viet Nam.

 

The report showed that Viet Nam ranked below 100 in five out of ten indicators, including starting a business (108th), access to electricity (155th), protecting investors (169th), taxation (138th) and bankruptcy proceedings (149th).

 

Viet Nam remained below the world average after ten years of reforms and surveys, proving that it has failed to make a breakthrough despite the issuance of Resolution No 11 and Project 30 aiming at improving the business climate and and simplifying administrative procedures, said senior economist Pham Chi Lan.

 

"It's a pity that the reform problems have been addressed, yet the results aren't clear," Lan said.

 

Allowing companies to print their own value-added tax (VAT) invoices, which was recognised as an improvement by the report's authors, did not do much to increase Viet Nam's rankings, much while access to electricity remained problematic due to ongoing electrical shortages and a monopoly in the power market, together with high power costs.

 

The report also found that tax burdens were high in Viet Nam, Lan said.

 

Meanwhile, the country ranked only 28th and 40th in terms of dealing with construction permits and obtaining credit, respectively.

 

Lan expressed doubts about the rankings, saying that they did not reflect the real situation in Viet Nam, although she admitted that construction permits and access to credit remained headaches for domestic enterprises.

 

"This has weakened economic competitiveness, which might lead to corruption," she said, warning that Viet Nam would encounter further challenges in the next two years, as the ASEAN-China Free Trade Agreement took effect.

 

World Bank experts said procedures should be further simplified while information needed to be made accessible to everyone, improving transparency and reducing opportunities for corruption. —Vietnam News.

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