Active Int’l Integration and Aggressive Business Environment Improvement

10:11:10 AM | 10/28/2019

In the context of extensive international integration, Vietnam has substantially improved its business environment. However, its national competitiveness, as assessed and ranked by international agencies, is still lower than that of many countries in the region. Improving the business environment for higher national competitiveness is always an ultimate task undertaken by the Government and the whole system.

Continuous and consistent policies

After 30 years of renovation, endorsed by “active international integration” policy, under the leadership of the Party, Vietnam has staged deepening integration into the international economy. Vietnam's position and role in the international arena has constantly heightened thanks to right, continuous and consistent policies of the Party, the State and the Government; and efforts of the entire political system and business representatives like VCCI, business associations, enterprises and entrepreneurs.

Initiated by the Politburo's Resolution 07-NQ/TW dated November 27, 2001 on international economic integration, in 2005 the Politburo continued to issue Resolution 48-NQ/TW dated May 24, 2005 on strategy for construction and completion of Vietnam's legal system to 2010, with a vision to 2020, and Resolution 49-NQ/TW dated June 2, 2005 on the judicial reform strategy to 2020.

This is the foundation for a series of State policies to improve the business environment and raise national competitiveness. For example, the National Assembly promulgated the Constitution 2013 with important provisions for international integration and national competitiveness; important laws on business environment and corporate/national competitiveness were enacted, including the Law on Enterprises 2014, the Law on Investment, the Land Law 2013 and Tender Law 2013.

In addition to prompt efforts to promulgate decrees and circulars on enforcement instructions for laws ratified by the National Assembly, the Government also issued important resolutions like Resolution 30c/NQ-CP on overall public administrative reform program in 2011-2020; Resolution 19/2014/NQ-CP on main tasks and solutions for better business environment and stronger national competitiveness; Resolution 19/2015/NQ-CP on main tasks and solutions to further improve the business environment and national competitiveness in 2015-2016, accelerate administrative procedure reform, streamline handling processes, reduce service time, reduce administrative costs, ensure publicity and transparency, and raise the responsibility of administrative agencies; Resolution 19/2016/NQ-CP dated April 28, 2016 on goals and targets of enhancing business environment and competitiveness; and Resolution 35/NQ-CP on business support and development to 2020 to raise economic competitiveness.

Most recently, on January 1, 2019, the Government promulgated Resolution 02/NQ-CP on key tasks and solutions on improving business environment and enhancing national competitiveness in 2019, with a vision to 2021.

The process of active international integration has greatly contributed to fostering Vietnam’s economic development, improving economic institutions and enhancing national competitiveness.

Average competitiveness

Resolution 02/NQ-CP clearly stated that, according to international agencies, in 2018, Vietnam's business environment (ease of doing business) climbed 13 places (Grade 1) over 2016. Among its component indices, access to electricity index improved 69 places (Grade 2); tax payment and social insurance index 36 places (Grade 3); starting a business index 17 places (Grade 4); logistics performance index 25 places (Grade 5) and Global Innovation Index 14 places (Grade 6).

Rapid and clear improvement in business environment and national competitiveness was highly appreciated by international agencies and widely recognized by businesses and people.

However, Vietnam’s business environment and competitiveness standing was moderate on the international scale (ranking 69th out of 190 economies by business environment and 77th out of 140 economies by competitiveness). In ASEAN, Vietnam has not reached the Top 4 as expected (ranking 5th in business environment, 7th in competitiveness). Nevertheless, slow progress or even declines were seen in some indicators. For example, corporate bankruptcy decreased 8 places in 2018 (Grade 7) over 2016. Standing at the bottom of the rankings was cross-border trade, down 7 places (Grade 8).

In the “Doing Business” Report 2019 released by the World Bank (WB) in October 2018, Vietnam’s business environment scored 68.36 points, ranking 69th out of 190 economies. But, if compared in ASEAN, Vietnam’s standing was still quite far behind Singapore (2nd), Malaysia (15th) or Thailand (27th). Given the effectiveness of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), compared with 10 other signatories, Vietnam stands last, even after Peru and Chile.

From a business perspective, Resolution 02/NQ-CP stated that “more than 50% of enterprises said the business environment was significantly more open and favorable. By actively executing Resolution 19, central and local authorities could secure high rankings or make significant improvement in their Provincial Competitiveness Index (PCI) rankings (administered by the Vietnam Chamber of Commerce and Industry) and their Public Administration Reform Index - PAR Index (administered by the Ministry of Home Affairs).

Innovative mindset about international economic integration

Vietnam has determined that international integration is a strategic approach to build and protect the country, a cause of the entire people and the whole political system. International integration is built by maximizing internal forces and utilizing external forces. Economic integration is the heart and other sectoral integration is expansive steps. Vietnam strictly abides by international commitments and actively takes part in building and fulfilling common standards to ensure national interests. It is more aware of satisfactory resolution to correlation of international integration and national independence, autonomy and sovereignty. It also understands more clearly and sufficiently about characteristics of international environment, and instruments and power systems used to control the international integration process. The world is at the peak of fast-paced expanded international integration, leading to increased interdependence. International integration is a complex process, both cooperative and competitive.

While sustainability and innovation trends are emerging with growing global influence and ongoing Fourth Industrial Revolution, the mindset of international economic integration needs to be changed. Today, sustainability and innovation has become a practical new approach that every country feels necessary to meet short- and long-term needs and goals. Developing sustainable and innovative economy is building an independent and autonomous economy with a reasonable, effective economic structure and necessary security. That is a sustainable and competitive economy with balanced export and import structure; no FDI control of some economic sectors; restricted and prohibited foreign investment in sensitive sectors.

Innovative thinking of international economic integration needs to go along with effective solutions to meet objectives: Upgrading analysis and forecasting; handling existing weaknesses and bottlenecks in old development models and ensuring macroeconomic stability; establishing elements for a new growth model towards sustainability, innovation and inclusivity; encouraging technological application, fostering innovation and creativity to adapt to the world's rapid changes and international integration process; perfecting socialist-oriented market economy institutions and improving the quality of national governance.

Up to now, more than 70 countries have recognized Vietnam as a full market economy. Successful international economic integration has created more internal resources for the country. Vietnam is advancing integration robustly under the full leadership of the Party, with clear transformation of the administrative apparatus towards accountability and formation of continuous dialogue mechanisms to monitor public administration and remove barriers that arise from policy enforcement.

Nguyen Thanh