The World Bank (WB) has just released its Business Environment Report 2020. Among the assessed 190 economies, Vietnam reached 69.8 points out of 100, higher than last year (68.6), but fell one step down to 70th.
This year, WB values 190 economies based on 10 criteria including Enterprise establishment, Construction permits dealing, Electricity access, Registering property registration, Getting credit, Protection of minority investors, Tax payment, Transborder trading, Enforcing contracts, and Resolving insolvency. Two other criteria, such as Employment and Government Contract, were also studied but not used for grading.
For Vietnam, most sectors increased compared to those last year, the fields that the World Bank considers to be reformed and made it easier for businesses is Borowing capital and Paying taxes. Applying for a Construction Permit registered the highest (25th) while the lowest is Handling when insolvency (122nd).
WB’s report is based on a standard limited company in Ho Chi Minh City. That the total number of administrative procedures the company must follow when establishing a business is 08. This figure is higher than the average for the East Asia – Pacific region (6.5) and in the middle to Southeast Asia, specifically Singapore (2), Malaysia (12), Thailand (21) and Brunei (66). Ranked number one this year is still New Zealand. Followed by Singapore, Hong Kong (China), Denmark and South Korea. The US holds the 6th position in this ranking.
The World Bank reports 115 out of 190 economies around the world have implemented reforms to make business simpler. According to statistics, 190 countries have made a record of 294 reforms in the period of May 2018 – May 2019.
According to World Bank data, East Asia-Pacific economies have conducted 33 business environment reform programs over the past years. Although many economies in the region are assessed to have a more favorable environment for small and medium enterprises compared to the world average, the pace of reform is slowing. The number of reforms in the region has decreased by 10 over the past 12 months as of May 1 and less than half of the economies (12 out of 25) have implemented reforms.
China and India are still among the top 10 economies with the most reforms in the past year to improve their business environment. The other eight economies on the list of the most positive business environment improvement are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait and Nigeria.
However, the World Bank believes that the East Asia-Pacific region still has many weaknesses in some areas such as contract dispute resolution, corporate bankruptcy settlement and cross-border trade. These indicators show the wide gap between economies in the region.
For example, in Myanmar, it takes up to 1,160 days to resolve commercial disputes at 110.3% of the fee applied in Papua New Guinea. Commercial dispute resolution through a local court of the first instance in the region has an average cost of up to 47.2% of the value of the complaint, twice more than the average of 21.5% of OECD economies.
Rita Ramalho, one of the authors of the report, said that removing barriers to business is a positive measure to promote economic growth. Continuous reform is the key to improving the domestic business environment and facilitating private enterprises. “We have studied and the results point out that there is a correlation between simplified, improved business regulation and growth rates. However, this is just one of the measures and cannot solve all problems, “she said.
The report also suggests that easier business conditions can boost start-up, thereby increasing career opportunities, government tax revenues and people’s income. This will significantly support the global economy, which the International Monetary Fund (IMF) forecast a growth of 3% this year – the lowest in more than 10 years.