Untangling red tape better than policy preferences

According to the Global Competitiveness Report 2003 – 2004 of the World Economic Forum, competitiveness growth capacity rank of Vietnam fell 17 grades in the last year and corporate competitiveness fell 23 grades. However, the combination of the two above ranks of the global competitiveness rank of Vietnam jumped to 61 out of 104 countries and territories, which is in the group of countries that are witnessing substantial economic movements.
The vice director of the Vietnam Competitiveness Improvement (VNCI) project said “The fall in the ranking of Vietnam in competitiveness capacity doesn’t mean Vietnam has low competitiveness capacity for the reason that not many countries have attained such a GDP high growth rate as Vietnam. A recent report of the World Bank showed that Vietnam would reach 7.2% in economic growth in 2004 and stands at fourth place among rapidly growing economies. Therefore, this cannot be the picture of an economy that is becoming lower in competitiveness.”
In addition, the market share of Vietnamese products have increased 0.2–0.3% in the global trade volume in the past few years. Foreign economic experts appraised that it is quite an achievement to reach economic growth of 7.2% in 2004 and the achievement is mostly due to the bilateral trade agreement between Vietnam and America that became operative in 2001. In the 2001–2003 period, exports from Vietnam to the US increased 3.5 times but it’s much harder to maintain such a high growth rate in future years.
And in spite of the huge surge in the private sector since the issuance of the Enterprise Law in 2000, government administration reform has not been strong enough to create the best conditions for this sector, as there are too many unfair preferences in the government’s taxation policy. This means companies spend to much time and energy on trying to receive the preferences than on actual competitiveness improvement.
The vice director of the macro policies board under the Centre Economic Management Institute, Phan Thanh Ha, suggested that the best way for the government to help the private sector is too eradicate bothersome administrative procedures and clean up the land use rights conundrum instead of constantly dreaming up new financial preferential policies that businesses don’t really need if they could just spend all their time knuckling down to doing business.

 

Category: Legal