Vietnam is the rising star of the ASEAN community and the most attractive destination for investment.
With economic growth on a solid path, the country aims to transcend the ASEAN-6 countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and catch up with the ASEAN-4 that include, Singapore, Malaysia, Thailand and the Philippines, said the Vietnam minister of planning and investment, Bui Quang Vinh.
According to the International Monetary Fund's World Economic Outlook, Vietnam possesses the second highest GDP growth in ASEAN-5 countries (Indonesia, the Philippines, Thailand and Malaysia), following the top economy of Philippines.
Already, the country is planning drastic reforms in the administrative procedures to reduce the time taken to start a business in Vietnam. At the same time, the government is standardising the criteria for doing business, and managing imported/exported goods and services in accordance with international practice.
By 2016, these changes would be in place, helping Vietnam compete with the ASEAN 4 nations in terms of business environment .
Reforming investment scene
The sovereign government has directed ministries and committees of cities and provinces to focus on economic reform, renewing growth model and competitiveness edges of of businesses, thereby enhancing the efficiency of the entire economy.
The agricultural sector is developing commodities with more value and researcing the application of modern technology in cultivation. For the industrial sector, the government is encouraging industries with high added value, so that the country can join the global production and value chain.
Meanwhile, for services continue to develop in areas of finance, communications, oil and gas exploitation, logistics, sea transport and marine tourism.
During a meeting with local and international enterprises, the minister of planning and investment Vinh pledged to quickly remove the hurdles of procedures that delay the grand of an investment license, "We are working on a number of new legal documents the assist the implementation of the amended investment law, which will take effect in July," he said.
According to Vinh, the larger European firms were finding it hard to penetrate the Vietnamese market. "That is because the Vietnamese companies are not transparent in operation," he added.
The investment minister also calls for corporate awareness of being transparent and effective if they want to win the competition with international players.
Asia's next tiger?
Already there have been major procedural changes. The process for starting a business has been halved to just five steps, with the total time reducing from 31 days to only six working days, Nguyen Dinh Cung, head of the Central Institution for Economic Management, revealed at a recent conference on Vietnam's business environment.
Other improvements include shorter time to pay tax and social insurance.In addition, Vietnam now has a mechanism to protect the small shareholders, allowing them to sue companies directors.
Cung said that Vietnam is ranking the 165th spot in World Bank's selection of small investor protection indicator. However, the senior economist believes that Vietnam can grow to the 100th position.
"So far Vietnam has well implemented five over 10 indicators of business environment and competitive advantage. There are five left, access to credit, property registration, dispute settlement and bankruptcy procedures. We are determined to leverage them this year," Cung said.
According to the World Economic Forum's Global Competitiveness Report 2014–2015, Vietnam ranked 68 in terms of competitiveness amongst 144 economies, an improvement of two spots compared with last year's result. In addition, in November 2014, the credit rating agency Fitch Ratings upgraded Vietnam to "BB-" due to improvements in the country's economy and finances.
The latest data on ASEAN economies by the General Statistic Office (GSO), which were released earlier this month, shows that Vietnam's GDP per capita in 2013 reached $1,908/person per year, ranking seventh among ASEAN countries, beyond Cambodia, Laos and Myanmar.
The report indicates that the distance compared to other countries has been significantly narrowed. Vietnam's GDP per capita growth was the second highest in the region in 2013, at 9.1 per cent. Meanwhile, GDP growth has been stable, helping Vietnam gain the sixth spot while economies like Singapore, Brunei, Thailand and Malaysia have seen slow progress, the GSO's ASEAN Stats report stated.
During the first quarter of 2015, Vietnam's GDP increased 6.03 per cent year-on-year.
A spate of international institutions have also recognised the roar of the tiger. Newswire Bloomberg has praised the country as the world's new manufacturing powerhouse besides China, South Korea and Thailand, fueled by a young population and low wages. The country's purchasing managers' index (PMI) compiled by HSBC and Markit Economics has remained stable above the average of 50 points every month since August 2013, an unseen operation in other Asian economies.
The rise of the private sector
In this process, Vietnam has comprehensively acknowledged the role of the private sector and is planning to provide equal access to resources, especially in terms of capital, land and natural resources, to the private companies.
One of the new policies that the government outlined for 2015 is to boost the activities of venture capital investment, nurturing small and medium enterprises simultaneously while encouraging large businesses.
The private sector will be the motive of the Vietnamese economy, the investment minister, Vinh, affirmed. That is also the reason behind the government's ambition to equitise up to 500 state-owned companies within 2014 and 2015.
Although economic recovery is back on track, the "Doi Moi" (Reform) process is not without potential hurdles if there is a little involvement of the private sector.
Source: http://www.dealstreetasia.com
Key words: Vietnam, route, become, largest, ASEAN's economies
