Vietnam has emerged at the forefront of global business improvements, according to a recent report by the Economist Intelligence Unit (EIU). The EIU’s Business Environment Rankings (BER) place the spotlight on the remarkable strides made in the business environment in Vietnam over the past two decades, highlighting the nation as the most improved among 82 countries evaluated from 2003 to 2023.
Key Drivers Enhancing the Business Environment
Economic Liberalization Through Trade Agreements: Vietnam’s commitment to economic liberalization is evident in its active participation in significant free trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These agreements have opened up markets and reduced trade barriers, bolstering the business environment in Vietnam.
Strategic Supply Chain Positioning: The country’s role in the global “China+1” strategy has made it an attractive destination for businesses seeking to diversify their supply chains away from China. This strategic positioning enhances the business environment by attracting foreign investment and boosting manufacturing capabilities.
Infrastructure Development: Significant investments in infrastructure have improved logistics and connectivity, making it easier for businesses to operate efficiently within the country.
Expert Insights on Vietnam’s Business Climate
Prianthi Roy, Country Forecast Manager and Europe Analyst at EIU, sheds light on Vietnam’s promising trajectory:
“In the coming five years, the business environment in Vietnam will continue to outpace regional competitors like Indonesia and Thailand. This is largely due to Vietnam’s competitive labor costs, extensive trade deals, and growing market opportunities.”
Roy also emphasizes that Vietnam’s business environment will benefit from deeper integration with major export markets, particularly the United States and the European Union.
Challenges Ahead
Administrative and Bureaucratic Hurdles: Complex bureaucratic procedures can hinder business operations. Streamlining administrative processes is crucial to improve ease of doing business.
Institutional Effectiveness: Enhancing institutional frameworks and governance will strengthen the business environment, making it more competitive on the global stage.
Climate Change Vulnerabilities: Vietnam’s geographic features, including a long coastline and densely populated low-lying areas, make it susceptible to climate change impacts. Addressing environmental risks is essential for the long-term stability of the business environment.
Looking Forward
Other nations, such as Serbia, Romania, and several Middle Eastern countries, have also shown significant improvements. The EIU forecasts that countries like India, Kenya, and Greece will join the ranks of top business performers in the coming years.
For investors and companies eyeing expansion, the evolving business environment in Vietnam offers promising opportunities. The country’s strategic economic policies and commitment to integrating with global markets continue to enhance its appeal as a prime business destination.