Vietnam's getting credit index increased by 5 points

Vietnam has stepped down a notch from the 69th to 70th in the World Bank (WB) 2020 Ease of Doing Business ranking. The country has made significant improvements in 2 out of 10 areas concerned.


However, this downslide is not due to the fact that its performance has not improved but because other countries have made more dramatic improvements than Vietnam. Vietnam’s ease of doing business score has increased over the years. This year, it went up from 68.8 to 69.8 out of the maximum 100 points. 

Vietnam currently ranks behind 4 countries in ASEAN region, including Singapore (2nd), Malaysia (12th), Thailand (21st) and Brunei (66th), but it is way above Indonesia (73rd), Philippines (95th), Cambodia (144th), Laos (154th), Myanmar (165th) and East Timo (181th).

Among 10 areas of business regulations included on the ease of doing business ranking, Vietnam has made improvements in 5 areas including starting a business, dealing with construction permits, getting electricity, getting credit, paying taxes; 4 indexes remained the same as the previous report (trading across borders, protecting minority investors, enforcing contracts, registering property), while only resolving insolvency saw a decline of 0.1 points compared to the previous report.

Notably, getting credit and paying taxed are the most improved areas. Specifically, the paying taxes index has an impressive increase of 6.1 points to 69 points compared to 62.9 points in the 2019’s business environment ranking. Vietnam is highly appreciated for improving information infrastructure of the General Department of Taxation, helping enterprises to pay taxes more easily.

Vietnam's getting credit index ranked 25th out of 190 countries and territories, jumping up 7 places compared to a year earlier, and ranking second in ASEAN and in Asia (after Brunei). This area consists of two component indexes: legal rights index and depth of credit information index. Vietnam received maximum score for depth of credit information in terms of data distribution from retailers, contributing to improving Vietnam's credit access index to 80/100 points, increasing by 5 points over the previous year. This means that people and businesses can access credit fairly and transparently with favorable legal policies protecting the legal rights of borrowers and lenders.

Commenting on Vietnam's ranking in this year, Chief Legal Officer of VCCI Dau Anh Tuan said: “Vietnam has improved on its own, but other countries, including those from Africa, are also accelerating on business environment reform. This means that Vietnam, though on the right track with positive reforms and changes, is not yet equal to other countries”.

"Leading countries in the ASEAN region have also changed," Mr. Tuan said, emphasizing the view that "Vietnam needs to be more active in the process of improving its business environment and competitiveness".

Upon further analysis of the indicators, Mr. Tuan said some areas including starting a business and getting electricity are highly appreciated by the World Bank, which jumped 19 and 37 places respectively. "This shows a positive change as for many years, starting a business had not witnessed significant improvement," he commented. However, this ranking still needs further melioration.

Vietnam currently has a low number of enterprises per capita in comparison with the world. The Government has set a target to have 1 million effective businesses by 2020, but recent information shows that this goal will be difficult to achieve without more determination and effort.



Bonny Le - VietnamCredit

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