Excellency Deputy Prime Minister Vu Duc Dam;
Mr. Nguyễn Văn Trung, Deputy Minister of Planning and Investment;
Mr. Michael Greene, Country Director of US Agency for International Development;
Ladies and Gentlemen
A very good morning to you all.
It is my pleasure to join DPM Dam in welcoming all of you to the international conference: “Substantially Improving Business Environment to Strengthen Economic Growth in Vietnam”. I want to thank DPM Dam for the initiative and leadership, the OOG and the MPI team for the effective preparation of this conference in collaboration with my colleagues at the World Bank.
Ladies and Gentlemen,
The development of a competitive business sector is a key factor in determining economic performance, job creation and prosperity. There is no doubt that the development of a dynamic private sector depends on the quality of its regulatory environment. Good quality regulations, effective, efficient and fair enforcement encourage firm entry, reduce transaction costs, protect investment, promote fair competition, and hence, contribute substantially to Vietnam’s overall competitiveness and economic growth potential.
The Government of Vietnam has paid considerable attention to continuously improving the regulatory environment. A critical, milestone was the promulgation of the Enterprise Law in the Year 2000, which really enabled the formation of private sector enterprises and brought about significant breakthrough in the development of the private sector. Since then, the number of operating private enterprises grew more than 13.3 times between 2000 and 2015, and reach an estimated 520,000 or 97 percent of enterprises in 2017. As a result, the private sector has already become a key engine of growth in Vietnam, accounting for 51 percent of employment and 43 percent of GDP in 2016.
I think we all agree that there is still untapped potential, especially in developing the domestic private sector. Most domestic firms lack the scale and capabilities to become efficient and competitive in the global environment. We know from firm surveys that, despite progress, regulatory barriers and red tape - together with limited access to capital and skilled labor - continue to pose impediments to firm growth in Vietnam. The Provincial Competitiveness Index surveys reported that there were little improvements in paying informal cost between 2006-2016. One third of surveyed enterprises in the median province needed more than 10 percent of their time endowment for completion of administrative procedures in 2016. Recent analysis undertaken by the World Bank trade team suggests that regulatory compliance e.g. preparation of various border declarations, physical inspections, etc.- account for 76 percent of the total time it takes to import goods to Vietnam. So, there are clearly opportunities to further reduce transaction costs associated with the compliance with prevailing regulations.
Indeed, cutting red tape and enhancing the overall business environment has been one of the key priorities of the Government of Vietnam in recent years. Starting in 2014 the Government has adopted a new Resolutions 19 which become a trademark for the Government’s efforts to improve the business environment. Each of the existing resolutions laid out specific reform targets -anchored in the World Bank’s Doing Business Indicators. This has yielded notable achievements. Vietnam has continuously moved up the ranks and the gap with the global regulatory frontier is closing. According to the latest Doing Business 2018 Report, Vietnam ranks 68 out of 190 economies on the Ease of Doing Business, up from rank 82 in DB 2017. Vietnam is placed among the top five performers in ASEAN, and I congratulate the GoV for these excellent achievements.
Ladies and Gentlemen,
As HE DPM Dam mentioned, an important objective of our conference today is to bring all stakeholders together for an open, constructive dialogue and information sharing, to facilitate the effective implementation of the new Resolution 19 for 2018.
The new Resolution confirms GoV continued and strong determination to further reform Vietnam’s business environment, and to make the business sector, especially the domestic private sector a fundamental engine of Vietnam’s competitiveness and growth. We welcome the specific reform commitments across several sectors towards the ambitious target of reaching the average of ASEAN top 4, especially in areas where Vietnam is lagging behind such as starting business, contract enforcement, or resolving insolvency.
While anchoring reforms in the Doing Business Rankings is useful, I would like to stress the higher objectives of improving business environment, which are a vibrant business sector, and ultimately a strong and competitive economy. Improved rankings are no doubt important, but this is not an end in itself. We do need to make sure that changed laws, regulation and procedures are properly implemented. We all know that weak implementation can easily derail achievement of intended objectives as famously summarized by PM Nguyen Xuan Phuc’s recent remarks “warm at central level, but cold at lower levels”. This is a challenge shared by many countries and we know from global experience that linking reforms to the removal of specific bottlenecks to business sector development, building in feedback loops and impact monitoring is crucial for success.
Ladies and Gentlemen,
As survey the room today, I am glad to see representatives of so many stakeholders from the private sector, the government and international partners. We have designed the program to enable wide participation and will try our best to ensure everybody get their chance to have a say. Given the relatively compact agenda, I would like to urge all of us to keep presentations and interventions focused and succinct.
HE. DPM Dam, thank you again for inviting us to join GoV in arranging this event. We are also grateful to the Government of Australia and USAid for providing financial support for the conference.
I wish you all good health and success in the New Year and look forward to having fruitful and constructive dialogue. Thank you.
Xin cam on Qui vi.