Vietnam ranks 68th, up two, in global competitiveness report 2014-2015

While the region of Asia and Pacific is home to three of the 10 most competitive economies in the world: Singapore, Japan, and Hong Kong SAR and a further three economies are featured in the top 20; Vietnam advances 2 places to the rank of 68th out of 144 in the list, according to the Global Competitiveness Report 2014-2015 released by World Economic Forum. Vietnam is among the five largest Southeast Asian economies (ASEAN-5) featuring in the top half of the rankings, and making strides in the edition for 2014-2015. 

Steady improvement in the macro economy, public institution and labor market 

At the rank of 68th, Vietnam’s performance remained almost unchanged from the past 2 years (70/144 for the 2012-2013 and 2013-2014). Following an experience of high inflation in 2011, the country’s macroeconomic situation continues to improve (75th, up 12 positions), as inflation declined to 6.6 percent. Institutions pillar also receive a better assessment (92th, up six), on the basis of better property rights protection and improved efficiency. 

Comparison of the 12 GCI Pillars between Vietnam and Emerging & Development Asia. Source: World Economic Forum

According to WEF’s definition, the institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. The importance of a sound and fair institutional environment has become all the more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery, given the increasing role played by the state at the international level and for the economies of many countries. 

In a region where many countries have poorly functioning labor markets, Vietnam ranks a satisfactory 49th, its best showing among the 12 pillars combined to determine the competitiveness index, especially thanks to the “pay and productivity” aspect ranking 23rd. The highest ranking pillar for Vietnam is the market size (34th). The quality of transport and energy infrastructures also improves slightly. 

Much concerns over access to financing and low readiness for technology 

Vietnam’s financial sector and its banks remain vulnerable. Technological readiness remains low (99th, up three). The country’s businesses are especially slow in adopting the latest technologies (with technology readiness ranking 99th) thus forfeiting significant productivity gains through technological transfer. The degree of business sophistication is low (106th, down eight), with companies typically operating toward the bottom of the value chain (nature of competitive advantage and value chain breadth rank extremely low at 128th, 112th respectively). 

Vietnam's GCI for 2014-2015. Source: World Economic Forum

The report also lists the most problematic factors for doing business in Vietnam, based on the opinions of respondents. Of major concerns are the factors of, among others, access to financing, inadequate educated workforce and policy instability.