Vietnam takes the bottom position in the region in the newest Index of Economic Freedom just announced by the U.S.-based Heritage Foundation, which uses data from global institutions like the World Bank or the International Monetary Fund to compile the rankings.
According to the 2018 report released last Friday, Vietnam ranks 141st in the 2018 Index although the country’s economic freedom score does inch up by 0.7 point to 53.1. Vietnam’s score lags behind all regional economies.
Specifically, Myanmar sees its score rise 1.4 to 53.9, taking the 135th position, while Cambodia and Laos gain scores of 58.7 and 53.6, earning 101st and 138th position respectively. Other regional countries standing high in the index include Brunei at 70th, Indonesia at 69th, Thailand at 53rd, and especially Malaysia at the 22nd position.
It is noteworthy that while Vietnam has managed a modest rise in its overall score, at 0.7, some other regional economies have moved even faster, such as Thailand with 0.9 and Indonesia with a strong leap of 2.3 – the latter with a score of 64.2.
The Heritage Foundation’s index put Hong Kong at the top position as the freest economy globally, followed by Singapore and New Zealand. Meanwhile, Vietnam – among a group of dozens from the 97th to the 159th position – is regarded as a “mostly unfree” economy.
Four groups of criteria – each containing several criteria – are used to assess the economic freedom, namely rule of law, government size, regulatory efficiency, and open markets.
In its report, the Heritage Foundation notes that “Vietnam’s overall score has increased by 0.7 point, with improvements in fiscal health, government integrity, and judicial effectiveness offsetting lower scores for the trade freedom, property rights, and labor freedom indicators. Vietnam is ranked 35th among 43 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.”
Specifically, in the group of Regulatory Efficiency, Vietnam earns pretty high scores, at 60.4 for Labor Freedom, 63.2 for Business Freedom, and 75.4 for Monetary Freedom. Meanwhile, in the Government Size group, the Fiscal Health criteria gets a low score of 27.3, while in the Open Markets group, the criteria of Investment Freedom is also low, at a score of 25.0.
To continue its trajectory of strong economic growth, Vietnam will have to acknowledge the need to reform state-owned-enterprises, reduce red tape, increase business-sector transparency, reduce the level of nonperforming loans in the banking sector, increase financial-sector transparency, liberalize the trade regime, and increase recognition of private property rights, according to the report.
It also stresses that “strengthening institutions to make the regulatory regime more efficient, shrinking and making more transparent the bloated and opaque bureaucracy, and bolstering the weak judicial system would also promote economic freedom in Vietnam.”