VIETNAM: 2015 Index of Economical Freedom

Posted By: Kavition: April 28, 2015In: CHÍNH TRỊ-PHÁP LUẬT-QUÂN SỰ, HỘI LUẬN, KINH TẾ-XÃ HỘI-KHOA HỌC, TÀI LIỆU ĐẶC BIỆT, VIỆT NAM NGÀY NAY -- VIETNAM TODAYNo Comments

Print Email

VIETNAM:
2015 Index of Economical Freedom

Vietnam’s economic freedom score is 51.7, making its economy the 148th freest in the 2015 Index. Its score has increased by almost 1.0 point since last year, with improvements in the control of government spending, freedom from corruption, and monetary freedom outweighing declines in labor freedom and business freedom. Vietnam is ranked 32nd out of 42 countries in the Asia–Pacific region. Although the Vietnamese economy has achieved its highest economic freedom score ever in the 2015 Index, its overall score continues to be lower than the world and regional averages.

Vietnam’s rapidly expanding links to the global marketplace have failed to materialize into a comprehensive program of economic reform. Over the past five years, economic freedom in Vietnam has stagnated, with advances over the past year mitigating three years of deteriorating scores. A worrying expansion of inflation has undercut potential gains from advances in trade freedom.

A member of the Trans-Pacific Partnership talks, Vietnam has steadily opened its market and reduced other tariff and non-tariff barriers. However, other factors of economic freedom remain less entrenched. The ruling Communist Party controls the judiciary, corruption and bribery are common, and the government lacks transparency. The government’s suspicion of private business is reflected in inefficient business regulations. State-owned enterprises dominate many economic sectors.

BACKGROUND

The Socialist Republic of Vietnam remains a Communist dictatorship characterized by political repression and an absence of civil liberties. Economic liberalization began in 1986 with its doi moi reforms, and Vietnam joined the World Trade Organization in 2007. In 2012, Prime Minister Nguyen Tan Dung acknowledged mismanagement of the Vietnamese economy and affirmed his commitment to reforming the state sector, but the Vietnamese are still waiting for action. Vietnam’s economy is driven primarily by tourism and exports. Inflation is a problem, and the country has struggled to attract investment in the absence of a transparent legal and regulatory system.

RULE OF LAW

Property Rights15.0

Freedom From Corruption31.0

Corruption blights all levels of the Vietnamese government and judiciary. Factionalism and bureaucratic rivalries, nepotism and vast corruption within the Communist Party of Vietnam, and a general lack of accountability ensure that many agencies are run as fiefdoms, perpetuating the culture of payoffs. Private property rights are not strongly respected, and resolution of disputes can take years.

LIMITED GOVERNMENT

Government Spending77.1

Fiscal Freedom79.1

Vietnam’s top individual income tax rate is 35 percent, and its top corporate tax rate is 22 percent. Other taxes include a value-added tax and a property tax. Overall tax revenue equals 19.6 percent of the domestic economy, and government spending amounts to 27.6 percent of domestic production. Public debt is equivalent to 55 percent of gross domestic product.

REGULATORY EFFICIENCY

Business Freedom61.5

Labor Freedom62.9

Monetary Freedom66.8

Despite ongoing reform efforts, the regulatory framework lacks efficiency. No minimum capital is required to start a business, but the process still takes over a month, and licensing requirements remain time-consuming. The labor market remains rigid, and informal labor activity is considerable. Although inflation has moderated, the state continues to influence prices though controls and state-owned and state-subsidized firms.

OPEN MARKETS

Trade Freedom78.6

Investment Freedom15.0

Financial Freedom30.0

Vietnam’s average tariff rate is 5.7 percent. Tariff-rate quotas affect imports of goods like eggs and sugar. The government screens new foreign investment and restricts investment in some sectors. Directed lending by state-owned commercial banks has been scaled back in recent years. Foreign equity in domestic banks remains capped at 30 percent, but it can be higher for weak banks.

Country Rankings

Free

rank	country	overall	change	rank	country	overall	change
1	Hong Kong	89.6	-0.5	4	Australia	81.4	-0.6
2	Singapore	89.4	0.0	5	Switzerland	80.5	-1.1
3	New Zealand	82.1	+0.9

Mostly Free

rank	country	overall	change	rank	country	overall	change
6	Canada	79.1	-1.1	21	Luxembourg	73.2	-1.0
7	Chile	78.5	-0.2	22	Georgia	73.0	+0.4
8	Estonia	76.8	+0.9	23	Sweden	72.7	-0.4
9	Ireland	76.6	+0.4	24	Czech Republic	72.5	+0.3
10	Mauritius	76.4	-0.1	25	United Arab Emirates	72.4	+1.0
11	Denmark	76.3	+0.2	26	Iceland	72.0	-0.4
12	United States	76.2	+0.7	27	Norway	71.8	+0.9
13	United Kingdom	75.8	+0.9	28	Colombia	71.7	+1.0
14	Taiwan	75.1	+1.2	29	South Korea	71.5	+0.3
15	Lithuania	74.7	+1.7	30	Austria	71.2	-1.2
16	Germany	73.8	+0.4	31	Malaysia	70.8	+1.2
17	The Netherlands	73.7	-0.5	32	Qatar	70.8	-0.4
18	Bahrain	73.4	-1.7	33	Israel	70.5	+2.1
19	Finland	73.4	0.0	34	Macau	70.3	-1.0
20	Japan	73.3	+0.9	35	Saint Lucia	70.2	-0.5

Moderately Free

rank	country	overall	change	rank	country	overall	change
36	Botswana	69.8	-2.2	64	Portugal	65.3	+1.8
37	Latvia	69.7	+1.0	65	Rwanda	64.8	+0.1
38	Jordan	69.3	+0.1	66	Montenegro	64.7	+1.1
39	Brunei Darussalam	68.9	-0.1	67	Trinidad and Tobago	64.1	+1.4
40	Belgium	68.8	-1.1	68	Panama	64.1	+0.7
41	The Bahamas	68.7	-1.1	69	Kazakhstan	63.3	-0.4
42	Poland	68.6	+1.6	70	Turkey	63.2	-1.7
43	Uruguay	68.6	-0.7	71	Ghana	63.0	-1.2
44	Saint Vincent and the Grenadines	68.0	+1.0	72	South Africa	62.6	+0.1
45	Cyprus	67.9	+0.3	73	France	62.5	-1.0
46	Barbados	67.9	-0.4	74	Kuwait	62.5	+0.2
47	Peru	67.7	+0.3	75	Thailand	62.4	-0.9
48	Jamaica	67.7	+1.0	76	Philippines	62.2	+2.1
49	Spain	67.6	+0.4	77	Saudi Arabia	62.1	-0.1
50	Slovakia	67.2	+0.8	78	Samoa	61.9	+0.8
51	Costa Rica	67.2	+0.3	79	Madagascar	61.7	0.0
52	Armenia	67.1	-1.8	80	Italy	61.7	+0.8
53	Macedonia	67.1	-1.5	81	Croatia	61.5	+1.1
54	Hungary	66.8	-0.2	82	Kyrgyz Republic	61.3	+0.2
55	Bulgaria	66.8	+1.1	83	Paraguay	61.1	-0.9
56	Oman	66.7	-0.7	84	Vanuatu	61.1	+1.6
57	Romania	66.6	+1.1	85	Azerbaijan	61.0	-0.3
58	Malta	66.5	+0.1	86	Dominican Republic	61.0	-0.3
59	Mexico	66.4	-0.4	87	Guatemala	60.4	-0.8
60	Cabo Verde	66.4	+0.3	88	Slovenia	60.3	-2.4
61	Dominica	66.1	+0.9	89	Morocco	60.1	+1.8
62	El Salvador	65.7	-0.5	90	Serbia	60.0	+0.6
63	Albania	65.7	-1.2

Mostly Unfree

rank	country	overall	change	rank	country	overall	change
91	Swaziland	59.9	-1.3	122	Kenya	55.6	-1.5
92	Uganda	59.7	-0.2	123	Guyana	55.5	-0.2
93	Namibia	59.6	+0.2	124	Egypt	55.2	+2.3
94	Lebanon	59.3	-0.1	125	Mozambique	54.8	-0.2
95	Tonga	59.3	+1.1	126	Malawi	54.8	-0.6
96	Mongolia	59.2	+0.3	127	Niger	54.6	-0.5
97	Bosnia and Herzegovina	59.0	+0.6	128	India	54.6	-1.1
98	Fiji	59.0	+0.3	129	Suriname	54.2	0.0
99	Benin	58.8	+1.7	130	Greece	54.0	-1.7
100	Zambia	58.7	-1.7	131	Bangladesh	53.9	-0.2
101	Sri Lanka	58.6	-1.4	132	Burundi	53.7	+2.3
102	Burkina Faso	58.6	-0.3	133	Yemen	53.7	-1.8
103	Côte d’Ivoire	58.5	+0.8	134	Maldives	53.4	+2.4
104	Gabon	58.3	+0.5	135	Mauritania	53.3	+0.1
105	Indonesia	58.1	-0.4	136	São Tomé and Príncipe	53.3	+4.5
106	Senegal	57.8	+2.4	137	Papua New Guinea	53.1	-0.8
107	Tunisia	57.7	+0.4	138	Togo	53.0	+3.1
108	Nicaragua	57.6	-0.8	139	China	52.7	+0.2
109	Tanzania	57.5	-0.3	140	Tajikistan	52.7	+0.7
110	Cambodia	57.5	+0.1	141	Liberia	52.7	+0.3
111	Moldova	57.5	+0.2	142	Comoros	52.1	+0.7
112	Djibouti	57.5	+1.6	143	Russia	52.1	+0.2
113	The Gambia	57.5	-2.0	144	Guinea	52.1	-1.4
114	Seychelles	57.5	+1.3	145	Guinea-Bissau	52.0	+0.7
115	Bhutan	57.4	+0.7	146	Cameroon	51.9	-0.7
116	Honduras	57.4	+0.3	147	Sierra Leone	51.7	+1.2
117	Belize	56.8	+0.1	148	Vietnam	51.7	+0.9
118	Brazil	56.6	-0.3	149	Ethiopia	51.5	+1.5
119	Mali	56.4	+0.9	150	Laos	51.4	+0.2
120	Nigeria	55.6	+1.3	151	Haiti	51.3	+2.4
121	Pakistan	55.6	+0.4	152	Nepal	51.3	+1.2

Repressed

rank	country	overall	change	rank	country	overall	change
153	Belarus	49.8	-0.3	166	Central African Republic	45.9	-0.8
154	Micronesia	49.6	-0.2	167	Timor-Leste	45.5	+2.3
155	Lesotho	49.6	+0.1	168	Democratic Republic of Congo	45.0	+4.4
156	Ecuador	49.2	+1.2	169	Argentina	44.1	-0.5
157	Algeria	48.9	-1.9	170	Republic of Congo	42.7	-1.0
158	Angola	47.9	+0.2	171	Iran	41.8	+1.5
159	Solomon Islands	47.0	+0.8	172	Turkmenistan	41.4	-0.8
160	Uzbekistan	47.0	+0.5	173	Equatorial Guinea	40.4	-4.0
161	Burma	46.9	+0.4	174	Eritrea	38.9	+0.4
162	Ukraine	46.9	-2.4	175	Zimbabwe	37.6	+2.1
163	Bolivia	46.8	-1.6	176	Venezuela	34.3	-2.0
164	Kiribati	46.4	+0.1	177	Cuba	29.6	+0.9
165	Chad	45.9	+1.4	178	North Korea	1.3	+0.3