Vietnam is losing its battle — at least in the short run — to gain credibility among international investors. The World Bank has just lowered Vietnam’s business climate ranking from 90th to 98th among 183 world economies. At the same time, the European Chamber of Commerce finds its members are disappointed with the business environment in the world’s 13th most populous country.
The World Bank report suggests Vietnam is not reforming its economy as aggressively as others. The report says Vietnam has strengthened investor protections and required more accountability — but performs poorly in tax collections and currency strength.
The European Chamber’s survey of 200 enterprises doing business in Vietnam finds a decline in confidence for the 3rd straight quarter; businesses rating the business climate good went from 64% at the start of 2011 to 32% recently. When the third quarter began, the majority of European businesses wanted to maintain their investments in Vietnam; now just over one-third do.
This is an alarming trend for what was widely viewed just two years ago as one of the world’s most promising frontier economies. Vietnam’s dream of being a fully developed country is now stalling.