“Non-financial" solution a contributory factor to improving business environment

Amid this context of institutional reform, the creation of an open, convenient, and safe business environment is seen as a "non-financial" solution wanted by enterprises.

Slowdown in improvements

The country’s position on global prestigious rankings has been raised after eight years of reform efforts. However, reforms of the local business environment since 2020 indicate an upward trend due to the impact of the COVID-19 pandemic.

In terms of the global rankings, some improvement indicators have not been sustainable, with there being many specific indicators that the country’s quality and ranking remain low or have not been improved, in some cases even going down.

The COVID-19 pandemic has therefore had a significant impact on people, enterprises, and the economy in general, resulting in firms keenly looking forward to the Government's institutional reforms and improved business environment which will remove barriers and contribute to the national economy. These efforts will thereby help them to overcome difficult times for economic recovery and development.

However, Nguyen Minh Thao, head of the Business Environment and Competitiveness Research Department under Central Institute for Economic Management (CIEM), also frankly assessed that in 2020 and 2021 the solution groups of the Government greatly focused on pandemic containment efforts. This primarily saw businesses supported in the form of tax payment extension, social insurance, land rent reduction, social security support, resulting in the slow-paced implementation of business environment improvements.

Statistics indicate that barriers to investment and business activities remain quite common, which is contributing to exacerbating the difficulties that firms are facing due to the wide-ranging impact of the ravaging pandemic.

“Non-financial” solution brings long-term and sustainable effects

The business environment typically impacts how firms overcome the pandemic and how competently they can take advantage of these opportunities. Because of institutional reform, creating an open and favourable business environment is viewed as an indispensable basic factor for companies to recover. This can be seen as a means of bringing the economy back to a high and sustainable growth trajectory.

“Improving an open, convenient and safe business environment has been identified as a meaningful “non-financial” solution for businesses to adapt and recover from the pandemic. This is a solution that brings long-term, sustainable results and is highly expected by the business community," emphasized Thao.

Therefore, the Government's recently-issued Resolution 02 on key tasks and solutions to improve the business environment and national competitiveness this year will create pressures to make necessary changes from the "internal" economy to approach external international standards.

This is in addition to continuing to support people and firms to restore production and business, thus overcoming the negative impacts of the COVID-19 pandemic.

Furthermore, ministries themselves must also hold regular dialogues with businesses in order to make leaders of ministries and sectors aware of existing problems and barriers for them to deal with these issues properly, thereby making it easier to remove unnecessary barriers, she added.