Viet Nam’s economic freedom score is 55.3, making its economy the 128th freest in the 2019 Index. Its overall score has increased by 2.2 points, with a sharp increase in fiscal health and higher scores for investment freedom, according to the Heritage Foundation’s Index of Economic Freedom.
Economic freedom is the fundamental right of every human to control his or her own labour and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, while governments allow labour, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
The index covers 12 quantitative and qualitative factors, grouped into four categories including rule of law (property rights, government integrity, judicial effectiveness), government size (government spending, tax burden, fiscal health), regulatory efficiency (business freedom, labour freedom, monetary freedom) and open markets (trade freedom, investment freedom, financial freedom) in 186 countries.
The index shows that the Vietnamese economy expanded at a very fast rate in 2018 and will benefit from new global supply chains that evolve from ongoing US–China trade tensions.
“To continue strong economic growth, Viet Nam will need to reform State-owned enterprises, reduce red tape, increase business-sector transparency, and increase recognition of private property rights,” according to the index.
“Strengthening institutions to make the regulatory regime more efficient, shrinking the bloated and opaque bureaucracy and making it more transparent, and bolstering the weak judicial system would also promote economic freedom.”
It also showed that Viet Nam has been transforming itself into a more market-oriented economy. Administrative procedures have been streamlined, and the regulatory framework for smaller businesses has been improved. The labour market has become more flexible and dynamic. The Government tightened price controls for air travel, energy, utilities, natural resources, pharmaceuticals, education, healthcare, and some housing in 2018 to fight inflation.
The combined value of exports and imports is equal to 200.3 per cent of GDP. The average applied tariff rate is 2.9 per cent.
As of June 30, 2018, according to the World Trade Organisation, Viet Nam had 80 non-tariff measures in force. Foreign investment restrictions related to commodity trading have been eased. The State remains involved in the financial sector. About 30 per cent of adult Vietnamese use formal banking services.
The index is expected to be a helpful tool for a variety of audiences, including academics, policymakers, journalists, students, teachers, and those in business and finance, who can use the index in research, public policy, business, and advocacy for analysing 186 economies throughout the world. — VNS