In the recent Global Innovation Index 2017, Vietnam jumped 12 places to 47th among 127 economies, its highest ranking in the last 10 years. The index aims to capture different factors of innovation by providing a rich database of detailed metrics for 127 economies. Among the Southeast Asian countries, only Singapore and Malaysia outranked Vietnam. The country’s impressive growth is being attributed to its improved business environment and competitiveness. Vietnam also leads the group amongst the 27 lower-middle income economies. Over the last five years, Vietnam has recorded an impressive growth in rankings from 76th place in 2013 to 71st in 2014, 52nd in 2015, 59th in 2016 and 47th in 2017.
As per the study, Vietnam demonstrated growth in a range of indicators, in the last year. In the Innovation efficiency ratio, which reflects how much output a country is getting for its inputs, Vietnam was featured amongst the top ten. Vietnam also performed well in other indicators such as knowledge and technology outputs, ICT use, creative goods exports, FDI inflows, and gross capital formation. Expenditure on education along with market sophistication, which includes availability of domestic credit to private sector and microfinance gross loans, were also highlighted as Vietnam’s strong points.
The study also focuses on the rising ASEAN economies, especially Indonesia, Philippines, Thailand, and Vietnam, which they have dubbed as the “New Asian Tigers” for their continued focus and improvement in innovation performance.
Need to focus
The report highlights a number of areas that Vietnam should continue to focus for it to become an innovation-driven economy, such as, developing a more knowledge-intensive workforce, establishing industry clusters, and investing more in R&D to ensure further integration into high-tech value chains. Manufacturing firms mainly from China, Japan, and South Korea have been shifting their manufacturing activities to Vietnam over the years, leading to the development of the regional production and innovation networks to a certain extent, but it has failed to realize its full potential due to lack of skilled workforce and low R&D activities.
Easing tax paying procedures and increasing ICT services exports were also highlighted as areas of focus.
Taking necessary steps
In the last decade, Vietnam has implemented various socio-economic policies to boost innovation. Aware of the significance of innovation in long-term economic development, the government had issued Resolution No. 19-2017/NQ-CP in February 2017, to improve business environment and strengthening national competitiveness under the Ministry of Planning and Investment, Ministry of Science and Technology, and Ministry of Information and Communications.
Going forward, productivity and innovation will eventually be the main drivers of growth. In the long-term, the country needs to shift from the current model of export-oriented, labor-intensive and natural resource-dependent growth to a more diversified and innovation-driven economy. This will require continuous reforms to ensure increase in production efficiency and increased investments, especially in infrastructure, education, and technology.
Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.
Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.