Empirical data in Vietnam proved institutional reform have direct impacts on economic growth. Vietnamese enterprises with higher law compliance cost than their Thai peers make less competitive products despite equaling them in productivity, according to Phan Duc Hieu, vice director of the Central Institute for Economic Management (CIEM). "A good legal environment is key for competitiveness," said Hieu at a workshop discussing market entry regulations in Vietnam on February 28. There remain inefficient and unreasonable regulations restricting market entry for newcomers, Hieu stated, adding they are creating five types of costs for enterprises, including unofficial costs during the process of realizing administrative procedures; opportunity costs due to prolonged administrative process; investment costs to meet legal requirements; different taxes; and time. "Even a small reform could make a significant impact on large scale," Hieu asserted. For example, a reduction of one hour for enterprises in realizing administrative procedures means a large amount of resources saved, given over 700,000 enterprises operating in the country. The introduction of Law on Enterprises in 2000 led to a sharp increase in the number of enterprises. Data: CIEM Chart: Nguyen Tung. "Empirical data in Vietnam proved institutional reforms have direct impacts on economic growth," said Hieu…. Read full this story
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