Vietnam has a relatively sizeable and efficient banking system but it suffers from underdeveloped institutional and business environments, according to a new report by the World Economic Forum.
The country dropped four places from last year to rank 50th in the forum's fourth annual Financial Development Report published Tuesday.
Vietnam, together with Indonesia and Bangladesh, face considerable hurdles and must work to improve corporate governance, liberalize their financial sectors, and reduce their costs of doing business, the report said.
However, the country's banking system "provides a solid foundation for further growth," the forum said. Vietnamese banking financial services were ranked 20th in terms of size and 27th in terms of efficiency.
The rankings came even as the banking system is facing bad debts and liquidity problems. The government has announced a plan to restructure the system next year.
Hong Kong topped the World Economic Forum's 60-market index this year, outranking the US and UK.