Vietnam’s per capita income should have crossed $7,000: USAID economist

By Manh Quan, Thanh Nien News

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A man works on a vehicle at an automaker factory in Vietnam's northern Hai Duong province, outside Hanoi. Weak management and cumbersome administrative procedures have hampered Vietnam's competitiveness, experts say. Photo credit: Reuters A man works on a vehicle at an automaker factory in Vietnam's northern Hai Duong province, outside Hanoi. Weak management and cumbersome administrative procedures have hampered Vietnam's competitiveness, experts say. Photo credit: Reuters

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Weak management and red tape prevented Vietnam's per capita income from hitting US$7,500, according to a USAID economist.
Olin McGill, a senior economist for the United States Agency for International Development (USAID), said that though the World Bank ranks Vietnam's economy 99th out of 189 economies in terms of business environment, the country has a gross national income (GNI) of just $1,400 per capita.
A country's GNI represents the total worth of production and services, generated by the citizens of a given country, on its land or on foreign land. 
Countries that ranked at between 91st and 120th in the World Bank's Doing Business 2014 report had a GNI per capita of $7,545 on average, McGill said during a recent seminar in Hanoi.
Vietnam's progress has been dragged down by some bad-performance indicators, the economist said; it ranked 143rd in terms of the ease of starting a business, 157th in terms of protecting investors, 156th in terms of the ease of business access to the electricity grid, and 149th in terms of ease of paying taxes, according to Doing Business 2014.
The tax obstacles proved very serious; businesses reported spending more than 800 hours a year on making tax payments, McGill said.
Even in countries with weak performances in taxes, enterprises spend about 300 hours a year on the procedures, he added.
The economist also said Vietnam requires many unnecessary procedures for establishing an electricity connection such as an excavation permit for the underground connection from the transportation agency and a certification of the substation’s design from the fire department.
The department which grants construction licenses to enterprises should be responsible for those procedures, said McGill.
He said if the number of steps required to establish a power connection was halved to three, Vietnam’s electricity ranking would jump to 43, bringing up the country's business environment ranking and, subsequently, its per capita income.
Vietnam transformed itself from one of the poorest countries in the world in 1993 to a lower middle-income country with a $171-billion economy. But the country’s growth remains moderate and well-below its potential, the World Bank said earlier this month.

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