Vietnam has improved its business environment over the past 20 years. Photo: Duc Thanh

A long-term study of the EIU’s proprietary Business Environment Rankings (BER) released on October 10 reveals that Vietnam improved its business environment the most out of the country's evaluated between 2003 and 2023.

Vietnam’s meteoric rise in the index is due to its adoption of several free-trade agreements and its investment in infrastructure, as well as in human and physical capital. It has also greatly benefited from the China+1 policy of diversifying global supply chains away from China.

Prianthi Roy, country forecast manager and Europe Analyst at EIU, comments: “In the next five years, Vietnam’s business environment will outperform regional peers such as Indonesia and Thailand, given its participation in numerous free-trade agreements, low labour costs and wide market opportunities.”

“However, one of the most debilitating impacts on growth and the overall business environment in the long term will be from climate change. Vietnam, the country that we expect to see the biggest improvement in business environment from 2003 to 2028, is one of the geographies that will also be most affected by climate change. Its long coastline and population centres in low-lying areas make it vulnerable to the increased likelihood of extreme heat events and severely disruptive storms.” Roy adds.

Several Eastern European countries such as Serbia, Romania, Poland, and Croatia also make the top ten list of the most improved places to do business, as well as Middle Eastern countries like Morocco, Saudi Arabia, and Israel. Peru is the only Latin American country to make it into the top ten.

Over the next five years, several new countries will enter the list of the top ten performers, including India, Kenya, and Greece. India’s youthful demographic profile is a crucial advantage, promising good availability of labour. Kenya’s Privatisation Act of 2023 will help to trim the state’s excessively large economic footprint while boosting the private sector. Greece will also see a big improvement, reflecting the impact of a pro-business government, led by the New Democracy party, now in its second term.

The EIU’s Business Environment Rankings measure the attractiveness of the business environment in 82 countries and territories, examining 91 indicators spread across 11 different categories. The EIU is the business intelligence arm of The Economist Group, a leading authority on international business and world affairs.