Vietnam falls in WEF ranks

Viet Nam has dropped four places to rank 50th out of 60 countries represented on the World Economic Forum (WEF)’s Financial Development Index, according to the Finance Development Report 2011.

Source: WEF

Both report and index are based on the world’s leading financial and capital markets, analysing drivers that support economic growth to act as a benchmark for advanced and emerging economies to identify and prioritise areas for reform.

As part of this year’s ranking, Viet Nam scored only 2.98 points on a scale of 7, down 0.05 points over 2010.

Viet Nam (50th), Indonesia (51st) and Bangladesh (56th) all suffer from underdeveloped institutional and business environments. Because factors, policies and institutions are a cornerstone of financial development, these countries face considerable hurdles and must work to improve corporate government, liberalise their financial sectors, and reduce their business. Nevertheless, there are some areas where these countries are making progress. IPO activity for both Bangladesh (39th) and Indodenisa (14th) proved to be particularly robust. Indonesia and Bangladesh also have very stable currencies (9th and 6th) on which both countries will benefit as they continue to develop.

Viet Nam, on the other hand, has a relatively sizeable (20th) and efficient (27th) banking system that provides a solid foundation for further growth. In addition, the country has an advantage in securitisation (33rd), which underscores the relative depth and sophistication of the country’s non-banking financial services (48th).

Despite the recent problems of liquidity and bad debt, banking services in Viet Nam were ranked 30th (an average threshold). According to the WEF, the banking system operated efficiently and as of 2009, it pumped about US$73 billion into the economy.

Despite easier accessibility to financial services, the quality of banks and financial markets in Viet Nam was still underestimated, only ranked 48th and 49th.

Viet Nam lost 0.34 points due to its quality of corporate governance. According to the WEF, from 2008, most countries have lost scores in this category. Saudi Arabia showed the strongest increase by adding 0.78 points.

Overall, Hong Kong (China) was the most developed economy in the world in 2011 with a score of 5 followed by US, the UK, Singapore and Australia.

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