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Vietnam Moves Up on the Sustainable Trade Index
According to the 2018 Hinrich Foundation Sustainable Trade Index, which measures the capacity of countries to participate in the international trade system in a way that supports sustainable development, Vietnam ranked ninth in 2018, up two places from 2016.
The study was released by a non-profit foundation Hinrich foundation and the research firm The Economist Intelligence Unit and includes 19 Asian economies and the US.
Sustainable trade index
The index has 24 indicators and ranks the economies across three broad categories, economic growth, social capital, and environmental protection. It covers 19 Asian countries and the US.
Trade is a major component in any country’s economic growth, however, for a sustainable growth, social development and environmental protection are equally important, hence both categories are included in the study.
Vietnam’s rankings
Vietnam ranked ninth in 2018, an increase of two points compared to 2016 and six points in index performance relative to the GDP.
Social
The social pillar covers factors such as labor standards, educational attainment, and inequality. In this section, Vietnam ranked eighth, up one place compared to 2016, higher than middle-income nations such as China, Thailand, and Malaysia.
Economic
The economic pillar covers economic growth through trade, financial sector, investments, innovation, infrastructure, and growth in the labor force.
Driven by the growth in foreign investments and a reduction in non-trade barriers, Vietnam’s rank jumped from 10th in 2016 to ninth in 2018.
Environment
This section covers air/water pollution, deforestation, environmental standards in trade, the share of natural resources in trade, and transfer emissions.
Vietnam’s rank dropped from 11th in 2016 to 16th in 2018, mostly due to deforestation.
Regional Comparison
Overall, Hong Kong led amongst all the countries in the study. Among ASEAN nations, Singapore ranked third followed by Vietnam at the 9th position. The Philippines, Malaysia, Thailand, and Indonesia ranked 10th, 12th, 13th, and 14th respectively.
Social
Taiwan led the rankings in the social pillar. Singapore ranked fifth, while Vietnam, Brunei, Indonesia, and the Philippines ranked eighth, ninth, 10th, and 11th respectively.
Economic
Overall, Singapore led the rankings in the economic pillar. Malaysia ranked seventh, while Vietnam, Thailand, and Indonesia ranked ninth, 11th, and 14th respectively.
Environment
Hong Kong had the highest scores in the environmental category and led the rankings. Singapore ranked fourth, while the Philippines, Thailand, and Laos ranked sixth, 11th, and 12th respectively.
Need to do more
Going forward, Vietnam needs to focus on issues such as the decline in labor force due to an aging population, infrastructure development to minimize trade and logistics costs, minimizing trade payment risks, reducing the rate of deforestation, and water pollution for a sustainable development.
Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices in China, Hong Kong, Indonesia, Singapore, Vietnam, India, and Russia.
Please contact vietnam@dezshira.com or visit our website at www.dezshira.com.
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