The country ranked 105th out of 180 nations.
The annual Economic Freedom Index measures "the impact of liberty and free markets around the globe," according to the ranking's website.
While Vietnam's score, 58.8 out of 100, was a 3.5 point increase over the 2019 index, the country remains in the "Mostly Unfree" bracket, above South Africa and below Ghana.
According to the report, the ranking jump occurred thanks to Vietnam's improved fiscal health: "The Vietnamese economy has gradually been climbing the ranks of the mostly unfree since 2011. Strong GDP growth over the past five years has mirrored this improvement, driven by export-focused manufacturing and processing sectors."
Each country's score is calculated based on 12 factors under four categories: rule of law, government size, regulatory efficiency, and open markets. Vietnam's highest scores are for "Tax Burden" and "Trade Freedom," at 79.5 and 79.6, respectively. It has low marks for "Government Integrity" and "Investment Freedom," 33.8 and 40.0, respectively.
The report adds: "Economic freedom will be enhanced in Vietnam if the government can successfully expand economic liberalization by promoting international trade and restructuring state-owned enterprises..."
The index is created by The Heritage Foundation, a highly influential conservative think tank based in Washington D.C.
Singapore, Hong Kong and New Zealand were the top three ranked countries in the region, with respective scores of 89.4, 89.1 and 84.1. Cuba, Venezuela and North Korea rounded out the bottom, at 26.9, 25.2 and 4.2, respectively.
