Hanoi has made major breakthroughs in social and economic development but its provincial competitiveness index (PCI) still dropped 10 places in 2010 from a year earlier. Dr Nguyen Minh Phong of the Hanoi Socioeconomic Development Research Institute, said in an interview with Reporter Phuong Anh that Hanoi needs many practical measures to improve this index to sustain economic development, especially in the context that its trade and service sectors are facing up with numerous challenges arising from external competition.
Mr Phong said Hanoi has many advantages for economic development but, á a political, economic and administrative centre of the country, the capital city is also facing difficulties. Firstly, the land fund for construction and development is limited while land prices are too high and the city does not have preferential land policy for businesses, especially small and medium enterprises, like other provinces. Besides, as Hanoi accounts for 15 percent of the country’s total companies, the time for processing information related to business is slow and limited. Moreover, legal and procedural conditions subject to SMEs and private enterprises are stricter than other provinces. In addition, the Government has not approved the Hanoi development master plan for the period from now till 2030; thus, a series of other planning in the city have not been developed accordingly. As a result, investors are displeased with its investment attraction channels and resolution to project problem-shooting. Mr Phong said an improvement in PCI will offer more conditions for the capital to speed up its economic development in the coming time.
In reality, land is an important criterion to rate PCI but Hanoi does not advocate preferential land policy to attract investment. How does this affect its PCI rankings?
I think that Hanoi does not necessarily take the lead in all PCI criteria. Among nine indicators, Hanoi should only focus on improving transparency and access to information, dynamism of local leaderships, informal charges and business supporting services. The capita city should improve following criteria: Raising awareness and responsibility of leaders and civil officials in supporting businesses; Focusing on promoting administrative procedures reform to reduce time costs for businesses; Creating strong changes in solving production premises for businesses; Enhancing publicity and transparency of information for business; Improving the investment environment by boosting up openness, transparency, publicity and equality; Creating conditions favourable for businesses to access investment capital, etc. Criteria related to land should not be treated a major issue for Hanoi given its natural conditions.
Do you have any proposals to reduce disadvantages for cities and provinces pursuing green economic development like Hanoi?
In my opinion, PCI computing methods need to be more flexible because each locality has its own typical economic construction and development which may be very different from other peers. Taking Hanoi for example, the weight of land criteria should be lowered to the level that ensures highest equality for all localities. Taking 100 respondent businesses in each surveyed locality is also inappropriate and unscientific because Hanoi has many companies (accounting for 15 percent in the country). Hence, the percentage of surveyed enterprises in Hanoi is much lower than in other localities. Therefore, the number of questionnaires or survey forms should be increased to reach the average percentage of local businesses as “all different is the same” is far from reality.
What should Hanoi do to improve its PCI in the following years?
Indeed, the PCI 2010 result did not mean that Hanoi failed to meet the target but it would rather admit that other localities also strived a lot in this competition. The capital must also admit it internal persistent weaknesses like lack of integrity, time-consuming administrative procedures and informal charges (kickback). To improve its PCI, Hanoi should boost the transparency and publicity of land plans to let businesses know who are prioritised and who are not; build industrial parks or cottage industry zones for companies to lease, etc. Besides, it essentially reduces intermediary costs, speeds up administrative procedure, and enhances information publicity. On the other hand, it should cooperate with the Vietnam Chamber of Commerce and Industry (VCCI) during the process of surveying to explain and provide necessary information.
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