The northern mountainous province of Lao Cai topped the rankings of Provincial Competitiveness Index (PCI) in 2011, followed by northern Bac Ninh province and southern Long An province according a report released in Hanoi on February 23, 2012. These provinces have made great efforts to improve governance, leading to gradual improvements in their PCI scores over time. Other surprising outperformers include Ha Tinh and Binh Phuoc provinces, which climbed to the Top 10 group.
Big changes in rankings
According to the report, provincial governance showed a slight improvement in the past year. The weighted 2011 PCI score for a median province is over 59 points, about one point higher than 2009 and 2010. This reflects the continued commitment to reform economic governance by most provinces. However, some fields will need further improvement, including land, government dynamism and business support service.
PCI 2011 - the 7th annual release - presents the latest views of 6,922 Vietnamese enterprises on economic governance and the business environment across 63 provinces and cities in Vietnam in 2011. The strong drop in rankings of previous top-placers came to a surprise. Da Nang - top place keeper for three consecutive years - slid to the fifth position. Hau Giang and Tra Vinh provinces made a free fall from 4th and 8th places to 42nd and 43rd places, respectively.
After years on the top part of the ranking list, Binh Duong province lost a lot of scores because it lost government dynamism, land access and business support service. Danang dropped its spot for worse business support services and labour training.
The two northern provinces of Lao Cai and Bac Ninh topped the list after years of provincial governance improvement.
Dak Nong climbed four places from the bottom in 2010. Cao Bang replaced the Central Highlands province at the bottom of the list. Quang Ngai made the biggest leap from 55th to 18th position. Six provinces jumped more than 20 places. Ho Chi Minh City and Hanoi - the two largest economic centres of the country - remain in the middle of the list.
Ha Tinh and Binh Phuoc surprisingly entered the Top 10 group after creating local legislation and task forces specifically aimed at areas of potential improvement in their PCI scores.
PCI gauges aspirations of businesses
Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said: “In the context of economic difficulties, positive business perceptions about provincial governance are a bright signal in this report. We do hope that from this important message sent by the business community, the central and local governments will continue to make efforts to improve the business climate and enhance the competitiveness of Vietnam’s economy.”
In general, the above trend shows that reform policies have permeated nationwide. Many are easy areas where no substantial institutional changes or difficult compromises are required, enabling some provinces to catch up with high-ranking counterparts that had enacted these reforms earlier.
In addition, the privatisation of State-owned enterprises helps eliminate the root of privileges for State-owned enterprises.
Improvements include shorter time for business registration and licensing; more land-use rights certificates granted; easier access to provincial planning documents, particularly land and infrastructure planning; shorter time for administrative procedures after the finalisation of business registration; significant reduction in unofficial costs for government officials; and higher satisfaction of labour quality.
Also according to PCI 2011, the following areas need to be improved further. For example, enterprises still fear that compensation and site clearance prices do not match market rates. Another concern is the reduced dynamism of leaders and less positive attitude of local government.
The PCI research team annually arrives in more than 20 provinces and cities nationwide to attend PCI diagnosis conferences to analyse local strengths and weaknesses and recommend good practices for local authorities to improve governance. Many donor agencies use this information to evaluate and monitor the progress of their projects in provinces and cities. Investors also use PCI to assess the investment environment and make investment decisions.
In addition to the index, the PCI research team also surveyed nearly 2,000 foreign-invested enterprises (FIEs) in 61 provinces, providing the largest sample of the current profile of foreign direct investment in the country, and helping to identify challenges for building a competitive economy with dynamic growth by both foreign and domestic enterprises. Key findings from the FIE survey revealed that although FIEs had increased revenues in 2011, there is greater pessimism about the next two years due to economic challenges. In addition, they continue to select Vietnam for its labour cost advantage and political stability, but heavily discount other governance factors. These results reflect the type of investors Vietnam has attracted so far: Low-cost and low value-added manufacturers. Meanwhile, high-quality foreign investment projects demand the implementation of intellectual property rights commitments, better control of corruption and higher quality human resources.
Huong Ly
Vietnamese
