Lao Cai Improving District Competitiveness for a Higher PCI

5:35:29 PM | 29/8/2013

According to the announcement by Vietnam Chamber of Commerce and Industry (VCCI), in the last 3 years, Lao Cai province has been always at the top of PCI ranking, successfully improving investment attraction. This comes from consensus in the government of Lao Cai. To learn more about the current investment environment of Lao Cai, Vietnam Business Forum interviewed Mr Dang Xuan Phong, Director of Lao Cai Provincial Planning and Investment Department.
Could you review some of the results about investment outcomes, especially those related to the FDI projects in Lao Cai recently?
In 2012, despite a very tough socio-economic context and low GDP growth, with many businesses being dissolved and suspended, Lao Cai still kept stable economic growth and many targets were fulfilled. For example, the GDP growth rate reached 14 percent; total local revenues in 2012 reached VND3,221 billion, accounting for 105.6 percent of total revenue initially assigned by the central government; total social investment mobilised in the area reached over VND14,500 billion, up 40 percent compared to 2011; export turnover reached US$1,229 million; other social security issues have been improved, national defence and national security has been sustained and the poverty rate has decreased.
As of 2012, the province attracted 397 domestic investment projects with total registered capital of VND43,645 billion, 29 FDI projects with total registered capital of VND502 million; the investment projects in the province are mainly focused on exploiting some industries such as commercial services, tourism, mining and mineral processing, developing Lao Cai Economic Zone at the Border, and attracting, using and effectively managing the projects. All of those contribute to the socio-economic development of Lao Cai.
Faced with the economic downturn, many investment projects of the province are recording slow progress, mainly caused by limited access to bank loans. What solutions has Lao Cai proposed to minimise such limitations?
One of the greatest difficulties of enterprises in the implementation of investment projects is accessing capital. In recent years, Lao Cai has directed local authorities to conduct regular reviews of investment projects in the area to classify well-performing and non-performing projects, before proposing measures to minimize hurdles to accessing bank loans. One of many measures is that the province organizes an annual conference among the commercial banks in the province to discuss and come up with the financing solutions based on the types of projects under priority; for example, credit incentives are first offered for big and core investment projects of the province in the fields of agriculture, rural areas and small and medium enterprises, supporting industries, exports, social welfare-related areas. Other measures are that the province encourages businesses to participate in domestic and international promotion activities for investment opportunities; the province also expands external activities through bilateral cooperation programs between Lao Cai and other large credit institutions such as Bank for Investment and Development of Vietnam (BIDV), Vietnam Development Bank and Vietnam Technological and Commercial Joint Stock Bank (Techcombank) to raise funds and finance for the businesses in the province.
By the end of 2012, the total mobilised capital reached VND12,906 billion, up 24 percent compared to the same period of the last year, of which the total mobilised capital of the province reached VND6,843 billion and the funding of the credit institutions accounted for VND6,063 billion. The total loans reached VND6,550 billion, total outstanding credit reached VND11,282 billion, up 10.6 percent compared with the same period of 2011. The commercial outstanding credit reached VND7,052 billion and bad loans accounted for VND99.48 billion, accounting for 0.88 percent of total loans, up 0.03 percent compared with the same period of 2011 (compared with the national bad debt of VND120,000 billion of 2012, accounting for 4.1 percent of total outstanding loans). For the first 3 months of 2013, the total credits of Lao Cai have grown impressively, with total loans of over VND13,400 billion. The credit growth of Lao Cai of the first 3 months is higher than those of other regions in the country (up 19 percent compared with the same period in 2012) while many provinces have had negative credit growth. This demonstrates the quite good business environment of Lao Cai.
To improve the PCI of the province, Lao Cai has been working on of the "Improving the District Competitiveness Index (DCI)" project in the 2013- 2015 period. Could you highlight some features of this project?
This idea is totally new and it is the only one nationwide. It covers diversified activities and complicated selection and measures related to many indicators, so the project has a combination of different methods and approaches. And to ensure objectivity among districts and cities with different socio- economic conditions, the DCI will be conducted based on the following principles:
(1) Realistic, (2) Based on the analysis of local issues, (3) Ensuring the accurate feedback of the business community on the capacity of the public administration of the governments at the district and municipal levels (4) Highlight the positive points as well as the local limitation of the districts reflected on the PCI report, (5) Create motivation for the authorities to change and improve the PCI, and (6) Recommendations for improving the PCI in the next stages.
The project aims to build the index framework to assess the management capacity of the district administration, the city in terms of creating favourable conditions for the business community, construction and development environment investment, production and business best motivate economic development - the local society.
To help Lao Cai continue to maintain its position in the top five PCI ranking and further improve the business investment environment, what should Lao Cai focus more on?
Lao Cai always values and considers the PCI a useful indicator to measure the province's capacity and effectively promote the departments and local agencies to make stronger reforms in the direction of more active support and facilitation for business. Lao Cai continues to focus on maintaining and promoting the high sub-indicators of the PCI and proposing solutions to improve the low indicators in the previous years, as follows:
- Continue to review administrative procedures, accelerate the evaluation steps and grant business registration certificates and land use rights for citizens and businesses.
- Strengthen the planning and management of land use; regularly review investment projects; hand over the land and collect land rent as regulated for projects with investment certificates; actively allocate land to attract feasible investment projects.
- Promote transparency in the planning process of government agencies at all levels; publicize the mechanisms and current policies relating to the business operations; continue to promote the performance of the provincial business association and young business association for gathering advice and feedback on the policies of the province.
- Review the inspection plans at all levels and for every business sector to avoid overlaps and difficulties for businesses; promote administrative reform under the "one -door" mechanism to reduce paperwork and time for businesses.
- Regularly review and consolidate the administration of the government agencies simply and effectively and build up a team of virtuous and talented officials to best serve for the common development tasks.
- Promote the meetings and exchange events with the business community and investors.
- Focus on direct review and shorten the periods of the settlement of complaints and denunciations relating to businesses.
In addition, to maintain and improve the PCI, Lao Cai is now designing the "Improving the DCI" project to assess the capacity of public administration of the government of the districts and cities in terms of creating favourable conditions for the business community and further improving the investment environment of the province.
Mr Le Quang Minh - Chairman of Bao Thang District People’s Committee
As a gateway to Lao Cai City, the capital of Lao Cai province, the infrastructure system in the district is quite good. Hence, it holds more advantages than other localities in the province in investment attraction. To assure investors, Bao Thang district will create the most favourable conditions for investors in taking the land for their projects and carrying out land compensation. It will work closely with provincial departments to introduce planned investment locations for investors. It also actively informs State policies on investment and business to strengthen the consensus among State officials, residents and businesses. The district always tries its best to settle all issues related to investment to avoid unnecessary complaints and grievances, thus creating the peace of mind for investors.
Mr Tran Van Hoa - Director of Hoa Phong Co., Ltd
Despite being a poor province in the country, the untapped potential of Lao Cai province remains huge. In my opinion, Lao Cai has all elements for developing a diverse economy based on agriculture, industry, tourism and service. However, to unlock the potential, the province needs capable investors to deal with current limitations like transportation (rail and road) and human resources. I hope that more investors will invest in Lao Cai and we are willing to cooperate with capable investors to bring a new face to Lao Cai.