3:35:50 PM | 21/2/2019
According to the Provincial Competitiveness Index (PCI) rankings in 2017 - the measure of local economic management quality in Vietnam, Nghe An province scored 63.52 points, ranking 21st in the country (four places higher than a year earlier) and first in the North Central region.
This is the highest PCI standing Nghe An province has achieved. The outcome is attributed to efforts of local authorities and people in administrative reform and investment attraction.
Considerable improvement in component indices
Among 10 PCI component indices, six gained considerable scores, including land access and security of tenure, time costs and regulatory compliance, informal charges, proactivity of provincial leadership, labor and training, and especially business support services. However, four indices did not pick up, or even declined, like market entry costs, transparency and access to information, fair competition, and legal institutions.
According to VCCI's surveys used for the PCI 2017 rankings, respondents said that land access and security of tenure is easier (up 0.80 points, up 11 places, ranking 41st out of 63 provinces and cities); regulatory compliance tends to decrease (ranked 24th, 19 places higher) and time costs declined. Enterprises spent more than 10% of the time fund to learn and implement regulations.
In addition, informal charges tended to decrease (13 places higher, up 0.28 points). According to surveys conducted by the Vietnam Chamber of Commerce and Industry (VCCI), companies had to pay more than 10% of revenues for unofficial expenses, lower than 17% in 2015, 15% in 2016 and to 13% 2017.
Business support services improved significantly (ranked fourth among 63 provinces and cities, up 1.71 points to 7.47 points, 19 places higher). This was the highest index of Nghe An compared to 12 other provinces and cities in the region.
The share of enterprises using private business support services was higher than in 2016, including market information search, trade promotion, business administration training, legal advice, technology services, business partner search and financial accounting training is much higher than in 2016.
In addition, the quality of labor training was also highly appreciated (ranked 13th, up 0.43 points). The labor training index scored 6.94 points (ranked third, just after Da Nang and Ha Tinh among 12 provinces and cities in the region).
What do businesses expect from Nghe An?
According to PCI reports, Nghe An province-based enterprises wanted to be provided favorable conditions for more convenient market entry. This index fell from a year earlier (down 1.06 points, down 24 places to No. 31).
In addition, they wanted Nghe An authorities to take measures to help businesses quickly go into operation, enhance transparency and access information more easily (Its transparency ranked 25th out of 63 provinces and cities in 2017, seven places higher than 2016).
In particular, what they expected most was the business environment needed to be fairer. The fair competition index dropped 17 places from 2016 to almost the bottom position, ranked 61st out of 63 provinces and cities. What they complained was the government had greater favor for their familiar businesses and FDI firms. The province’s favor for State-owned enterprises (SOEs) raised difficulty for them while FDI firms seemed to be given higher priority when facing hardships. The province also gives priority to attracting foreign direct investment (FDI) companies rather than developing the private sector. Contracts and business land mostly fall into familiar businesses. The preferential treatment for large enterprises is an obstacle to the rest.
Facing this reality, the provincial government needs to be more dynamic and flexible in tackling emerging difficulties and create a more favorable business environment for businesses. (In the PCI 2017, the proactivity of Nghe An province slid 20 places to No. 48).
Besides, it is necessary to foster the effect of consist law enforcement at all tiers of government. The gap between provincial/municipal policies with the enforcement of local authorities is still distant. Province-level good initiatives and policies are not implemented well by local authorities.
At the same time, it is necessary to build a reliable legal system and ensure order and security for businesses to operate safely in the province; understand and tackle hardships for businesses in seeking customers, capital sources, anticipating market fluctuations, finding business partners, and finding suitable personnel.
Nghe An province-based companies also expect the Government to facilitate corporate entities, especially SMEs, to better access business resources, train more skilled workers (engineers, supervisors and managers); improve administration quality for enterprises (administration quality has a strong correlation with PCI scores, specifically in such aspects as transparency, informal charges, proactivity of provincial authorities, and legal institutions).