Binh Duong and Experience of Competition

For the second consecutive year, Binh Duong province has been voted by private enterprises as the locality with the best competition environment. Within a project to build a provincial competition index, the Vietnam Chamber of Commerce and Industry (VCCI) and the Asia Foundation have co-operated to disseminate the best practices in provincial economic governance, especially the experience of Binh Duong province to other localities.

 

Binh Duong is a province considered by experts from the research group not to receive any ‘priority’ in terms of geographic conditions and not to have any superiority in terms of infrastructure facilities or distance to markets in comparison with other provinces and cities. What has helped Binh Duong and some other provinces and cities be outstanding in eight aspects, surveyed by the research group, such as market participation, land policies, inspection and examination, policy building, transparency, time-based transaction costs, money-based transaction costs, dynamism and pioneering?

 

Three main factors, which have linked practices in economic governance on the eight research aspects, include positive behaviour towards enterprises, openness and co-operation. Positive behaviour is expressed via the fact that local authorities want private enterprises to be successful and do not create any barrier to market participation of the private sector for protecting State-owned enterprises or those leading enterprises which enjoy priorities of the province. The barriers include complicated procedures for registering tax codes or regular and long inspections and examinations.

 

The openness of the local authorities ensures that enterprises know about their rights to market participation or during inspections and examinations. This will help enterprises protect themselves before from corrupt officials. Finally, co-operation among local authorised agencies will help enterprises save time from travelling from agency to agency to have all procedures completed. Also, when local authorised agencies inspect or examine enterprises’ activities, the enterprises have to suspend their production and business activities only once or twice a year instead of tens of times. 

 

At a symposium entitled ‘best practices in provincial economic governance in Vietnam,’ held in Hanoi recently, Nguyen Ky, member of the Prime Minister’s Research Commission, stated the following issues, which Binh Duong has achieved during its provincial economic governance. Firstly, Binh Duong always considers enterprises to be reliable partners of the local authorities. Secondly, the local authorities have always performed their functions and tasks correctly, not interfering into business the administration of enterprises. Thirdly, the province has always ensured openness and transparency, and fair competition environment among enterprises. Finally, the province has attached importance to developing the role and advantages of business associations.

 

Ky stressed that apart from Vietnamese economic organisations, foreign economic organisations or organisations with foreign factors had received favourable conditions for their establishment and operation. For example, the Taiwanese Industrial and Commercial Association, set up in 2000, has attracted most Taiwanese businesses in Binh Duong and 50 per cent of Taiwanese businesses operating in Vietnam as members. The association has built a good relationship with local authorities and vice versa in order to address issues relating to the association.

 

Talking about this aspect, Nguyen Dinh Cung, head of the Macro-economics Department, the Central Economic Management Institute, said that what Binh Duong had done was very active and positive. The province did not wait for enterprises’ arrival to know or address their problems. Instead, the province is very active in collecting and gathering information, analysing and reviewing it, while developing a mechanism on automated addressing of the problems.

 

Cung made some proposals on renewing governance to increase the competitiveness of the local business environment. For a solution on improving transparency, Cung suggested the establishment of an agency specialising in gathering and collecting proposals of enterprises, and providing information for enterprises via various methods and tools. Talking about the solution on reducing costs for market participation, Cung said that there should be mechanisms strong and flexible enough for land allocation and land lease. He particularly stressed that local authorities should be unique in terms of targets, knowledge and norms, as well as methods of action. Also, focus should be given to the establishment of institutions and mechanisms to address problems of enterprises quickly and equally at low costs. Cung went on to say that there should be inspection and examination mechanisms for the institutions’ operation, instead of addressing issues at the concrete request of individual investors.