Competitiveness index boosts business climate improvement

08:32 | 16/04/2018 Society

(VEN) - The Provincial Competitiveness Index (PCI) report has been produced since 2005 to evaluate the ease of doing business, economic governance, and administrative reforms by the municipal and provincial government. After 13 years of implementation, PCI has become the driving force in helping localities to promote reforms and improve their business environment.

competitiveness index boosts business climate improvement

Positive results

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that in the early years, many localities explicitly asked to exclude them from the survey. However, after a period of implementation, their awareness of the index’s importance has grown, and currently all 63 provinces and cities view PCI as a reliable indicator to evaluate economic governance. In particular, 13 provinces and cities have included PCI improvement in their annual targets.

Many localities have undertaken positive reforms in the spirit of Resolution 19/NQ-CP on improving the business environment and Resolution 35/NQ-CP on supporting and developing businesses through 2020. Administrative reforms have made significant progress, with 67 percent of the survey participants agreeing that the time needed to complete administrative procedures is now shorter than specified in regulations, and 72 percent of the respondents believing their local bureaucrats are effective. Only 13 percent of the surveyed businesses complained of overlapping regulatory inspections.

In the last few years, the perception of corruption in the private sector in Vietnam has increased. However, in light of the government’s anti-corruption drive launched in 2017, some corruption measurements have declined. Specifically, the rate of firms paying over 10 percent of their revenues in informal charges fell to 9.8 percent in 2017 instead of 11 percent in 2015. In addition, firms reporting payment of bribes dropped from 66 percent in 2016 to 59 percent in 2017. With respect to supporting businesses, 67 percent of the respondents agreed that provincial authorities deal effectively with the difficulties that firms raise in meetings and dialogues. In addition, those reporting a positive attitude of provincial government toward the private sector increased from 35 percent in 2015 to 45 percent in 2017.

Foreign investors have exhibited increased confidence in business prospects in Vietnam and FDI companies have also sought to improve their labor relations.

However, some flaws still require a determined response. For example, only 25 percent of the respondents reported difficulty-free procedures when trying to work with local land authorities on an exchange, purchase or state rental, down from 40 percent in 2013. In addition, only 50 percent of firms found transparency in procurement bidding, while 70 percent of fi¬rms said personal ties are important or very important to get access to provincial documents. Moreover, only 31 percent of foreign companies thought that the quality of local workers meets their needs.

Quang Ninh’s model

There is broad agreement on the need to make greater effort to enhance the quality of provincial economic governance and improve the business climate. Quang Ninh Province is one of the localities determined to do so. The province has pioneered the use of social networking such as Facebook to understand and resolve difficulties and challenges facing businesses. In addition, Quang Ninh Province has implemented an “Entrepreneur Coffee” model, aiming to link the state management agencies with enterprises, as well as create favorable conditions to support and encourage local enterprises to draw investors from outside the province.

The model is designed to facilitate dialogue between entrepreneurs and representatives of state management agencies on issues related to the investment environment and competitiveness of the province. It also provides managers with a chance to directly listen, answer questions and address difficulties of enterprises seeking investment opportunities and trade activities in the locality. The “Entrepreneurs Coffee” has created interaction between enterprises and local government as well as becoming an open forum for enterprises. As a result, Quang Ninh Province has increased its sub-index ranking in terms of business support services to 8.52 points, helping the province climb to the top of the PCI with 70.7 points.

Nguyen Duc Long, chairman of the Quang Ninh People’s Committee, said the province needs to continue striving and drastically reforming to further enhance the competitiveness of the local economy.

Quang Ninh Province climbed to the top of the Provincial Competitive Index with 70.7 points. Da Nang, which dominated the ranking from 2013 to 2016, came second with 70.1 points, followed by Dong Thap (68.8), Long An (66.7), Ben Tre (66.69), Vinh Long (66.07), and Quang Nam (65.41).

Lan Ngoc