PCI 2014 presents a brighter business environment

Widespread reform

The PCI 2014 report was jointly launched by the Vietnam Chamber of Commerce and Industry (VCCI) and the US Agency for International Development (USAID) on April 16 in a special context when the Vietnamese government is speeding up its institutional reform and increasing the national competitive capability. The objectives are Vietnam’s business environment and competitive capability will not be inferior to other countries in the region and the world.

The PCI 2014 report shows the efforts of provinces in improving their business environments. The top performers were those that recorded high PCI rankings in 2013 in all three northern, central and southern regions. Meanwhile, northern mountainous localities were still in the lowest PCI group. The survey on nearly 11,500 domestic and foreign companies showed a positive outlook along with renewed optimism about future investment.

According to the PCI 2014 report, the central city of Da Nang maintained its top position, followed by Dong Thap, Lao Cai, Ho Chi Minh City and Quang Ninh. The last places of the rankings included Ca Mau, Bac Kan, Ha Giang, Cao Bang, Lai Chau and Dien Bien.

After 10 years of the PCI Survey, Ho Chi Minh City entered the top-five group of the best-governed provinces and cities in Vietnam, along with Vinh Phuc, Long An, Thai Nguyen, Kien Giang and Bac Ninh.

Notably, Tuyen Quang Province has strongly risen and increased 13 grades from its last position (63 out of 63 provinces and cities) of the PCI 2013 report.

Regulations to join the market need to be improved

Despite the reduced gap in competitiveness capability among provinces and cities, a survey of 1,491 foreign direct investment (FDI) enterprises showed that Vietnam’s business environment remained unattractive in terms of unofficial costs, regulatory burdens, quality of infrastructure and public services (such as education and health care). Particularly, Vietnam needs to increase its skilled workforce and simplify foreign workers licensing to improve its competitiveness in investment attraction.

The FDI enterprises assessed that, leaders of Vietnam’s provinces and cities have been more cautious about issuing policies and they seemed to wait for directions from the state.

Professor, Dr. Edmund Malesky from Duke University of the US and the PCI lead researcher said that the interesting thing is this change coincided with the increased preferential treatments provided to foreign-invested firms; this indicated negative tendencies in the business environment at the provincial level. Another surprising thing was that FDI enterprises rank Vietnam’s infrastructure and public services worse than most of other potential competitors. Meanwhile, Vietnam had made great attempts and resources to improve infrastructure and public education and health care. To improve business environment and investment attraction, Vietnam needs to make efforts to improve regulations on joining markets and on business conditions. Chairman of the VCCI Vu Tien Loc said being more active and creative in creating a more favorable business environment is the expectations of every enterprise and investor from Vietnam’s local authorities.

This is the 10th year since the PCI was launched, which aims to reflect the voice of the Vietnamese business community about business environment via the contentment of businesses with the country’s local authorities.

By Thuy Ngoc