Quang Ninh leads PCI ranking for the first time

Top five leading cities and provinces receiving PCI certificates

The Vietnam Chamber of Commerce and Industry (VCCI) and the US Agency for International Development (USAID) jointly launched the 2017 Provincial Competitiveness Index Report (2017 PCI Report) this morning.

The 2017 PCI Report is the 13^th iteration and is based on responses from 12,000 enterprises, including more than 10,200 domestic private enterprises from 63 cities and provinces and nearly 1,800 foreign invested enterprises in 21 cities and provinces in Vietnam.

Nguyen Duc Long There is much room for improvement of Quang Ninh’s PCI ranking, because 70.7 is not a very high score on a 100-point scale. Thereby, we are innovating continuously and are determined to improve the province’s score.

In 2017, for the first time ever, Quang Ninh topped the PCI rankings with a score of 70.7 on a 100 point scale. The cities and provinces listed as the top 10 PCI performers include Danang (70.1 points), Dong Thap (68.8 points), Long An (66.7), Ben Tre (66.7), Vinh Long (66.1), Quang Nam (65.4), Ho Chi Minh City (65.2), Haiphong (65.2), and Can Tho (65.1).

Other cities and provinces that found themselves on the higher end of the PCI tier are Lao Cai, Vinh Phuc, Hanoi, Binh Duong, Thai Nguyen, Ba Ria-Vung Tau, and Bac Ninh.

Nguyen Duc Long, Chairman of the Quang Ninh People’s Committee, said: “Ten years ago, Quang Ninh’s ranked 58^th out of 63 provinces and cities. After a long time of doing their utmost and constant improvement, Quang Ninh has been in the top five of PCI ranking for the past five years."

"PCI is considered a powerful tool for localities to lure in investment. FDI capital pouring into the province in the last five years was $6 billion, and there are 15,638 firms operating with the total charter capital of over VND150 trillion ($6.6 billion),” he said.

“There is much room for improvement of Quang Ninh’s PCI ranking, because 70.7 is not a very high score on a 100-point scale. Thereby, we are innovating continuously and are determined to improve the province’s score,” confirmed Long.

The PCI 2017 Report witnessed impressive reform efforts by local governments across the country. Many governance areas have been improved in 2017 to remove obstacles for businesses.

Informal charges have been on the decline, the business environment has been more equal, and administrative procedures have been simplified.

At the launching ceremony, Vu Tien Loc, chairman of VCCI, noted: “Positive improvements have been the dominant trend in Vietnam’s business environment for the past year. Cities and provinces have actively implemented the directives of the prime minister, learning to employ good practices and experiences from top performers in order to improve their local business environment.”

Vu Tien Loc, chairman of VCCI

“Important policies and guidelines by the government have led to positive improvements, such as Resolution No.19/NQ-CP on improving the business environment, enhancing national competitiveness, Resolution No.35/NQ-CP on supporting and developing enterprises through 2020, and Directive No.20/CT-TTg of the prime minister dated May 17, 2017 on rectifying inspection activities to prevent redundant, overlapping, and unnecessary inspections for enterprises,” said Loc.

The 2017 PCI survey revealed that optimism among the private business community and foreign investors regarding their economic prospects is growing.

52 per cent of PCI 2017 respondents in the domestic survey said that they planned to increase the size of their operations over the next two years, the highest level since 2011, while the number of firms planning on scaling down or closing their business was extremely low at 8 per cent.

The share of foreign-invested enterprises (FIEs) that plan to expand their businesses in Vietnam rose to 60 per cent, a level of ambition unseen since the apex of 2010.

The PCI-FDI survey offers several causes for optimism. FIEs reported significant improvements in the regulatory burden in entry procedures. The post-entry regulations for FIEs in areas such as social insurance, taxes, and labour have been eased compared to previous years.

There is, however, much room for improvement. The business community expects to see continued reforms in the business environment in the future, particularly in the fields of taxes, customs, specialised inspections, social insurance, and firefighting and prevention.

It is crucial that Vietnam have in place effective strategies and policies to enhance its labour quality, especially skilled employees that firms currently find difficult to recruit.

Daniel Kritenbrink, the US Ambassador to Vietnam

Daniel Kritenbrink, US Ambassador to Vietnam, commented: “The PCI report has been very influential in promoting transparency and good economic governance in Vietnam, which has been vital for stimulating investment and trade opportunities. We look forward to continued strong economic growth and prosperity in the years ahead.”

This year’s edition features a special chapter to analyse management issues of Vietnamese private enterprises. The analyses showed that management quality is associated with better performance. Firms with good managers have higher growth rates in both employment and fixed capital investment.

Firms that are able to obtain a one-point increase in management quality (on a four point scale) can expect to experience a 1.06 per cent increase in average annual capital growth. Good managers also are more likely to be optimistic about future expansion plans and more involved in exporting or selling to FIEs.

Jocelyn Tran, Walmart’s regional senior director for Southeast Asia, said: “The PCI opens up opportunities and shows the general views of FIEs and the relationship between the PCI ranking and improvements of business investment and business outcomes. On behalf of the FIE community, I congratulate the Vietnamese government and cities and provinces for these results. However, they need to do more to speed up administrative procedures and customs.”

Improving management quality is an important part of enhancing the performance of domestic firms in order to increase their scale of operations and create opportunities to integrate more deeply into the global economy, thereby contributing significantly to the formation of a successful generation of competitive private firms in the international arena.

The PCI report has been produced annually since 2005 to assess the ease of doing business, economic governance, and administrative reform efforts by the provincial and city governments in Vietnam in order to promote the development of the private sector.

Quang Ninh leads PCI ranking for the first time