Ongoing Launch of 2014 PCI Report
THE PROVINCIAL COMPETITIVENESS INDEX 2014
Bringing the Voice of Business to Policy-Makers: Creating a more competitive Vietnam
Ha Noi, April 16, 2015: This morning, the Vietnam Chamber of Commerce and Industry (VCCI) and the U.S. Agency for International Development (USAID) launched the annual Provincial Competitiveness Index Report 2014 (PCI 2014). The event marks the 10th anniversary of the VCCI-USAID partnership in the creation and development of the PCI, a tool to measure economic governance and the ease of doing business for the private sector in all provinces in Vietnam.
The 2014 PCI survey is based on responses from nearly 10,000 domestic private enterprises across 63 provinces in Vietnam. The PCI is comprised of sub-indices such as entry costs, land access and security of tenure, transparency, time costs, informal charges, proactivity of the provincial leadership, policy bias, business support services, labor training policy and legal institutions. The Index is developed by a team of international and national experts from VCCI with the support of USAID.
This year, Da Nang continued its reign as the top performing province with a PCI score of 66.87, followed by Dong Thap (65.28 points) and Lao Cai (64.67 points). After ten years in the PCI Survey, Ho Chi Minh City (62.72 points) achieved the distinction of being one of the five best-governed provinces and cities in Vietnam. This group also welcomes Quang Ninh (62.16 points) for the second time.
The remaining top ten provinces and cities includes Vinh Phuc, Long An, Thai Nguyen, Kien Giang and Bac Ninh. Notably, after being listed last in the PCI rankings for the past two years, Tuyen Quang’s rise can be attributed to significant changes in its approach to business-government interactions and responsiveness.
Provincial governance across Vietnam continues to show a positive trend. This year, the PCI score of the median province increased to 58.58 points from 57.81 in 2013. Dr. Vu Tien Loc, Chairman and President of the Vietnam Chamber of Commerce and Industry commented: “To be more proactive, creative, and develop a transparent and level-playing business environment for all economic sectors is what all businesses and investors hope to see in the local leadership of Vietnam”.
The Vietnamese economy is showing some signs of revival. In 2014, our survey shows that nearly half the local firms (46.1%) expect to expand their businesses over the next two years, an increase from the 32.5% reporting such plans in 2013. The same optimism is observed for foreign firms with 50% indicating they intend to expand. For the first time in five years, the PCI Business Thermometer is able to report improved business confidence.
“I would just like to highlight how encouraging I found the survey findings on renewed optimism about future investment, along with a widespread positive outlook, shared by both domestic and foreign companies, on the potential of the TPP to spur new investment and growth. As I often say, nothing is impossible,” stated Ted Osius, U.S. Ambassador to Vietnam.
As the 2014 PCI report shows, 1,491 foreign businesses perceive that Vietnam continues to have advantages over its competitors in terms of policy stability, low expropriation risk, business involvement in policy-making, and a reasonable tax burden. However, foreign investors ranked Vietnam below its competitors in regard to informal costs, regulatory burden, quality of infrastructure and public services (health and labor training). A technically skilled labor force and simplified procedures for foreign work permits are considered factors that are considered especially important to make Vietnam more competitive in attracting investment.
About 70% of foreign and domestic firms in Vietnam have at least some knowledge of the TPP. Most of these firms, however, report only limited understanding of the trade pact. In general, domestic firms favor the TPP with over 66% answering they strongly support it or offer support with some concerns while foreign firms express a more cautious perception (about a quarter of firms support the TPP). All in all, our survey bodes well for the prospects of Vietnam’s entry into the TPP. Nevertheless, significant work lies ahead in both informing the public about the arrangement and preparing for the structural adjustments that will be part of the agreement.
For further information, please contact Ms. Le Thanh Ha, Email: email@example.com, or mobile number: 090 414 6686. The PCI 2014 report and survey data can be downloaded at www.pcivietnam.org.