What is PCI? Introduced in 2005, the Provincial Competitiveness Index (PCI) on Vietnam’s business environment conducts an annual business survey, assessment and ranking of the economic governance quality of provincial authorities in creating a favorable business environment for development of the private sector.
What Does the PCI Measure? The overall PCI comprises ten sub-indices, reflecting economic governance areas that affect private sector development. A province that is considered to perform well on the PCI is the one that has: 1) low entry costs for business start-up; 2) easy access to land and security of business premises; 3) a transparent business environment and equitable business information; 4) minimal informal charges; 5) has limited time requirements for bureaucratic procedures and inspections; 6) limit crowding out of private activity from policy biases toward state, foreign, or connected firms; 7) proactive and creative provincial leadership in solving problems for enterprises; 8) developed and high-quality business support services; 9) sound labor training policies; and 10) fair and effective legal procedures for dispute resolution.
Brief Methodology: The PCI is constructed in a three-step sequence, referred to as “the 3 Cs”: 1) collect business survey data and published data sources, 2) calculate nine sub-indices and standardize to a 10-point scale, and 3) calibrate the composite PCI as the weighted mean of nine sub-indices with a maximum score of 100 points.
Sampling: Firms are selected using random sampling to mirror provincial populations. Stratification is used to make sure that firm age, legal type, and sector are accurately represented.
The 2014 PCI, the 10th edition of the report, represents the opinions of 10,000 domestic businesses and 1,500 foreign invested enterprises regarding the local economic governance and business environment in Vietnam’s 63 cities and provinces. The 2014 PCI report also discusses the opportunities and challenges involved in Vietnam’s entry into the Trans-Pacific Partnership Agreement (TPP) and presents timely survey findings about business-labor relations in the country’s foreign invested enterprises.