Doing business harder in two biggest cities: PCI 2010 poll
By Ngoc Lan and Pham Vu – The Saigon Times Daily
HANOI, HCMC – Hanoi and HCMC may come to investors’ mind first when they think about doing business in Vietnam, but a 2010 Provincial Competitiveness Index (PCI) survey shows a grim reality: it is getting harder to run a business in the two biggest cities of the nation.
Hanoi and HCMC have great advantages in terms of geographical position, infrastructure, business support services and labor training. But the PCI 2010 survey excluded all these items and focused solely on economic governance to determine how competitive the country’s 63 provinces and cities were last year.
Hanoi dropped 10 places to 43rd position among the 63 provinces and cities in the sixth annual survey that represents the views of 7,300 Vietnamese and 1,155 foreign invested enterprises. For the first time, foreign invested firms participated in the annual survey.
HCMC was down seven notches to 23rd place and for the first time was not among the 22 provinces and cities ranked in the Excellent and High Tiers of the PCI.
Meanwhile, the smaller provinces indicated stability and improvements, particularly the Mekong Delta, which accounts for nine of the 22 provinces and cities in the excellent and high tiers of PCI 2010.
“The Mekong Delta continues to show steady and consistent improvement across the region,” says a statement issued on Wednesday by the PCI organizers – the Vietnam Chamber of Commerce and Industry (VCCI) and the U.S. Agency for International Development’s Vietnam Competitiveness Initiative (USAID/VNCI).
For other regions, like the Red River Delta, the Central Highlands and the central coast, their performances were significantly better. Take Lao Cai in the country’s northern upland for example; it ranked second after Danang.
Danang retained its position as the best performing city for the third year in a row as it is committed to promoting itself as an attractive destination for local and foreign investors by fostering an investment and business enabling environment.
“The PCI has been adopted as a primary data source by local governments of provinces and cities including Danang to assess their socio-economic governance, particularly in respect of policy making, enhancing an investment and business enabling environment,” Tran Van Minh, chairman of Danang, is quoted as saying in the statement.
“The PCI, therefore, recently has contributed to promoting Danang as a destination for many foreign and domestic investors.”
The PCI 2010 survey indicates governance and regulation are issues that needed to be coped with to ensure the ease of doing business.
In the past, market entry was always the best performance of the nine aspects of the provincial business environment. From 2006 to 2009, reform cut the time required for business registration by a half.
But the pace of this reform seemed to slacken in 2010. The time required for business registration or revision remained the same as in 2009, 10 and seven days respectively, still longer than the duration stipulated in Government Decree 43 issued in April 2010.
Another worse performance was transparency. The PCI 2010 indicates most of the transparency component indicators fell from 2009. Access to information and documents related to production or legal framework also declined.
On a five-point scale, the average point for these indicators was 2.31 points, falling from 2.44 points in 2009 and representing the lowest since 2005, of which the highest scoring province reached only 2.62 points.
“The 2010 PCI survey suggests that to move to the next stage of development, the country could look to ways to attract higher quality investment to increase productivity and prosperity. This will require improved economic governance and regulation that reduces the costs and risks for doing business in Vietnam,” Francis Donovan, Mission Director of the United States Agency for International Development (USAID) in Vietnam, said in the statement.
Virginia Palmer, Chargé d’affaires of the United States Embassy in Hanoi, said in the same statement, “Improving economic governance requires continued leadership and commitment of government leaders at central and provincial levels to tackle difficult challenges, such as infrastructure, administrative management, corruption, and workforce development.”
Vu Tien Loc, president of VCCI, said in the statement, “The PCI is a useful tool to assess the ease of doing business, economic governance, and administrative reform efforts by local governments of provinces and cities in Vietnam, in order to promote the development of the private sector.
“There are several good examples of reform initiative this year that one province could learn from others.”