PCI: Helps Find out Economic Bottle-necks

Vietnam Chamber of Commerce Industry (VCCI) has coordinated with Vietnam Competitiveness Initiative (VNCI) to recently release the 2008 Vietnam Provincial Competitiveness Index. This edition reflects the input of more than 7,820 Vietnamese entrepreneurs and managers of small and medium enterprises across 64 provinces. It shows a stable ranking over the course of time but in general indicates a slight reduction against last year in ranking index, focusing on labour training and economic development polices.

 

Da Nang took the top ranking in the 2008 Vietnam Provincial Competitiveness Index (PCI). The southern province of Binh Duong, which was the top PCI province for the past three years ahead of Da Nang, came second this year. Da Nang on the central coast had ranked second in previous years. Dien Bien stands at the bottom, replacing Dak Nong last year. Above Dien Bien are Bac Kan and Bac Lieu.

 

The report also demonstrates that scores are slightly lower this year across the country, a decline that can be traced to real evidence of disappointment among entrepreneurs in the way provincial leaders have responded to both their rising expectations and current macroeconomic instability.

 

In addition to these macro- findings, detailed analysis finds statistical evidence of improvements in entry costs, property rights, transparency of legal normative documents, and confidence in provincial economic courts. Both national and local leaders should be justifiably proud of these accomplishments.

 

As indicated in last year's report, there is evidence that increasing inequality is beginning to appear across the country. Top performing provinces excel at all aspects of economic development, as shown in this report in terms of economic governance, infrastructure, and ICT capability. This group is pulling away from the rest of the country. At the same time, another group that must struggle with weak initial conditions and poor infrastructure has not been able to develop the good governance practices to compensate for their handicap.

 

U.S Ambassador Michael W.Michalak said that feedback and guidance from the business community about how the government of Vietnam can better support business development, job creation, trade and investment. All of these factors help raise the standard of living for all citizens.

 

Mr Tran Huu Huynh, Head of VCCI Legal Department, member of research team, said that these numbers show the negative changes of PCI 2008. Huynh said the index was complied based on surveys conducted up till May 2008. At that time, inflation was just beginning. If the index had been compiled based on current surveys, the results would have been different.

 

The PCI 2008 report also introduces a new provincial analysis of infrastructure which is a critical factor effecting to markets, transaction costs, and economic growth and the overall competitiveness of the investment environment in Vietnam. According to research team members, provincial authorities do not have complete control over infrastructure within their provinces, and that they have even less control over the perceptions of entrepreneurs regarding local infrastructure. It is not all clear that entrepreneurs have a perfect understanding of where provincial borders are situated, and which authorities deserve praise or complaint for poor infrastructure.

 

The infrastructure index is simple an assessment of total infrastructure quality; it is not a definitive evaluation of the quality of local leadership like the PCI. Research team make no assumptions about credit or culpability, and present it simply as a tool to inform the investment decisions of local entrepreneurs and the policy priorities of central and local officials. These results serve as a baseline measure, which will facilitate tracking future developments. Nevertheless, the PCI Infrastructure Index represents a baseline that can be used to track and analyze future developments.

 

The Report shows that Da Nang, Binh Dinh, HCMC, Hai Phong, Binh Duong, and Dong Nai have the best infrastructure in the country, while the rural Northwestern Uplands have the worst.

 

Commenting on the PCI 2008, Vu Tien Loc, VCCI Chairman said "PCI helps find out economic bottle-neck namely administrative formalities, labour and infrastructure. The ranking doesn't matter most. It is important that we find out the obstacles, seek ways to overcome them and achieve a lesson. Even provinces with the lowest ranking can also have an experience story to share".