Improving Mekong Delta Competitiveness: New Way of Thinking Needed

In the framework of Mekong Delta Economic Cooperation Forum (MDEC Tien Giang 2012), the Mekong Delta Business Forum took place and caught the attention and attendance of local enterprises. At this function, the topic of enhancing the competitiveness of the Mekong Delta by improving the provincial competitiveness index (PCI) was heated up by experts and executives.

 

According to the “Mekong Delta Business - Business Environment and Recommendations for Improvement" Report released by the Can Tho Branch of the Vietnam Chamber of Commerce and Industry (VCCI Can Tho), as of early this year, the region had 43,000 enterprises with a combined registered capital of VND356 trillion (US$17 billion). However, small businesses accounted for over 28 per cent and micro-businesses made up over 68 per cent. The scale of Mekong Delta-based businesses is much smaller than the rest in the country; the average headcount in a business equals two-thirds of the country’s average and the capital equals a third. Profitability and tax payment equals a half of the country’s median, and asset investment equals a third. With small operating scale, slow growth, very low external investment like FDI, and limited own investment, it is very difficult for the Mekong Delta region to make rapid progress in the next 5 - 10 years.

 

In 2011, most Mekong Delta provinces dropped their rankings of provincial competitiveness index (PCI). Ten out of 13 provinces downgraded and three upgraded. Among advancers, Long An province climbed from the 12^th position in 2010 to the third place in 2011, taking the lead in the Mekong Delta. Soc Trang province gained two notches and Ca Mau jumped 19 places. Generally, a few provinces advanced and most regressed, even very much. After many years standing in the good group, Vinh Long province dropped 45 notches from the 9^th position to the 54^th place. Tra Vinh sank from the 4^th place to 42^nd and Hau Giang slid from the eighth place to 43^rd. The biggest drops were seen in dynamism and innovative leadership component indices. Significant declines also happened to business support services, workforce training and access to land. Only market entry index advanced in all 13 provinces and cities.

 

Dr Vo Hung Dung, Director of VCCI Can Tho, said PCI decline in Mekong Delta provinces in 2011 resulted from the neglect and subjectivism of some provinces in the region while maintaining and uplifting PCI rankings requires persistence, continuity, and no complacence. In the future, in order to attract investment and develop businesses, the Mekong Delta must have effective measures to deal with human resources and infrastructure problems and strongly improve the business and investment environment. He emphasised that "The drop in PCI rankings in 2011 was a warning for localities in the region.”

 

It is noted that PCI is not a sort of superficial merit but it is a tool to measure dynamism and economic administration of local governments. The ultimate nature of PCI is the satisfaction of businesses with the investment and business environment where they operate. Therefore, the core matter is that local authorities must look at investment environment and quality management on the wider space rather than provincial administration thinking.

 

Mr Dau Anh Tuan, Deputy Director of Legal Department, VCCI, said, to improve PCI index, the Mekong Delta must change the way of thinking and administration. He cited human resource element as an example. The region must focus on supplying a workforce of high quality, discipline, professional skills, and expertise instead of supply abundant low-cost labour as previously. Human resource training must be based on the demand of market and enterprises.

 

Similarly, Tuan added that cost is no longer decisive to investors. Instead of competing with low-cost space and financial incentives, the region should focus on more important factors like human resource quality and policy environment. Additionally, policy environment and leadership dynamism play an increasingly important role and decide competitiveness and efficiency of investment attraction of a locality. He recommended that instead of only focusing on promoting and attracting investment capital in the initial stage, Mekong Delta provinces and cities need to travel with investors and businesses as well as long-term partners throughout investment process to expand investment and attract more new investors.

 

In short, to maintain and improve PCI, Mekong Delta provinces and cities need to change the way of thinking and actively expand regional connectivity to move forwards in this context of competitive integration and challenges.