PCI 2021: Substantial Improvement in Economic Governance Quality

11:37:25 AM | 4/28/2022

Quang Ninh, Hai Phong, Dong Thap, Da Nang and Vinh Phuc are respectively holding the highest quality of economic governance in the PCI Rankings 2021. These localities also achieved very progressive outcomes of economic development and COVID-19 pandemic control, according to businesses.

The announcement ceremony of the Provincial Competitiveness Index (PCI) Annual Report 2021 was held in Hanoi by the Vietnam Chamber of Commerce and Industry (VCCI) with the support of the United States Agency for International Development (USAID). PCI aims to gauge the quality of economic management, ease of doing business and administrative reform efforts of provincial and municipal governments in Vietnam, thus helping boost private business development.

The PCI 2021 Report is built from the feedback of 11,312 companies, including 10,127 private enterprises in 63 provinces and cities and 1,185 foreign invested enterprises in 22 localities in Vietnam.

According to the report, based on a 100-point scale summed from the total score of 10 component indices, Quang Ninh province continued to lead PCI 2021 with 73.02 points, becoming the only province with “Very Good” economic governance. This is the 5th year in a row that Quang Ninh ranks first in PCI standings. In addition, it topped the country in two component indices: Market entry (7.98 points) and time cost of administrative procedures (8.52 points).

VCCI President Pham Tan Cong said, PCI 2021 recorded positive changes in provincial economic governance quality over time. The business community highly appreciates the authorities of many provinces and cities for their proactivity, innovation, responsible attitude and competence to effectively solve new and urgent problems from practice. Despite the pandemic contagion, business surveys reveal many bright spots in the local business environment. For example, informal charges continue to decline in many business-related procedures or administrative procedures continue to pick up as a result of strong information technology application.

PCI 2021 also points out issues that need to be further improved: Reforming procedures for granting a business license and enhancing access to land and business premises for enterprises or effectively and practically implementing the Law on SME Support. The PCI Report 2021 also provides relatively optimistic assessments of the Vietnamese business environment by FDI enterprises.

“PCI 2021 is the index’s 17th year in a row, starting 2005. It is 17 years of perseverance and effort, 17 years of objective and honest assessments and 17 years of action for a better provincial business environment,” he added.

Despite many impressive achievements, to further improve PCI in the coming time, the report says provincial governments need to step up settlement of administrative procedures in the network environment and focus on reforms in tax, land, social insurance, environment, construction, fire prevention and market management.

“Conditional business licensing procedures should be the focus of reform in the coming time when burdens of regulatory compliance costs on companies remain high. At the same time, it is necessary to more effectively implement programs to support small and medium-sized enterprises (SMEs) and programs to support enterprises for international economic integration in the coming time,” said Mr. Dau Anh Tuan, Director of VCCI Legal Department.

Besides, survey results into FDI firms recorded positive improvements in the business environment in Vietnam. Burdens of inspection and examination alleviated, coupled with relatively positive progress in administrative procedure reform in many areas. The informal cost burden continues its downward trend. Labor quality and infrastructure quality have also picked up markedly over time.

To maintain its attractiveness to foreign investors, the PCI Report says that Vietnam needs to focus on reforming administrative procedures in tax, fire prevention, import and export, investment registration and social insurance. The country also needs to facilitate businesses to carry out investment procedures with construction, namely construction permits, fire prevention and control approval and environmental impact assessment. The fight against corruption and bad acts should be further intensified, especially in some areas such as import and export, inspection, court proceedings and land administrative procedures. In addition to further improving infrastructure quality, Vietnam needs to raise human resources quality.

Mr. Marc E.Knapper, U.S. Ambassador to Vietnam

For the 17 years of PCI, the United States Government, particularly USAID, are very proud of the work we have done. This started in 2005, when I first got here, the last time I served. I'm just so proud to be back and to see all the great things that PCI has accomplished. It's been a really important channel for businesses, especially SMEs, to be able to encourage the government at a local level to be more accountable, more transparent, and more responsive to their needs. And so, it's been really heartening to see that provincial governments have responded and embraced PCI as a way to improve their competitiveness. Because when provinces are more competitive, Vietnam overall is more competitive. And that helps the United States as well because our two economies are increasingly intertwined with each other.

Workforce development is very important in preparing young people and workers here for the jobs of the 21st century, digital transformation, and digital skills. These are all really important ways, as Vietnam transforms economically, for its workers to transform as well. And this is something on which the United States government is very pleased to be able to partner with Vietnam, the government at the central and provincial levels, as well. So, workforce development, training, skilling, ensuring workers have the capabilities and the skills they need to compete in the 21st century, as you said after COVID-19 and in the new normal.

Mr. Nguyen Xuan Ky, Secretary of Quang Ninh Provincial Party Committee

PCI, annually surveyed, is not only a reliable information channel for the government of Quang Ninh to capitalize on and analyze feedback from the business community on the quality of economic governance, improve the business investment environment and enhance the provincial competitiveness, but is also a local brand, a resource, a driving force for rapid and sustainable development. The political goal approved by the 15th Provincial Party Congress is “Every year, the province maintains its leadership in PCI, PAR Index, SIPAS and PAPI in the country”.

With the perception that “what cannot be measured cannot be reformed”, “improving the business investment environment, administrative reform and provincial competitiveness is only a starting point and there is no ending point at all”, the motto that “gaining business trust is difficult but maintaining, nurturing and continuing to develop it to new highs is even harder”, we are not subjective or complacent with what we have achieved, but will work further to promptly figure out difficulties and challenges of the business investment environment to find ways to remove and solve them.

With its top PCI rankings in the country, Quang Ninh province defines a higher role and responsibility, requiring the province to actively adapt safely, flexibly to, and effectively control the COVID-19 pandemic; uphold responsibility in building a government with integrity, action, innovation and service; make the most of all opportunities to rapidly complete digital transformation and promote green growth; always create the best conditions for businesses and investors to find different opportunities.

Mr. Le Duy Thanh, Chairman of Vinh Phuc Provincial People's Committee

Vinh Phuc ranks 5th in the PCI rankings in 2021. This is just the first step for the province to make further progress in the coming years. What is important is the quality of administration and service provided by governments at all levels for businesses and people in the coming time. Business and public satisfaction is the most important goal when the province cuts unnecessary administrative procedures.

In 2021, authorities of Vinh Phuc province conducted eight major surveys, including five online surveys to collect business feedback on difficulties in commodity distribution, access to credit, employment, labor and seeking policy solutions on business support during the COVID-19 outbreak. These efforts helped Vinh Phuc improve its scores and rankings in a series of component indices such as Time Costs (ranked 3rd in the country), Informal Charge (3rd), Fair Competition (7th) and Land Access (7th).

By Quynh Anh, Vietnam Business Forum