Assessing Thanh Hoa Business Environment from PCI

12:47:18 PM | 16/9/2016

The provincial competitiveness index (PCI) with 10 component indices is now considered a useful tool for local governments to assess and adjust administrative activities. In the past 10 years, Thanh Hoa province’s PCI rankings climbed from the lower half to the upper. Vietnam Business Forum has an interview with Dr Doan Duy Khuong, Vice President of Vietnam Chamber of Commerce and Industry (VCCI) on this issue. Ngo Khuyen reports.
How do you assess Thanh Hoa province’s significant progress in PCI rankings in recent years? What do you think about its business and investment environment?
In 2006, Thanh Hoa province scored 45.30 points to stand at the 55th position out of 63 provinces and cities ranked. Although the province did not pay much attention to VCCI's survey results, it was clear that the outcome did not meet the expectations of the local government. Its rankings improved only slightly from 2007 to 2011, because the province lacked strong determination and groundbreaking solutions.
But, its PCI rankings jumped to the top group since 2011, especially in the latest three years. It scored 61.59 points to secure the eighth position 2013, had 60.33 points to rank 12th in 2014 and returned to the Top 10 group with 60.74 points in 2015, ranking 10th out of 63 provinces and cities surveyed.
The above figures partly reflect the significant efforts of the provincial government to improve governance. But from a wider perspective, being the third largest area and the third largest population in the country with a low starting point of economical development, uneven development level (it has seven out of the 62 poorest districts in the country) and unbalanced administrative capacity, we can see its endeavours: Great political determination comes with firm action along with steady and continuous steps.
In recent years, the province has in fact carried out various measures for the purpose, like adjusting, supplementing and building new synchronous plans; reviewing and completing mechanisms and policies in order to free up resources and attract investment, reforming administrative procedures to improve and facilitate investment and business activities.
Those efforts have been translated into reality. In addition to PCI, the Provincial Public Administrative Reform Index was among Top 25 provinces and cities nationwide. Particularly, the province has attracted 705 investment projects (including 32 FDI projects) with a total registered investment capital of VND132 trillion and US$2.57 billion, bringing the total investment value to VND327 trillion in the 2011-2015, an increase of 3.9 times over the 2006-2010 period. Many big domestic and foreign companies have a presence in the province, evidence of the rising appeal of the local investment and business investment.
But in the 2016 - 2020 period, the province must ensure completeness, accuracy, publicity, transparency and timeliness of information provided for investors; continue to accelerate administrative reform with a focus placed on applying information technology to administrative works at all levels and agencies, especially procedures to land access for businesses; step up site clearance and hold regular dialogues to remove difficulties and obstacles against enterprises and support start-ups, according to Resolution 35/NQ-CP of the Government.
Thanh Hoa was one of the first provinces to sign a commitment to creating a favourable business environment for enterprises with VCCI on June 1, 0216. What prospects will this action open for the investment and business environment?
Dated May 16, 2016, the Government issued Resolution 35/NQ-CP on business development support to 2020. This resolution realised recommendations from the business community and proposals from ministries and branches at the Prime Minister's Meeting with enterprises on April 29, 2016. This is a far-reaching resolution, not only for 2016 but for the 2016 - 2020 period, and put forth important business principles: Enterprises are free to do business, and the State treats enterprises equally and sees them as subjects to serve, not subjects to govern. To bring Resolution 35 to life, ministries, branches and localities are urgently specifying and building action programmes to implement it with clear objectives, roadmaps and targets.
Based on the direction of the Government, on June 1, 2016, the Thanh Hoa Provincial People's Committee and VCCI signed a commitment to creating a favourable business environment for enterprises. Accordingly, Thanh Hoa province will cooperate with VCCI to carry out measures to further improve the investment and business environment towards transparency and openness for investors and enterprises in the spirit of Resolution 19-2016/NQ-CP, dated April 28, 2016 of the Government, on key tasks and measures to improving the business environment and enhancing national competitiveness in two years, from 2016 to 2017, with a vision to 2020. The provincial government and VCCI will also support enterprises to increase investment, production and business operations; provide favourable conditions for them to operate effectively and develop sustainably. The two sides also agreed to host annual meetings, exchange assessments and propose measures to better the business environment and enhance provincial competitiveness. Thanh Hoa was also among the first localities to sign such a commitment with VCCI after Hanoi, Ho Chi Minh City, Quang Ninh and Da Nang. Moreover, with the desire for a better future of the province, we have high expectations for an open investment and business climate in the coming time.
The process of improving the investment and business environment in local areas still meets a number of "bottlenecks", especially in such areas of land and construction permits, etc. What do you think about this?
 According to PCI surveys, in many provinces and cities, land access and construction permission cause major nuisances to businesses. About 7-8 out of 10 provinces and cities, the Departments of Natural Resources and Environment report that they have made a lot of efforts, but the outcome is always lower than other localities. This is partially caused by changeable, inadequate and overlapping policies and regulations on land and land management, especially since the Land Law 2013 came in force. Poor land planning and long-time land clearance and compensation also drag on the progress of projects. Another issue is administrative procedures where construction permission procedures are quite complicated and the most time-consuming. Before 2010, the Ministry of Construction announced 33 steps of construction procedures and sought ways to reduce them. Unfortunately, more procedures, even more complicated, were introduced when it tightened control over this sphere. In Resolution 35/NQ-CP, the Government assigned the Ministry of Construction to amend regulations on construction permits to reduce the time and decentralise authorization of design evaluation and estimation. These are great expectations of construction companies.
Indeed, construction licensing is a bone of contention not only in Thanh Hoa province but also in other localities, and this sparked the heated discussion between the Thanh Hoa Business Association and the Department of Construction. Resolution 35 of the Government aims to remedy such situations and create motivations and expectations for enterprises. After the incident, VCCI sent its officials to Thanh Hoa to assist the province to introduce satisfactory solutions to ensure administrative discipline and create conditions for enterprises to have a favourable investment and business environment. Of course, there are still a certain different opinions over administration of State agencies and investment operations of enterprises. To prevent such unpleasant incidents, provincial and local authorities should hold more dialogues with businesses to understand their aspirations and difficulties and work together for best solutions. Then, we can realise the target of imposing close administration and building a serving government in order to encourage enterprises to boost production and business investment.