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| Better governance has improved the business climate across the nation |
Provinces throughout the country showed notable improvements in economic governance over the past year, creating more favourable conditions for the business community’s operations, according to the 2009 Provincial Competitiveness Index report.
The 2009 PCI, which received responses from nearly 10,000 Vietnamese enterprises about governance at the provincial level, showed that significant improvements were made in the areas of entry costs, access and security of land, time costs, labour quality and confidence in legal institutions.
The greatest improvement reported in the 2009 PCI was the time required for filling out forms and handling other bureaucratic procedures.
Time costs of regulatory compliance improved the most after several years of stagnation. The total amount of time that businesses spent on bureaucratic procedures had declined from 22 per cent to 15 per cent, while the number of hours for tax inspections fell to five hours from eight hours.
Nearly half of the responding firms said that government-required paperwork had declined in the past two years. They also acknowledged that civil servants had become more effective at dealing with bureaucratic procedures.
“The 2009 PCI highlights the importance of economic governance in improving the business environment and a key measure of the ability of provinces to attract investments, create jobs and support economic growth,” said US Ambassador to Vietnam Michael W. Michalak.
“With the global economic downturn, improved governance has become even more critical for raising business confidence,” he noted. USAID Country Representative Francis A. Donovan said that the most interesting thing about the 2009 PCI was that it had the largest number of responding Vietnamese firms.
“It indicates the great interest and concern of the business sector to voice their opinions and recommendations to local governments,” he stressed. Danang city continued to be the most preferred business destination for entrepreneurs, which was given a score of 75.96 points, slightly ahead of the southern province of Binh Duong with 74.01 points, while Lao Cai, Dong Thap and Vinh Long emerged as three of the best performers.
Other major cities remained unchanged, with middle to high scores, including Ho Chi Minh City, which took 16th place with 63.22 points, Hanoi at 33rd place with 58.18 points, Dong Nai at 18th and Ba Ria-Vung Tau at a strong 8th.
Three mountainous provinces in the northern and central regions, Cao Bang, Dak Nong and Bac Kan, were at the bottom of the rankings. “I believe that the PCI is a very good tool for foreigners to define the places they want to go, particularly if they believe efforts are being made by provincial governments to improve local business environments,” said Alain Cany, chairman of the European Chamber of Commerce in Vietnam (EuroCham).
The 2009 PCI, however, noted that there was still much work to do to improve economic governance in Vietnam, particularly in transparency. The development of high-quality human resources for enterprises has also been noted as a burning issue, which must be improved in the years ahead.
The majority of EuroCham members are doing their businesses in big cities like Ho Chi Minh City, Hanoi, Haiphong, Dong Nai, Binh Duong and Ba Ria-Vung Tau, where there are strong amounts of investments.
“Thanks to the PCI, foreign investors may discover that some other provinces may be attractive to their businesses because they are improving their infrastructure and taking some initiatives in education, or because they are becoming more transparent,” Cany said
