On March 14th, the Vietnam Chamber of Commerce and Industry (VCCI) announced the 2016 Provincial Competitiveness Index (PCI).
In the fourth consecutive year and 7th time in 12 years since the first PCI survey and publishing, Da Nang had the privilege to top in PCI ranking with a score of 70.
Da Nang's general score increased by 1.36 points, being 11.8 points higher than the median PCI score and having seven out of ten sub-indices increase compared to 2015. There were a number of sub-indices which underwent an incredible rise such as Pro-activity of provincial leaders (increasing by 0.89 points from 6.17 points to 7.06 points) and Policy Bias (increasing from 5.45 points to 4.77 points). Besides, scores in other sub-indices such as Labor Training, Time Cost, Legal Institutions, Informal Charges, and Market Entry were also improved. However, the other sub-indices including Land Access, Business Support Services and Transparency decreased by 0.06, 0.07 and 0.11 points respectively.
Da Nang's PCI rankings showed recognition in efficient improvement of administrative procedures of the city in 2016 such as investment certificate issuance, enterprise registration, land, labor training…
In addition to Da Nang, in the Excellent Provinces Group, the second and third place belonged to Quang Ninh (65.60 points) and Dong Thap (64.96 points). Cao Bang had lowest ranking with 52.99 points.
The PCI survey results from 10,037 private enterprises showed that the quality of economic governance in provinces and cities tended to remain improvement. Positive changes over 2015 were Pro-activity, Informal Charges, Labor Training, Policy Bias and Enterprise Registration. However, according to enterprises, administrative procedure burden, unfavorable land access and unsecured legal environment were still main obstacles to business.
The new point of PCI 2016 report is the first time that there was a chapter on enterprises' perceptions of environment issues, which showed that 45% of domestic firms and 50% of FDI enterprises believed that environmental protection was an important issue and were willing to pay a reasonable fee for specific activities as well as apply more legal rules to prevent from the pollution.
With regards to FDI enterprises' perceptions, which were collected from the survey of 1,550 businesses from 46 different countries having operations in the 14 provinces with highest FDI enterprise proximity, the result of 2016 PCI-FDI investigation revealed many improvements and preferences for investors.
In 2016, 11% of FDI businesses admitted to expand investment and 63% recruit new labour. The employment increase was the highest recorded in the PCI-FDI survey in the past five years. Legal changes created friendly legislative environment for direct foreign investors. The market entry regulation, the 2014 Enterprise Law and Investment Law together with guidance for implementation documents contributed to the remarkable reduction of market entry costs for businesses. More than 90% of FDI businesses could receive all necessary licenses to come into official operation within 3 months since starting the procedures. About 40% of businesses officially came into operation within one month, which reached the highest rate ever in Vietnam. 56% of businesses agreed that state officials abused law compliance supervision in localities in order to demand unofficial charges from businesses, reducing 10% in comparison with 2005.
However, foreign investors assumed that access to budget, planning and master planning information remained challenging. Regulations on post-registration in Viet Nam remained troublesome, especially for a few firms that experienced extraordinary inspection. In 2016, 72% of businesses revealed that they spent more than 5% of time budget to study and implement the administrative regulations, which could have been used for managing and developing businesses. About 5% of FDI enterprises were inspected over eight times. The top problematic procedures relate to tax, fee, social insurance and customs procedures.
IPA DANANG
