Provincial competitiveness index: Da Nang City tops

Da Nang central City has for the third consecutive year maintained its top spot in the provincial competitiveness index (PCI 2010).

Meanwhile, Cao Bang Province that was at the bottom of PCI 2009 suddenly jumped up by 11 grades to stay at the pretty good group, to give the bottom to Dak Nong Province.



The disappointed position has now been given to Binh Duong Province. After three consecutive years, it stayed at the top (in 2005-2007) and two years at the second ranking, in 2010, Binh Duong fell to the fifth position, definitely ousted from the group of the very good operating quality.



Up to six provinces and cities this year have jumped by more than 20 levels, led by Quang Tri from 46th to 16th position. Meanwhile, Hung Yen has been backed to the 37th position near the tick on the table, ranked third from the bottom up.



With two leaders of the country’s economy, Hanoi and HCM City have seen backward movement in the rankings this year, which HCM City has dropped from the good to the pretty good class with seven levels decreased. Hanoi dropped 10 places back, located between the overall.



7,300 private enterprises and 1,155 foreign-invested enterprises participated in the survey conducted by the Chamber of Commerce and Industry of Vietnam (VCCI), giving the perceived quality of local economic operators.



Of the 6 very good positions of last year, up to now only three remains. Even some provinces and cities in the good group also have fallen by more than one.



Comparisons of business perceiving over two years showed no significant improvement in the quality of economic governance in 2010. PCI 2010 scored the weighted median of the province’s 58.02 point decline compared with 2009. It is noted that several provinces saw “free fall” from good positions.



VCCI assessed that about 20 localities issued documents implementing programmes to improve the business environment and enhancing the competitiveness of their provinces. In some localities, these programmes worked, but in some other provinces, the time to feel the positive changes may take longer.



Compared with a year ago, the business community in 2010 reported striking improvements in workforce training and business support services. Businesses’ satisfaction rate of education and workforce training quality at both the provincial median increased from 35.2 percent in 2008 to 45.45 percent in 2009 and 46.99 percent in 2010.



Meanwhile, the market penetration was the field with the biggest change over the previous PCI survey, in the 2006-2009 period, the business registration time was reduced by half on average. However, in 2010, this reform process tended to slow, some businesses on the new business registration, amendment or registration reaches all of 2009 with respectively 10 days and 7 days.



Number of papers submitted to additional businesses increased and the consequence is the median rate of enterprises in the provinces waiting more than one month to complete the legal procedures for official activities has increased from 19.35 percent in 2009 to 24.39 percent in 2010. Similarly, the percentage of businesses that had to wait more than 3 months increased from 4.44 percent to 5.77 percent during the same period.



Conversely, some areas did not show very sharp changes in the PCI survey this year, including dynamic and proactive leadership of the provinces, and the unofficial costs. The worry was that the areas of market entry costs, access to land, legal institutions, transparency and time costs tended to downgrade.



This suggested that the burden of compliance with legal regulations was growing for businesses. Scores on the transparency decreased strongly from the previous year, making it difficult for the investment decisions in the future by businesses.



According to the report of VCCI, up to 21 percent of firms admitted paying no formal business registration, 40 percent paid commissions when businesses wanted to get contracts from state agencies. With FDI, 18 percent of businesses that have engaged in “slippery” to expedite the procedures for registration and business licensing.



Analysis by the VCCI also showed that corruption particularly concentrated in the service sector with fast development speed and high profits. This contribution demonstrated review of international studies that corruption tended to concentrate in areas where there are multiple benefits and stricter regulations.



Meanwhile, the quality of infrastructure was one of the biggest barriers to investment and growth, according to most point of views from enterprises. Notably, in 2010, the state held a serious power cut, affecting people and causing damages to production and business activities of enterprises.



Average hours of power cut/business/every month during the time of the investigation of PCI 2010 (June 2010) in 2009 increased from 50 hours to 89 hours in 2010, an increase of 1.78 times. Average energy prices also rose from 796.24 dong/kWh in 2009 to 916.24 dong/kWh in 2010.



Although the number of businesses informed about the status of power cuts increased from 50 percent to 59 percent, this rate remained low and causing great damage to the business activities of enterprises such as suspending production and reducing working hours of workers, damaged equipment and machinery.

Tags: Vietnam business, Vietnam stock news

Posted by VBN on Mar 17 2011. Filed under Enterprises. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry