PCI 2023: Need for more substantial reforms in investment and business environment

The 2023 Provincial Competitiveness Index (PCI) and Provincial Green Index (PGI) surveys show clear improvements in the implementation of business support policies, cutting informal costs, and reforming administrative procedures. However, the reports recommend more substantial reforms of the investment and business environment in the coming time.

Mr. Pham Tan Cong, Chairman of Vietnam Federation of Commerce and Industry (VCCI)

Many new names appear in the PCI Top 10

On May 9, the Vietnam Federation of Commerce and Industry (VCCI) held a ceremony to announce the Provincial Competitiveness Index (PCI) and Provincial Green Index (PGI) reports for 2023. Quang Ninh is the locality topping the PCI 2023 rankings while the capital Hanoi ranks 28th.

The PCI-PGI 2023 report was developed from feedback from 10,676 enterprises, including 9,127 domestic private enterprises and 1,549 foreign-invested enterprises (FIEs) operating in Vietnam.

In this year's PCI rankings, Quang Ninh province continues to rank first with 71.25 points, the 7th consecutive year in the number 1 position.

This year's PCI runner-up is Long An province. With a big improvement in score (2.49 points) and an increase of 8 places compared to 2022, Long An province won second place in the rankings with 70.94 points. Businesses highly appreciated this locality for its efforts to cut informal costs for businesses with the "Informal Cost" component index reaching 7.74 points, ranking 2nd out of 62 localities.

The next positions in the Top 5 of the PCI 2023 rankings are Hai Phong (70.34 points) and the provinces of Bac Giang (69.75 points), Dong Thap (69.66 points)...

In addition, some new names also appeared in the Top 10 of this year's PCI rankings, including: Ben Tre (69.2 points), Hau Giang (69.17 points), and Phu Tho (69.1 points).

The group of 30 provinces and cities with the best economic management quality in PCI 2023 includes some new faces compared to 2022, namely Hai Duong, Binh Thuan, Ninh Binh, Tay Ninh, Dak Nong, Ca Mau, Tien Giang and Thanh Hoa.

Another notable point is that among the 5 centrally-run cities, only Hai Phong is in the Top 10 (3rd). Meanwhile, Can Tho ranked 14th, Da Nang ranked 16th, Ho Chi Minh City continued to hold the 27th position, and Hanoi ranked 28th.

By region, the proportion of provinces in the Top 30 of PCI 2023 is the Red River Delta (63.6% of provinces), followed by the Mekong River Delta (61.5%), Southeast (50%), Central Coast (42.9%) and Central Highlands (20%).

With the Provincial Green Index (PGI) 2023, the highest position belongs to Quang Ninh province, followed by Da Nang, Dong Nai, Hung Yen and Ho Chi Minh City.

Need more substantial reforms of the business investment environment

At the PCI and PGI Report Announcement Ceremony, Mr. Pham Tan Cong, Chairman of VCCI, said that the reports are annual publications conducted by VCCI to promote the creation of a favorable, safe, equitable and environmentally friendly business environment for enterprises in Vietnam. Accordingly, the reports recorded many positive changes by provincial and municipal authorities in their efforts to create a favorable business environment for enterprises.

The PCI-PGI 2023 survey shows a marked improvement in the implementation of business support policies, cutting informal costs and reforming administrative procedures. Notably, the application of information technology and digital solutions is bringing practical results when nearly 77% of businesses said they have reduced time and costs by performing administrative procedures online instead of in the traditional form.

However, the PCI-PGI 2023 report also shows that Vietnam's business environment still has some points of concern.

“From the feedback from businesses, it can be seen that obstacles in accessing land are increasing, the business environment is not really equal for small and medium enterprises, and the dynamism and pioneering spirit of local government officials is showing signs of slowing down,” said Mr. Cong.

According to Mr. Pham Tan Cong, businesses are also facing many difficulties in their operations. The main difficulties include finding customers, market fluctuations, policy/legal fluctuations, negative impacts of natural disasters, climate change, etc.

Along with that, the PCI report also said that the level of optimism among private enterprises is low compared to previous years. Specifically, only 27% of private enterprises said they would expand production and business in the next two years, a significant decrease from 35% in 2022. This 27% figure is also lower than the previous bottom (2012 - 2013), when the Vietnamese economy faced the double impact of the global financial crisis and domestic macroeconomic instability.

The survey data also showed that the proportion of businesses planning to reduce the scale of business or close down in the 2023 survey reached 16.2%. This figure is significantly higher than the 10.7% recorded in the 2022 survey and close to the record high of 16.6% in the 2021 survey, when Vietnam was still in the center of the Covid-19 pandemic.

“To support businesses to recover and develop in the coming time, local authorities need to implement more substantial solutions to improve the business environment, reform administrative procedures, and cut costs for businesses. The difficult economic situation requires support, dynamism, and pioneering spirit from provincial and municipal authorities. In the context of many uncertainties and fluctuations in the world situation, more than ever, businesses need stability, consistency, and trust in the development and implementation of policies and laws,” the Chairman of VCCI noted.

Speaking at the event, US Ambassador to Vietnam Marc E. Knapper said that the US Mission to Vietnam, through the US Agency for International Development (USAID), is building on the nearly 20-year partnership with VCCI to help Vietnam further enhance its competitiveness in the world market through the transition to a green economy.

By promoting institutional reforms and environmentally friendly investments, the Provincial Green Index will promote sustainable economic development as well as Vietnam’s ambitious goal of achieving net zero emissions by 2050.

Analysis of the PCI and PGI 2023 reports shows that high PGI scores correspond to better environmental quality and better ability to respond to and withstand natural disasters and climate change in localities. However, provincial and municipal authorities are facing many difficulties in finding and implementing environmental initiatives and solutions, lacking resources and professional capacity, the ability to coordinate in handling regional/inter-regional issues, or businesses do not have enough awareness and motivation to change.

Source: https://thoibaonganhang.vn/pci-2023-can-cai-cach-thuc-chat-hon-moi-truong-dau-tu-kinh-doanh-151527.html