PCI 2016: Danang continues to take the lead and Hanoi increases by 10 places

Da Nang Customs quickly investigates the case of a passenger accusing customs officers of harassment

Improving national competitiveness

CPI in December 2016 increased by 4.74%

Enterprises further trust in improving the business environment of locals. Photo: H.D

On March 14, 2017, in Hanoi, the Vietnam Chamber of Commerce and Industry (VCCI) and the United States Agency for International Development (USAID) have jointly organized the Announcement ceremony of PCI 2016.

Prosperous business environment

Accordingly, after the fourth consecutive year and the seventh time taking the lead, Da Nang once again earns the first rank. The second rank is Quang Ninh province, which increased by 1 place higher than last year and for the first time this province has reached this rank, which brings Dong Thap down to the third rank after 2 years in the second rank. Surprisingly, in this year is the return of Binh Duong in the group of top 5 provinces, after a long period in the middle group.

In particular, PCI 2016 recorded a surge of 10 places of Hanoi Capital compared to 2015, to 14th rank; Ho Chi Minh City reduced 2 places to the 8th rank. In addition, this year’s index also recognized the improvement of the provinces under the Central.

According to the PCI 2016 rankings, Vinh Long, Thai Nguyen, Vinh Phuc and Quang Nam are among the top ten in the country.

This year, at the bottom of the index is still the localities in mountainous areas such as: Cao Bang, Lai Chau, Dak Nong, Bac Kan, Ha Giang. However, as Mr Dau Anh Tuan - Director of VCCI Legal Department stated while a few provinces in the higher group achieved some significant breakthroughs, some the provinces at the bottom of the rankings develop faster and more evenly.

The PCI 2016 report also showed signs of improvement in Vietnam's business environment. The proportion of private enterprises increased the scale of capital investment continued to increase slightly (11%), the average capital scale of enterprises highly increased, with an average of 18.1 billion vnd, nearly two billion vnd higher than 2015. The percentage of enterprises recruiting more labor was 13%, almost doubling in 2013. In 2016, the rate of enterprises declaring losses also decreased more than 1% compared to 2015, down to 23%.

This year's report also pointed out the 10 most attractive investment destinations for Vietnamese private enterprises: Ho Chi Minh City, Da Nang, Hanoi, Binh Duong, Can Tho, Lao Cai, Bac Ninh, Dong Nai, Hai Phong, Khanh Hoa.

According to the forecast survey for 2006-2016, Mr. Dau Anh Tuan said, 57% of enterprises said that provincial authorities were active and creative, 71% of enterprises said provincial authorities were flexible within the law, 44% of businesses thought that the provincial authorities had positive attitude towards the private sector.

However, a worrying trend in this period is that 66% of businesses think that they have to rely on "relationships" to access information, 66% of firms have to pay non-official fees; 42% of enterprises said that the province prefers to attract FDI rather than develop the domestic private sector; 38% of local businesses favor local corporations and State-owned corporations; 41% of businesses are afraid of corruption, and evading arrest.

From the results above, Mr. Dau Anh Tuan suggested that localities should strive to improve transparency, simplify administrative procedures, reduce non-official costs, and create a fair business environment for the private sector and strengthen confidence in the legal control system. "Improving the quality of economic management, and creating a favorable business environment, and smooth administrative procedures will bring long-term benefits to localities," said by Mr. Dau Anh Tuan.

Enterprises are more active in the environmental issue

This year's PCI 2016 report also have a whole section on foreign investors. The highlight is that foreign investors continue to be optimistic about the Vietnamese business environment, with transaction costs being recorded at a low level in Vietnam, many indicators of small corruption have the tendency to decrease.

However, up to 24.8% of enterprises taking part in the survey reported that the rate of inspection was unnecessary (over 8 times/year). Besides, these enterprises also reported that the average time to complete the Customs clearance procedures for exported goods is 1 day; the average time to complete the Customs clearance procedures for imported goods is 2 days.

Prof. Dr. Edmund Malesky from the Duke University (USA), the Head of the investigation Board of foreign directly invested enterprises, said that although the preferential treatment for SOEs is significantly reduced, it is still a concern for FDI firms. However, legal changes, and reforms over the past two years have created a friendly environment and increased the optimism and prospects for greater business expansion of FDI enterprises.

In particular, the PCI 2016 stressed the enterprises’ perception on environmental issues, with 20% of companies reporting that environmental pollution negatively affects business operations, especially with non-manufacturing businesses are most concerned about environmental issues.

Speaking more about this issue, Prof.Dr. Edmund Malesky said that the message must choose either economic growth or the healthy environment is the wrong opinion. As a result of the survey, most businesses believe that environmental protection is an important issue and willing to pay a reasonable cost for specific activities as well as to apply more legislation to avoid pollution and many enterprises have actively take measures to respond to environmental pollution.