PCI 2011 sparks confusion over reforms
By Tan Duc - The Saigon Times Daily
HCMC – The Vietnam Provincial Competitiveness Index (PCI) 2011 to be released on Thursday in Hanoi begins to show the confusion over finding a reform breakthrough in provinces perennially appreciated by business communities.
Despite a fall in optimism in the aftermath of a slump in 2011, business communities still highly appraised improvement in provincial governance. The weighted 2011 PCI score for a median province is 59.15, the highest in the past three years.
Notably, the gap between the bottom and the top of the index has reduced significantly. Though Cao Bang still remained at the lowest position, its score rose almost five points versus 2009, whereas Lao Cai, scoring 2.5 points less than the top place getter did two years ago, was successful to displace Danang to lead the whole index.
Since its first introduction in 2005, this is the first time neither Danang nor Binh Duong was in the top place, with Lao Cai and Bac Ninh in lieu of them.
The incredible improvement belongs to Binh Phuoc and Ha Tinh which climbed to the top ten. At the same time, Binh Dinh and Vinh Long, the two provinces often occupying high ranks in previous editions, continued their sharp decline.
The above trend shows that reform policies have permeated nationwide. The bulk of them are easy areas where no substantial institutional changes or difficult compromises among local elites are required, enabling some provinces to catch up with high-ranking counterparts that had enacted these reforms earlier.
The index shows that leading provinces in the previous years began to decelerate and took little initiatives in the more difficult areas. Few improvements have been seen in more challenging areas, such as improvement of confidence in the judicial system, or improvement of the quality of the local work force.
Previous higher-ranked provinces scored slightly higher in entry costs, informal charges and legal institutions, while witnessing declines in other sub-indices. Meanwhile, the previous lower-ranked made substantial improvement across the board, except for business support services.
Transparency remains the most disappointing development, with the gap between the most transparent province and the least in 2011 doubling to nearly 1.3 points. The PCI 2011 remarks that up to 75% of the respondents, against 52% in 2007, contended that having friends or relatives in the provincial government apparatus is crucial for access to planning and legal documents.
The PCI 2011 saw both foreign and domestic respondents’ business confidence tumble down to a record low, with only 47.4% showing optimism about their business plans for the next two years, versus 76% in 2006. The most formidable challenges to encounter include rising input costs and declining access to credits.
PCI 2011 presents the latest views of some 6,900 Vietnamese enterprises on economic governance and the business environment across 63 provinces and cities in Vietnam in 2011. The project is carried out by the Vietnam Competitiveness Initiative (VNCI) in partnership with the Vietnam Chamber of Commerce and Industry under the support of the U.S. Agency for International Development.