VietNamNet Bridge – Analysis provided by the 2012 provincial
competitive index (PCI) has revealed a sharp decline in economic governance
across the country, leading to calls for local authorities to hasten reform.
The US Agency for International
Development (USAID) and the Viet Nam Chamber of Commerce and Industry (VCCI)
held a ceremony in Ha Noi yesterday, March 14, to jointly reveal the results of
last year's PCI, now in its eighth year.
Dong Thap ranked as this year's
number one province, followed closely by An Giang and Lao Cai. Meanwhile, top
performers from previous years, such as Binh Duong and Da Nang, slipped in this
year's index. The rural mountainous provinces of Dien Bien, Tuyen Quang and Cao
Bang finished bottom of the rankings.
The report, based on a survey of
8,053 domestic firms and 1,540 foreign-invested enterprises across 63
provinces, showed that economic governance actually declined in the past year.
The median score decreased from
59.15 last year to 56.2 this year, the lowest mark since 2009.
In addition, not a single
province this year reached the "Excellent" threshold of 65 points –
the first time this had ever occurred in the PCI.
In addition, the report found
that both foreign and domestic firms were far more negative about their
prospects than in previous years. This year, 33 per cent of respondents said
that they wished to expand their business in comparison to 76 per cent in 2006
– a historic low.
According to Dau Anh Tuan from
the VCCI, "business performance was reported at an all-time low this
year" with only 6.5 per cent of respondents saying that they had increased
operations and fewer than 60 per cent claiming to be profitable.
In comparison, the figures
recorded in 2007 were 27 per cent and 82 per cent respectively.
VCCI President Vu Tien Loc said
that some improvements had been made due to the implementation of
"easy" reforms such as reducing waiting periods for business licences
and making inspections more efficient.
However, reforms making
governance more transparent and fair failed to come into being last year.
According to the report,
businesses believe that access to provincial planning documents is purposefully
difficult and unfair and informal charges and fees are crippling their
operations.
Alarmingly, the report also
revealed that 42 per cent of firms admitted to paying commission to government
officials to ensure they won a contract, a dramatic 23 per cent rise on the
figure recorded in 2011.
Regarding the views of foreign
investors, the report noted a growing pessimism. Business confidence and
performance were at their lowest levels since the survey first began, with only
33 per cent of foreign–invested firms expecting to expand their business over
the next two years.
Profitability, capital and labour
growth in the foreign sector were lower than in previous years.
The arrest of the former vice
chairman of the Asia Commercial Bank Founding Council, Nguyen Duc Kien, on
August 20 last year, sent a strong signal to investors that Viet Nam was facing
severe economic difficulties.
The report found that within 20
days of the news, both foreign and domestic investor confidence in the country
reduced by half.
Further analysis revealed that
respondents believed that the crisis was macroeconomic in nature. Forty-eight
per cent of foreign investors consider macroeconomic instability as one of the
top three primary risks they face in Viet Nam.
"Viet Nam should focus
reforms on mechanism-related issues, such as improving transparency,
restructuring the real estate market, enhancing corruption prevention and
increasing the quality of human resources to create an advantageous business
environment for enterprises," Loc said.
Source: VNS
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