Fundamental solutions for PCI Nghe An

Effortstireless

Recognizing the importance of the PCI Index, since 2012, Nghe An province has promptly issued and implemented the Project to improve and enhance the PCI Index with many synchronous solutions.

Since 2014 and in recent years, Nghe An's PCI Index has had positive changes, always being in the good group and leading the North Central region. In 2021, Nghe An's PCI score was 64.74 (up 0.01 points compared to 2020), however, the ranking dropped 12 places from 18 to 30 in the National PCI Index Ranking Summary Table.

PCI Nghe An Score Chart from 2006 to 2022. Photo: Thanh Duy

In the context of 2022, although the Covid-19 pandemic has subsided, its consequences still severely affect the socio-economic life and the management of the provincial government has also encountered many difficulties and obstacles. The fact that PCI Nghe An achieved a score of 66.6 (an increase of 1.86 points compared to 2021), surpassing 7 places in the Ranking is a great effort. That result shows that the level of improvement in the province's investment and business environment has changed a lot and has been recognized by the business community.

In the past 2 years, some PCI Nghe An component indices have changed significantly, such as: Transparency; Informal costs; Dynamism and pioneering of local authorities; Legal institutions and security and order; Equal competition.

In particular, the Competitiveness Index increased by 2.54 points, ranking 11th (up 51 places); Legal institutions and security and order increased by 0.91 points, ranking 33rd (up 16 places); Informal expenses increased by 0.48 points, ranking 33rd (up 18 places).

The investment and business environment is increasingly healthy.

According to the PCI 2022 Report, Informal Charges, Proactiveness and Initiative of Local Governments and Business Support Policies are the three component indices with the highest weight. One of the contents that the business community is interested in is the recorded trend of reducing "petty corruption", which reflects the efforts of the political system in the fight against corruption and negativity.

The proportion of FDI enterprises having to spend a significant amount on informal costs has decreased. Specifically, the proportion of FDI enterprises having to spend 5-10% of revenue on informal costs has decreased from 5% to 3.2%. A similar decline is observed in the group of enterprises spending about 1-2% and 2-5% of revenue on informal costs. The last two groups have changed in opposite directions, with an increase in the proportion of enterprises paying informal costs at less than 1%, while the proportion of enterprises reporting no payment in 2022 decreased slightly compared to 2021.

The survey results show that the scale of informal costs is gradually decreasing over the years. However, paying informal costs is still a hidden obstacle to business development in an open economy like Vietnam in general and Nghe An in particular.

Tuna processing line at Fescol Tuna Processing Factory. Photo: Quang An

Mr. Tran Van Anh - Deputy Director of Tu Tam Cooperative said that the administrative reform and improvement of the investment and business environment in Nghe An province have recently had many positive changes. In particular, the work of preventing and combating corruption with improvements in the burden of informal costs of enterprises is being focused on. According to this year's PCI Index Report, Nghe An increased by 7 ranks, in particular, the Informal Cost Component Index reached 6.97 points (an increase of 0.48 points compared to 2021), although not much, but showing more transparency in improving the investment and business environment.

The dynamism of local government is a PCI component index that accurately measures and evaluates the flexibility and creativity of the government in the process of implementing policies and laws and promptly and effectively resolving difficulties and problems of businesses and people. A notable point is that in 2022, this index of Nghe An province increased by 0.55 points compared to 2021, ranking 25th (up 33 places).

Many businesses noted that the 2022 PCI Nghe An's Equal Competitiveness Component Index had a significant leap, reaching 6.75 points (up 2.54 points compared to 2021). This is one of the 5 decreasing indexes that at the 2021 PCI Index Assessment Workshop, Chairman of the Provincial People's Committee Nguyen Duc Trung pointed out, including: Market entry; Time cost; Equal competitiveness (from 6.35 points to 4.21); Labor training; Dynamism of local government.

In reality, although the situation of unfair competition has improved a lot, it still appears in most localities at different levels, including Nghe An. This index not only decreased in 2021 but also had a lower score than previous years and 6.75 is the highest score ever.

Many experts believe that fair competition plays a very important role and is the key to the development of the private economy. For the private economic sector to become an important driving force of the economy, there is much to be done by both the State and enterprises. In particular, the State needs to create a truly equal, healthy and fair competitive environment. Not only that, it needs to be considered the focus of economic institutional reform in the coming years.

Nghe An's PCI Index ranking compared to 63 provinces and cities nationwide from 2006 to 2022. Photo: Thanh Duy

Director of VCCI branch in Nghe An - Mr. Bui Xuan Sinh highly appreciated the tireless efforts of Nghe An government over the past years, especially the years 2020, 2021 and 2022 which were heavily affected by the Covid-19 pandemic. The improvement in PCI ranking in 2022 is a testament to those efforts.

However, in addition to the improved component indexes, the government needs to face the truth, research and find fundamental solutions to increase the PCI Index ranking in the coming years.

“PCI or DDCI is just a reference channel for the business community to evaluate the economic management capacity of governments at all levels. In the long term, there must be synchronous solutions in administrative reform, improving the investment and business environment, streamlining the apparatus to be compact and effective to promote internal strength for socio-economic development,” Mr. Bui Xuan Sinh shared.

What is the solution?

According to many businesses and experts, to improve the PCI Index, Nghe An province needs to focus on important component indexes that have decreased scores, such as: Market entry; Land access; Time costs; Business support policies and Labor training; in which, the Labor training indexes (with 5.05 points being the lowest index among 10 indexes) and Market entry have continuously decreased for 3 years.

Labor training needs to be focused on. Photo courtesy of BNA

To improvePCI Index, including the component indicators as mentioned above, the province needs to focus on a number of equally important solutions such as: Enhancing the role and responsibility of leaders in handling harassment and troubles for people and businesses; promoting the dynamism and creativity of leaders at all levels to support and develop businesses.

In addition to the Steering Committee for Administrative Reform, it is necessary to establish a PCI Steering Committee, issue regulations, and assign specific responsibilities to each member in management and operation at the unit; coordinate with VCCI and Associations and Business Associations to regularly organize dialogue sessions to resolve difficulties and recommendations of enterprises; strengthen the work of preventing and combating corruption; strengthen discipline, improve public ethics, build a team of truly clean and competent cadres, civil servants and public employees; promptly and strictly handle cases of taking advantage of positions, powers and assigned tasks to cause difficulties for people and enterprises.

Finally, in addition to solutions to improve the PCI Index, it is necessary to focus on improving the District, Town and Department and Sector Competitiveness Index (DDCI) to measure the quality of economic management and administration of district, town and department and sector authorities - authorities that have direct relations with economic establishments in the area such as business households, enterprises, cooperatives and investors./.