What do you see in the PCI ranking?

The quality of provincial economic management increases year by year.

According to the 2023 Provincial Competitiveness Index (PCI) Ranking recently announced by the Vietnam Federation of Commerce and Industry (VCCI), Nghe An province scored 65.71 points, ranked 44th, down 21 places compared to 2022. With this ranking, Nghe An ranked 3rd in the North Central region (after Thanh Hoa province and Thua Thien Hue province - Top 30).

First of all, it must be affirmed that over the past 19 years, the PCI Report has basically reflected the actual quality of economic management of provincial-level localities; including the building of a favorable business environment for the development of private enterprises along with the administrative reform (AR) efforts of that locality.

According to the PCI Report, the PCI results in 2023, compared with the past 18 years, show that the quality of economic management and improvement of the provincial business environment tends to improve over time. This trend can be clearly seen through the median PCI and original PCI scores of the provinces over the years.

Specifically, the PCI Index score in the median province of the whole country in 2023 increased by nearly 1.44 points compared to 2022. This is the 7th consecutive year that the median province in PCI has a score above 60. The original PCI score in 2023 in the median province reached 66.57 points, 1.12 points higher than the original PCI score in the median province in 2022, marking a continuous improvement from 2016 to present.

This coincides with the time when the Government began issuing a series of annual Resolutions on improving the business environment and enhancing national competitiveness (Resolution 19 on tasks and solutions to improve the business environment and enhance national competitiveness, Resolution 02 on the same topic, etc.).

In 2023, PCI Nghe An has 5 component indices that have dropped in rank compared to the results of 2022, including: Land access, Time costs, Informal costs, Fair competition, Legal institutions and Security and order. However, there are many component indices that have increased in score notably such as: Market entry, Transparency, Business support policies and Labor training.

It can be said that thanks to the attention and determination in improving the business environment and enhancing provincial competitiveness, Nghe An's PCI Index has had many positive changes. In terms of attracting resources, in the past 2 years, Nghe An has continuously ranked in the Top 10 nationwide in attracting foreign direct investment (FDI). In 2023, for the first time, the total FDI capital in Nghe An province exceeded the 1.6 billion USD mark and ranked 8th among the localities attracting the most FDI capital in the country.

According to the Socio-Economic Report for the first quarter of 2024 announced by the Nghe An Statistics Office, investment attraction continues to be a highlight in the province's socio-economic picture with more than 14,626 billion VND flowing into Nghe An. This year, Nghe An aims to continue to be in the top 10 localities attracting the most FDI in the country. On April 4, 2024, the Provincial People's Committee issued Plan No. 260/KH-UBND on the implementation of Resolution No. 02/NQ-CP dated January 5, 2024 of the Government on key tasks and solutions to improve the business environment and enhance national competitiveness in 2024. The province has been determined and making efforts to implement many effective solutions to build Nghe An as a reliable destination for investors, including foreign investors.

Many component indexes improved

Returning to the PCI Index, there are 3 "worrying" component indexes of the PCI Index in 2022: Market Entry, Business Support Policy and Labor Training have increased significantly (from 6.77 to 7.33; 6.64 to 7.56 and 5.05 to 5.65 points, respectively). The score of the Business Support component index in 2023 has the strongest improvement compared to the 2022 results in 10 CSTPs. Specifically, the average score of this index in 2023 nationwide reached 6.39 points, an increase of 0.6 points compared to the 2022 results; while this Index in Nghe An reached 7.56 points, an increase of 0.92 points compared to the previous year. Those are remarkable numbers.
In addition, market entry procedures are also considered more favorable by businesses. Businesses continue to record positive changes in handling administrative procedures (TTHC) in business registration in Vietnam in general and Nghe An in particular.

In terms of the Market Entry component index, Nghe An only achieved 6.77 points in 2022 compared to 6.99 points in 2021. In 2023, this component index reached 7.33 points, an increase of 0.56 points compared to the national average score of 7.31. To achieve this, the province has made great efforts in implementing administrative procedures related to business registration and conditional business licensing procedures.

The Labor Training Component Index is the lowest Index in 2022 of the Nghe An PCI Index, determined by taking opinions from businesses through 11 criteria. However, in 2023, this index reached 5.56 points, 0.6 points higher than the 2022 result. Thereby, we can see that the labor force in the province has gradually met most of the needs of businesses; general education and vocational training are gradually improving.

Also according to the PCI Report, the results of the 2023 business survey show that anti-corruption and anti-negativity activities continue to make progress. In 2023, this index reached 7.08 points, up from 7.01 points in 2022 and 6.99 points in 2021, marking a series of continuous increases since 2015.

Through the CPI index, the main features of provincial economic management can be observed from the changes in the scores of 10 component indexes such as: Business support has many positive changes, market entry procedures are more favorable, unofficial costs continue to decrease, and administrative procedure reform has achieved many positive results.

Some other opinions expressed the view that PCI is the experience of enterprises when carrying out administrative procedures at departments and branches, so in reality there is always a gap between policy and practice, between declarations and actions of subordinate agencies, that is the difference of the PCI Report. That, PCI is not absolutely accurate but has statistical significance, reflects the business environment, and provides specific information from a certain angle to the locality.

But the PCI’s advantage is to convey the message that local authorities need to further improve the quality of management, be open, transparent and listen to businesses. From there, it will encourage localities to improve the business environment to attract investment, create jobs, and develop the local economy and society; and Nghe An is no exception.

It should also be noted that although PCI is used to evaluate and rank Vietnam's provincial and municipal governments on the quality of economic management and business environment, PCI is only a reference channel and a reform tool, so localities should not pay too much attention to rankings./.