HCMC – The Vietnam Provincial Competitiveness Index (PCI) 2012 sees a dramatic fall of scores across the board, indicating a negative sentiment among the business circle on the quality of provincial economic governance and business environment.

The weighted score for a median province dropped from 59.15 points in 2011 to 56.2 in 2012, the lowest since the PCI was revised in 2009. For the first time no province managed to reach 65 points, the excellent level achieved by top performers such as Binh Duong, Danang, Lao Cai, Bac Ninh or Dong Thap in the past scoreboards.

Dong Thap led the 2012 index, earning 63.79 points, followed by An Giang and Lao Cai, the top place getter in the previous scoreboard.

Long An and Bac Ninh were also among the best performers. Binh Dinh and Vinh Long were able to gain momentum after a fall in 2011.

Meanwhile, top-rank provinces in previous scoreboards such as Danang and Binh Duong dived drastically this time.

PCI 2012, based on a poll of 8,053 privately-owned and 1,540 foreign-invested enterprises in 63 cities and provinces, reported the quality of economic governance really declined.

Provinces still made efforts such as reduced time for business registration certificates, less frequent business inspections, reduced time for land-use right certificates and less informal charges.

However, respondents wanted to see more reforms crucial to their existence during the business process. But none of the localities could meet the demand.

The most pervasive problems relate to indiscriminate approval of investment projects leading to failed planning, and expansive and wasteful public investment and spending.

Enterprises also urged local authorities to carry out more reforms in business-related issues such as reduced corruption, protection of property ownership and better legal institutions. Among their biggest obsessive preoccupations are the risk of land withdrawal and inadequate land compensation, which have seen no significant reforms.

Respondents’ optimism has plunged dramatically in recent years, from 76% in 2006 to the record low of 33% in 2012.

Business confidence suffered a major setback after several banking tycoons were arrested on August 20, 2012. Within the 20 days that followed, confidence of domestic and foreign investors declined by a half, according to PCI 2012.

An unprecedented business efficiency decrease in 2012 exerted a tremendous influence upon enterprises’ confidence on business expectations and the quality of provincial economic governance.

Only 6.5% of the respondents in median provinces said they had boosted investment scale and 6.1% recruited more employees. Less than 60% reported profits and 21% reported losses.

The confidence decline was clearly shown by business expansion plans. Only 32.7% of privately-owned and 33% of foreign-invested enterprises said they had plans for business expansion, versus 45.5% and 47%, respectively in 2011.

Source: SaigonTimes.