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Capital city seeks to be more competitive
The capital city of Hanoi is one of the country's leading destinations for foreign investment, but its competitiveness ranking has remained either low or average over the past few years, forcing the local government to take action to improve the image.
After the Vietnam Chamber of Commerce and Industry (VCCI) released a report on the Vietnam Provincial Competitiveness Index (PCI) for 2008 at the end of the first quarter, the city began mapping out a plan to increase its place in the PCI for this year, and next.
The city ranked 31st among the country's 64 cities and provinces last year, four notches lower than in the previous year.
This downgrade was then an actual wakeup call for Hanoi because the city last year attracted US$5 billion in new foreign direct investment pledges, making it one of the top three destinations for foreign investors.
But many local private enterprises surveyed under the Vietnam Competitiveness Initiative (VNCI) last year gave low grades for the city's business climate due to time-consuming and complicated administrative procedures.
According to the VCCI survey done last year in the VNCI project, more than 35% of the respondents said the quality of work at state agencies had not improved over the years.
This explains why five of 10 composite sub-indices of the PCI, which measures economic governance for private sector development, got low grades. These five indicators were land access and security of land tenure, legal institutions, state-owned enterprise bias, informal charges and pro-activity of provincial leadership.
And a report by the city admits the low rankings of these indicators.
At a workshop in Hanoi on Tuesday, businesses called for the city to tackle informal charges to keep officials from harassing private enterprises because the measure of informal charges last year fell by 16 notches compared to the previous year, ranking Hanoi 48th among the 64 provinces.
The sub-index of time costs and regulatory compliance dropped to the 56th position, affecting the city's overall ranking in the PCI. Moreover, enterprises said they lacked confidence in the use of legal institutions to resolve issues involving unequal competition.
These unfavorable rankings were one of the reasons for the city to host the workshop to seek a way out to improve its competitiveness standing.
However, Le Thu Hien, a member of the VNCI research team, said whether a province was considered attractive to investors depended on three factors - the quality of infrastructure, the quality of human resources, and the distance to major markets.
It will take time to improve these factors but the city can seek a fast improvement in the way officials treat businesses. Business-friendliness among city officials got a low grade last year, at 31st.
VietNamNet, SGT
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