Press Release

May 31, 2006

The 2006 Vietnam Provincial Competitiveness Index: Driving Local Governance Reforms

Hanoi, June 1, 2006 - The 2006 Provincial Competitiveness Index (PCI) was released today at a major seminar in Hanoi attended by 200 provincial officials, local business persons and members of the media.  Having surveyed over 6,300 local firms across all 64 provinces, the PCI represents the most comprehensive survey ever of local firm perceptions of the performance of their provincial governments with regard to supporting private sector development. 

The 2006 PCI – jointly designed and implemented by the Vietnam Chamber of Commerce and Industry and the Vietnam Competitiveness Initiative (VNCI) and funded by the U.S. Agency for International Development – is a follow-on from the first PCI released in May 2005, which surveyed 2,000 firms in 42 provinces.

The first PCI release was followed by enormous coverage in the national and local media, including being cited as one of the ‘Top 10 Economic Events’ of 2005 by Vietnamese national TV news (VTV1).  Also, provincial governments moved quickly to request assistance in understanding their ranking and opportunities for effective reform, leading several donor projects to make the PCI central to their efforts to promote provincial private sector development. Thirteen provinces have subsequently received “PCI Diagnostics” from VNCI, VCCI and other donor projects.

With the inclusion now of all 64 provinces and a tripling of the amount of responses, the 2006 PCI takes a more comprehensive and decisive look at areas such as business establishment costs, transparency and access to information, inspections, confidence in legal institutions, and labor training. The 2006 PCI has received a strong response from smaller, more remote provinces not included in last year’s PCI.

This year, strong performers include Binh Duong, Da Nang, Vinh Long, Vinh Phuc, and Dong Nai. The outstanding newcomer is Lao Cai, which performed consistently well across most sub-indices. The rankings this year also show remarkable stability when compared to 2005, raising confidence in the strength of the methodology and findings.

“We do hope that provinces will regard the PCI 2006 as an opportunity to review their local business environments and to undertake necessary governance reforms,” noted VCCI President Dr Vu Tien Loc.

According to Mr Dennis Zvinakis, USAID Country Manager, “We are very pleased that the PCI is becoming a valuable resource for local governments to measure their performance and encourage the growth of the private sector and private investment in their provinces. The VNCI’s PCI initiative has in many ways become the voice of the Vietnamese private sector. Even more encouraging is that local governments are taking the findings seriously and making changes to their economic policies to encourage private sector growth. Thanks to the leadership of Vietnam’s provincial officials, strong economic growth is being more broadly shared. We are happy to see that the PCI has become a valued resource to help move Vietnam’s economic development forward.”

The results of the 2006 PCI will also be presented at the upcoming Vietnam Business Forum in Hanoi on June 5th.  Also, in preparation for continued demand from provinces for assistance, VNCI will host a donor roundtable on June 7th to discuss how best to incorporate the PCI results in various donor projects to promote effective provincial economic governance.

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