PCI & PGI 2023 Report

Vietnamese Provincial Competitiveness Index (PCI) and Provincial Green Index (PGI) 2023 Report announced.

The Vietnam Chamber of Commerce and Industry (VCCI) in coordination with the United States Agency for International Development (USAID) on 9th May organized the announcement ceremony of the Provincial Competitiveness Index (PCI) Report and the Provincial Green Index (PGI) Report in 2023.

The 2023 PCI & PGI Report is a collaborative research product, conducted annually by VCCI with assistance from the United States Agency for International Development (USAID) and private sector partners, to promote an enabling and environmentally friendly business climate in Vietnam. The report is expected to provide state agencies at all levels with policy indications that are crucial to their policy formulation and managerial functions.

This year, the research team presents the second reiteration of the Provincial Green Index (PGI) in Chapter 2 of the Report. Like its cousin, the PGI aggregates the perception of businesses into a common voice to communicate their views on environmental policy to national and local decision-makers. This index evaluates and ranks provinces’ environmental policy from the perspective and behaviors of businesses to promote better business behavior and practices, including the application of new green technologies.

Mr. Pham Tan Cong, Chairman and President of VCCI. Photo: congly.vn

In 2023, 9,127 domestic private firms in all 63 provinces answered the full survey. Firms are selected using random sampling to mirror provincial populations. Stratification is used to make sure that firm age, size, legal type, and sector are accurately represented. The survey also includes 1,549 FIEs from 54 different countries and territories with a focus on 25 provinces and cities with the highest concentration of foreign direct investment (FDI). The highest concentration is businesses from Asia, especially South Korea (28.8 percent), Japan (23.0 percent), and China (10.4 percent).

The PCI 2023 Report and 7 findings

Quang Ninh continues to be the leading locality with 71.25 points on a scale of 100. It is the 7th consecutive year Quang Ninh leads PCI. Additionally, Quang Ninh continues to effectively implement business support programs, with its Business Support Policy subindex scoring 7.72 points, ranking second place nationally. The province is also recognized for its efforts to alleviate informal costs for businesses, ranking third in the country on the Informal Charge subindex score (7.72 points).

This year’s PCI runner-up belongs to Long An province. With a big step forward in score (2,49 points) and up to 8 places compared to 2022, Long An province won second place in the rankings with 70,94 points. The next positions in the Top 5 of the PCI 2023 rankings are Hai Phong (70,34 points) and Bac Giang provinces (69,75 points), Dong Thap (69,66 points), respectively…

The main features can be noticed through the changes in the scores of the ten PCI subindices with seven key findings, including:

1. Business support policy implementation changed positively;

2. Informal charges continue to decline;

3. Market entry procedures are easier to follow;

4. Administrative procedure reforms achieved many positive results;

5. Access to land is declining;

6. Domestic SMEs expect a fairer business environment;

7. Proactivity of provincial officials needs to be revitalized.

The PGI 2023 Report and challenges found

the Provincial Green Index (PGI) complements the PCI by balancing growth objectives with a sustainability orientation. Vietnam’s economic success has been accompanied by increasing climate and environmental threats. The long-term health and welfare of the citizenry depend on plotting a path to sustainable economic growth that allows the economy to thrive while protecting Vietnam’s vital environmental heritage.

There are four subindexes: 1) Pollution and Disaster Resilience; 2) Regulatory Standards; 3) Leadership & Assistance; and 4) Incentives & Support Services. Each subindex receives an equal weight of 25 percent.

Thus, the total possible score of the pilot PGI equals forty points. Provinces are rank ordered from top to bottom, so the best-performing province is on the far left. Quang Ninh, despite not ranking first in any individual index, ranks first overall due to its cumulative performance across all four subindices, achieving a total score of 26 points. It is followed by Da Nang (25.66), Dong Nai (24.71), Hung Yen (24.59), and Ho Chi Minh City (24.2).

The Report found out there are challenges awaiting leaders trying to make their provinces greener.

The first impediment is limited resources and capacity. The types of programs needed are expensive and require extensive scientific knowledge. Provincial leaders will certainly need financial and technical assistance to rise to these formidable challenges.

The second challenge is spillover; while provinces might design and implement sterling policies within their own borders, they can do little about pollution and environmental risks caused by their neighbors.

The third major challenge is the market incentives of businesses within provincial borders. Provinces with business populations facing consumer pressure to make green upgrades have a far easier time excelling on the PGI than others. Export-oriented firms, who often sell to developed markets with higher levels of environmental regulation and more eco-conscious consumers, spent the most on upgrades.

The Report also insists on the necessity of further progress on guiding legal documents for environmental standards. At the time of the 2023 PGI survey, many of the critical, guiding documents for Vietnam’s environmental transition, including the 2020 Law on Environmental Protection, the National Strategies on Environment Protection and Climate Change, and the National Strategy and National Action Plan on Green Growth were in effect for only 1.5 years.

Finally, education. Educational programs can assist Vietnamese consumers in understanding the importance of environmental upgrading, encouraging them to reward green businesses and hold dirty businesses accountable for contributing to pollution and environmental degradation. Environmental consciousness in Vietnam is beginning to change in a positive direction with more citizens willing to trade some immediate economic benefits for long-term environmental sustainability.

The PCI is designed to assess the ease of doing business, the quality of economic governance, and the effectiveness of administrative reform efforts in 63 provinces and municipalities in Vietnam. The PCI strives to augment the collective voice of investors in Vietnam regarding economic governance in provinces where they invest and in the country as a whole. The full report of PCI & PGI 2023 can be downloaded here.

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