Improving the Provincial Competitiveness Index for Thai Nguyen Province, Vietnam

The study uses secondary data collection and descriptive statistics to analyze the provincial competitiveness index of Thai Nguyen province. The province’s competitiveness index in the period 2019–2023 is in the top 30 provinces with high PCI index nationwide. Based on the assessment of the current status of the competitiveness index; the study proposes a number of solutions to improve this index in the next stages.

Introduction

The Provincial Competitiveness Index (PCI) on Vietnam’s business environment is the result of research cooperation between the Vietnam Competitiveness Enhancement Project (VNCI) and the Vietnam Federation of Commerce and Industry (VCCI). This index aims to support the improvement of the business environment in Vietnam, the Provincial Competitiveness Index (PCI) measures the efficiency of economic management and helps promote socio-economic development in 63 provinces and cities across the country. PCI assesses the level of business environment for the private sector.

In the period of 2019–2023, Thai Nguyen province has had strong directions and many policy mechanisms to improve the investment environment and enhance national competitiveness in general; and improve the business environment to create favorable conditions for businesses and investors in provinces and cities. In 2023, the province’s PCI index ranked 23^rd out of 63 provinces and cities nationwide, up two places compared to 2022, of which 5/10 component indexes increased in rank compared to 2022. However, due to the impact of the pandemic and objective factors, some of Thai Nguyen’s PCI component indexes did not meet expectations.

Methodology

Method of information collection: Secondary information for the study is collected from relevant documents such as articles, textbooks... related to the provincial competitiveness index and from the Vietnam Federation of Industry and Commerce VCCI.

Descriptive statistical method: analyze and present research data using tables, graphs, charts to assess the current status of the components that make up the provincial competitiveness index for Thai Nguyen province.

Literature Review

Provincial Competitiveness

The Provincial Competitiveness Index (PCI) is an index built to assess the business environment, economic management quality and administrative reform efforts of the governments of provinces and cities in Vietnam (VCCI (Vietnam Federation of Commerce and Industry), 2013).

Provincial competitiveness is the ability to create a favorable, open and healthy business environment in the economic development of provinces and centrally run cities. Improving provincial competitiveness is an inevitable requirement in the current innovation process. This also answers the question of why some provinces and cities are always attractive to investors (Nguyen, 2009).

Provincial competitiveness is the ability of provinces to compete to attract investment for socio-economic development based on local advantages in the relationship with other localities within the country (Phan, 2011).

Provincial Competitiveness Index is a constant concern of the central and provincial governments. Research on provincial competitiveness is to evaluate the effectiveness of management, which any local government can do because it depends on thinking, not on geographical conditions or other conditions. The more independent organizations evaluate organized entities, the more the Provincial Competitiveness Index is a measure of the level of competitiveness of a locality in attracting and supporting businesses to invest and develop in a province. The Provincial Competitiveness Index (PCI) can be considered a “collection of voices” of businesses evaluating the provincial business environment with operating businesses (VCCI (Vietnam Federation of Commerce and Industry), 2011).

In recent times, many provinces and cities have actively implemented and improved the investment environment, reformed administrative procedures to enhance provincial competitiveness to create favorable conditions for businesses to develop production and business.

Improving Provincial Competitiveness

Provincial competitiveness is a constant concern of central and provincial governments. Research on provincial competitiveness is to evaluate the effectiveness of management, which any local government can do because it depends on thinking, not on geographical conditions or other conditions. The more independent organizations evaluate organized entities, the more the Provincial Competitiveness Index is a measure of the level of competitiveness of localities in attracting and supporting businesses to invest and develop in a province. The Provincial Competitiveness Index (PCI) can be considered a “collection of voices” of businesses evaluating the provincial business environment with operating businesses (VCCI (Vietnam Federation of Commerce and Industry), 2011). In recent times, many provinces and cities have actively implemented and improved the investment environment and reformed administrative procedures to enhance provincial competitiveness to create favorable conditions for businesses to develop production and business.

Empirical Analysis and Discussion of Results

Ranking of Provincial Competitiveness Index of Thai Nguyen Province with the Whole Country

In the period 2019–2023, Thai Nguyen province has an unstable PCI competitiveness index ranking. According to the table, before 2020; before the Covid-19 pandemic; Thai Nguyen province was in a high position compared to the whole country, ranked 12/63 in 2019 and ranked 11/63 in 2020 provinces and cities nationwide. However, by 2021, the province’s PCI was downgraded to 28/63 provinces and cities nationwide (down 17 places compared to 2020). The sharp decline in the PCI index is an extremely meaningful lesson for Thai Nguyen province to perceive the province’s competitiveness through external assessments, from businesses’ assessments of the province’s investment and business environment. By recognizing the limitations and promptly overcoming them, in 2022 and 2023, the PCI ranking of Thai Nguyen province tends to increase to 23^rd out of 63 provinces and cities nationwide (up two places compared to 2022). However, this index is still low compared to the wishes and potential of the locality. The information about the national ranking has shown as Fig. 1.

Fig. 1. Ranking of provincial competitiveness index (PCI) of Thai Nguyen Province, Vietnam (VCCI (Vietnam Federation of Commerce and Industry), 2020, 2024).

Due to the impact of the pandemic and other objective factors, some of Thai Nguyen’s PCI component indexes did not meet expectations. The People’s Committee of Thai Nguyen Province issued Plan No. 151-KH/UBND of the Provincial Party Committee on improving and enhancing the PCI provincial competitiveness index of Thai Nguyen Province in 2023 (Thai Nguyen Provincial People’s Committee, 2023) and the following years to improve the business environment and enhance PCI provincial competitiveness, delegates raised existing issues such as: Awareness of the PCI index of some localities, units, and civil servants is not high; investigation and survey of enterprises are still limited. In addition, issues related to mechanisms, policies, consulting activities, and business support; Training a quality workforce as well as the professional capacity of a number of civil servants when performing public duties has not met the requirements... Although in 2020, facing the context of the Covid epidemic, with the efforts of all sectors and levels, and the support of the business community of Thai Nguyen province, the investment and business environment of Thai Nguyen province has been constantly improved, the role and position of Thai Nguyen is increasingly enhanced; the province’s PCI competitiveness index has increased by one rank compared to 2019, ranking 11^th out of 63 provinces and cities nationwide.

According to Fig. 2, when comparing the PCI index with some northern provinces that have quite similar advantages in terms of geographical location, climate... (such as Quang Ninh, Bac Ninh, Bac Giang), it shows that the PCI index of Thai Nguyen province from 2021 to 2023 is at the lowest level; while previously, Thai Nguyen’s PCI ranked higher than Bac Giang.

Fig. 2. Comparison of the provincial competitiveness index (PCI) of Thai Nguyen Province with some Northern provinces (VCCI (Vietnam Federation of Commerce and Industry), 2020, 2024).

Component Indicators that Make Up the PCI of Thai Nguyen Province

From the year 2019 to 2023, the component indicators of Thai Nguyen province’s PCI have had significant changes. Of the 10 component indicators, in 2023, Thai Nguyen has 4 indicators with increased scores, 1 index with the same score and 5 indicators with decreased scores compared to 2022. Time costs to implement State regulations; informal costs; dynamism and pioneering of provincial leaders; labor training. The index that maintains Thai Nguyen’s score in 2023 is market entry. 5 indicators with decreased scores include: Access to land and stability in land use; transparency and access to information; fair competition; business support services; legal institutions and security and order.

Thai Nguyen ranked in the Fair group among the provinces and cities of the country on the PCI ranking index with 64.81 points in 2021 with the component indexes increasing in points such as land access; fair competition; legal institutions and security and order. However, due to the impact of the pandemic and objective factors, some of Thai Nguyen’s PCI component indexes did not meet expectations.

To improve the PCI Index, Thai Nguyen attaches importance to and pays attention to evaluating DDCI, in addition to the effects of Digital Transformation.

Market entry: The PCI index on market entry criteria decreased from 7.36 in 2019 to 8.35 in 2020; then reached 7.45 in 2023.

Land Access: The reason why the Land Access criterion has not improved is because the indicators have decreased in points, including some indicators that have decreased quite deeply, causing the total score to decrease, such as an increase in the number of enterprises assessing risks in land acquisition, slow site clearance, unfavorable and untimely provision of land information; difficulties in carrying out administrative procedures... In addition, the province’s clean land fund is still very modest; the recovery of “suspended” projects is slow; attention has not been paid to planning for business activities in residential areas, making it difficult for small and micro enterprises to access; unofficial costs remain high... for projects where enterprises have to negotiate with the land users themselves, making land access very difficult, the reason being that people often demand prices much higher than the prices prescribed by the State. In addition, the number of staff working on compensation and site clearance at the district level is still small, with uneven qualifications. Table I has shown the Component indexes of PCI of Thai Nguyen province, Vietnam.

Table I. Component Indexes of PCI of Thai Nguyen Province, Vietnam

No.		Year
	Component	2019	2020	2021	2022	2023
1	Market entry	7.36	8.35	6.83	7.45	7.45
2	Land access	6.07	6.68	7.27	7.90	7.27
3	Transparency	6.69	5.85	5.80	5.97	5.56
4	Time costs	6.63	7.70	7.03	6.53	8.35
5	Informal costs	6.31	6.89	6.70	6.91	7.70
6	Fair competition	6.59	6.29	6.67	5.50	5.42
7	Dynamism	6.55	7.39	7.36	6.67	7.11
8	Business support services	6.05	5.63	5.62	5.41	4.88
9	Labor training	7.88	7.42	6.98	6.33	6.95
10	Legal institutions	7.13	7.34	6.40	7.91	7.63
	PCI score	67,71	66,56	64,81	66,10	67,48
	Ranking	12	11	28	25	23

Transparency: After 2019 and 2020, the transparency index in access to information had a corresponding assessment score of 6.69 points and 5.85 points, then by 2023, the transparency component score tended to continue to decrease. In 2023, the transparency criterion reached 5.56 points, down 0.41 points; this indicator of Thai Nguyen province reached 29th place out of 63 provinces and cities nationwide and this was the year with the highest score in the whole period. However, by 2020, this indicator decreased to 5.85 points and only reached 32nd place out of 63 provinces and cities nationwide.

Time cost: According to Table I, the time cost criterion has changed significantly in the period 2019–2023. In 2019, the score of the time cost criterion reached 6.63 points; by 2023, the time cost score reached 8.35 points, and achieved the highest score among the component indexes that make up the PCI.

Through the Time Cost index in the PCI provincial competitiveness index, it shows that administrative procedure reform, time to process business records and, most importantly, the service attitude of civil servants in the provincial government apparatus must always be maintained and improved.

Informal costs: Informal costs tend to increase in the period 2019–2023. According to Table I, this index increased from 6.65 points in 2019 to 7.7 points in 2023; the highest in the whole period; achieved the highest score in the entire research period.

Fair competition: From 2019–2023, this criterion had a relatively low assessment score, with 5.42 points in 2023 being the lowest score in the entire research period. From the province’s efforts, the total score of the fair competition index of Thai Nguyen has changed, thanks to positive changes from creating conditions for the implementation of administrative procedures, licensing procedures, attracting investment in all forms in the province, from localities and FDI capital sources; creating fairness in the provision of resources as well as listening and paying attention to solving problems for businesses operating in the area (every year, provincial leaders proactively organize meetings to solve difficulties and problems for businesses operating in the province):

• Dynamism: The dynamism criterion is one of the criteria with the most obvious improvement among the components that make up the PCI index of Thai Nguyen province.

• Business support services: In the period of 2019–2023, the business support service criterion of Thai Nguyen province tends to decrease. In 2019, this criterion reached 6.05 points, but by 2023 the score dropped to 4.88 points. To have a change in the score of the business support service criterion, Thai Nguyen province needs to regularly organize trade fairs, legal advice, trade promotion conferences, education and training, etc.

• Labor training: Among the components that make up the PCI of Thai Nguyen province, the labor training index has frequent changes. In 2019, the score of this criterion was 7.88 points, decreasing to 6.95 points in 2023.

• Legal institutions: The legal institutions of Thai Nguyen province are a criterion that has changed significantly in the period 2019–2023. Due to investment incentive policies, industrial parks have begun to appear in the province, which is also the reason why the score of this criterion has decreased. From the decrease in the score of this index, the PCI Steering Committee of Thai Nguyen province has issued many programs and plans related to improving the provincial competitiveness index.

Evaluate of Provincial Competitiveness of Thai Nguyen Province

The analysis results show that due to the impact of the Covid-19 pandemic; the component indexes of the province’s PCI index have decreased significantly, despite the attention and close direction of the Government, the Prime Minister, the support of VCCI and the Central Ministries and branches, the focused leadership of the Provincial Party Committee, the Provincial People’s Council, the Provincial People’s Committee, the active participation of all levels and branches, the efforts to overcome difficulties of enterprises and entrepreneurs, the PCI Index of Thai Nguyen province in 2023 has reached the rank of 23/63 provinces and cities nationwide, up two ranks compared to 2022, of which 5/10 component indexes have increased in rank compared to 2022. Specifically, the Time Cost Index ranked 8/63, up 48 ranks; the Informal Cost Index ranked 4/63, up 34 ranks; The Provincial Government Dynamism and Pioneering Index ranked 6/63, up 30 places; the Labor Training Index ranked 4/63, up eight places; and the Competitiveness Index ranked 41/63, up six places.

Conclusions and Recommendation

The article shows the current status of provincial competitiveness through the PCI index in 2023. The province’s PCI index ranked 23/63 provinces and cities nationwide, up two places compared to 2022, of which 5/10 component indexes increased in rank compared to 2022, specifically: Time Cost Index ranked 8/63, up 48 places; Informal Cost Index ranked 4/63, up 34 places; Provincial Government Dynamism and Pioneering Index ranked 6/63, up 30 places; Labor Training Index ranked 4/63, up eight places; Equal Competition Index ranked 41/63, up six places. From the component indexes with decreased scores, the study proposes a number of solutions to improve provincial competitiveness, namely solutions on Transparency; Equal Competition; Business support services; Labor training.

In the period 2020–2022, Dai Tu district will carry out the management of regular budget expenditures The main solutions contributing to improving provincial competitiveness in Thai Nguyen province are:

Firstly, the province needs to improve information transparency in the entire political system and state management agencies; publicize information on policies, laws, procedures, etc., correctly, sufficiently, and promptly on mass media platforms.

Secondly, the province needs to focus on training and improving the quality of human resources to ensure quantity and quality; focus on training and improving the quality of labor resources participating in industrial production to ensure quantity and quality, skilled workers, high-skilled workers to meet the needs of businesses.

Thirdly, it is necessary to continue reforming administrative procedures, reducing the cost burden for businesses. Business support programs need to focus on solving the difficulties that businesses are facing, such as accessing credit, finding customers, market fluctuations, etc.

Fourthly, the Province needs to improve the efficiency of using Document Management and Work Management software in processing work records and sending and receiving electronic documents.

Fifthly, the Province needs to have measures to strengthen the connection between the business community and authorities at all levels so that Thai Nguyen province can continue to improve the investment environment and improve the quality of service to people and businesses.