The Hanoitimes - The annual provincial competitiveness index (PCI) 2016 shows that more than half of foreign direct investment (FDI) firms are planning to expand their operations in Vietnam, the highest level since 2010.
The Vietnam Chamber of Commerce and Industry (VCCI) and the US Agency for International Development (USAID) unveiled the Provincial Competitive Index (PCI) 2016 in Hanoi on March 14.
The annual report, the 12th of is kind so far, gathers feedback and assessments the community on the business environment, economic management quality and administrative reform efforts of the municipal and provincial governments across Vietnam.
At the ceremony to announce the Provincial Competitive Index 2016.
VCCI President Vu Tien Loc said that PCI collects opinions of private firms, with an aim to promote their growth, especially micro, small and medium-sized enterprises, while creating jobs for people.
US Ambassador to Vietnam Ted Osius commented that PCI report is important to investors and businesses interested in Vietnam.
The collection and analysis of data for the report point out that competition helps improve operation effectiveness, the diplomat said, adding it will also promote trade affiliation as well as economic growth and prosperity.
According to the VCCI President, the PCI report 2016 has also reflected the rising trend of household businesses, as 65 percent of the firms enjoyed profit, the highest figure in the recent five years.
The capital scale of a company averaged a record high of 18.1 billion VND in 12 years, doubling that in 2006, while the ratio of firms recruiting more employees also increased to 13 percent in 2016 from 12 percent in the past year0.
According to the report, the business community also showed their optimism for business prospect as 48 percent of them said that they will expand operation in the next two years.
Head of the Legal Department of the VCCI Dau Anh Tuan noted that compared to 2015, positive signs have been recorded in various fields, including dynamism and pioneering of the provincial administrations, informal cost, labor-force training, equal competition and business registration.
However, administrative procedure burden and land access have yet to be solved while legal environment is yet safe, posing obstacles for many domestic businesses, he said.
Notably, FDI firms operating in Vietnam praised the reform efforts the government, ministries, sectors and localities have made to create a more favourable and healthier business climate, accordingn to experts.
The experts said most of the FDI enterprises, however, expected that administrative procedures need to be improved further.
FDI firms operating in Vietnam praise the reform efforts pf the government, ministries, sectors and localities
Prof. Dr. Edmund Malesky from the US-based Duke University, Head of the PCI study team in Vietnam, said taxation, customs clearance and social insurance are the most troublesome procedures facing FDI firms.
FDI representatives also said they found difficult to get access to information about planning schemes and state budget estimates.
According to Head of VCCI’s Legal Department Dau Anh Tuan, in the recent years, Vietnam has made numerous efforts to build a friendlier legal environment for foreign investors, helping enhance their optimism about prospects for business and production expansion in Vietnam.
A recent survey showed that 11 percent of 1,500 polled FDI firms had increased investment capital while 63 percent recruited more employees, the highest rates over the past five years. More than half of them are planning to expand their operations in Vietnam, the highest level since 2010.
Tuan said that FDI enterprises highly evaluated a decrease cost in the business registration.
In 2006, a FDI firm took about 20 days to register a business, but currently it takes seven days, the record low in the past 12 years.
More than 90% of FDI enterprises have obtained all the permits needed to officially come into operation within just three months. In 2015 and 2016, approximately 40% of FDI businesses started their operations in Vietnam just one month, the highest rate in the past 5 years.