ATTACHMENT_J.8_PCI_-_BEE_in_Vietnam_Discussion_Paper.docx

Attachment J.8: Discussion Paper on BEE Indicators in Vietnam About PCI About Us The Provincial Competitiveness Index (PCI) was developed in 2005 by the Vietnamese Chamber of Commerce and Industry (VCCI) and the U.S. Agency for International Development-supported Vietnam Competitiveness Initiative (USAID/VNCI).

As one of the largest and most comprehensive social surveys in Vietnam, the PCI has come to be seen as a critical tool for measuring and assessing the standards of economic governance in Vietnam’s 63 provinces from the perspective of private sector businesses, covering business-critical issues of entry costs, compliance costs, land access, informal charges and governance qualities on pro-activity, transparency, labor development and legal institutions. The PCI also includes an index assessing quality of provinces’ infrastructure as one of the most critical barriers to investment and growth in the country.

The PCI exercise is not intended to be a purely academic exercise, nor to ‘point fingers’ at individual provinces that rank lowest or highest. Rather, the PCI attempts to provide province robust information that can help provinces and municipalities to identify where and how they can pursue economic governance reforms to optimal effect.

The PCI has triggered a radical change in motivating provincial reform efforts with over 40 provinces conducting PCI diagnostic workshops to engage public-private dialogue or issue resolutions to improve governance performance. To position the PCI on a higher level, survey has been expanded to reach FDI business voices to draw a more comprehensive picture of Vietnam business climate for policy-makers during their decision-making process.

The Provincial Competitiveness Index (PCI) has come to be seen as a critical tool for measuring and assessing the standards of economic governance in Vietnam’s 63 provinces. It includes Entry costs, Land access and security of tenure, Transparency and access to information, Time costs, Proactivity, Informal charges, Business support services, Labor training, Legal institutions.

1. Entry Costs The goal of this sub-index is to assess the differences in entry costs for new firms across provinces. A measure of:

- Length of business registration in days

- Length of business re-registration in days

- Number of licenses and permits necessary to start operations

- Wait for Land Use Rights Certificate

- Percentage of firms waiting more than a month to complete all steps necessary to start operations

- Percentage of firms waiting more than three months to complete all steps necessary to start operations

- Percentage of firms having difficulty obtaining all licenses and permits necessary to do business (dropped since 2009)

2. Land Access and Security of Tenure A measure combining two dimensions of the land problems confronting entrepreneurs: how easy it is to access land and the security of tenure once land is acquired, including:

- Percentage of firms in possession of an LURC

- Total land in province with official LURCs

- Firm rating of expropriation risk (1: Very High to 5: Very Low)

- If land expropriated, firms receive fair compensation (% Always or Usually)

- Changes in government land prices reflect changes in market prices (% Agree)

- Firm checked no land problems after list of possible problems

- Firm rating of changes in lease contracts (1: Very High to 5: Very Low)

- Percentage of firms that feel land availability constrains their business expansion (dropped)

- Percentage of firms rating provincial land conversion policies as good or very good (dropped)

- If changes in leases contracts, is there a fair process for disputing them (% Always or Usually) (dropped)

3. Transparency and Access to Information A measure of whether firms have access to the proper planning and legal documents necessary to run their businesses, whether those documents are equitably available, whether new policies and laws are communicated to firms and predictably implemented, and the business utility of the provincial webpage.

- Transparency of planning documents

- Transparency of legal decisions and decrees

- Relationship important or very important to get access to provincial documents (% Important or Very Important)

- Negotiations with tax authority are an essential part of doing business (% Agree or Strongly Agree)

- Predictability of implementation of central laws at the provincial level (% Usually or Always)

- Openness of provincial webpage score

- Do Business Associations play an important role in advising and countering provincial polices (% Important or Very Important)

- Province discussed changes in laws with you (% Usually or Always) (dropped)

- Services provided by provincial agencies: consulting on national and provincial regulations (% Very Good or Good)(dropped since 2009)

- Friends important for negotiating with government (% Important or Very Important)(dropped)

4. Time Costs and Regulatory Compliance A measure of how much time firms waste on bureaucratic compliance, as well as how often and for how long firms must shut their operations down for inspections by local regulatory agencies.

- Percentage of firms spending over 10 percent of their time dealing with bureaucracy or bureaucratic regulations

- Median number of inspections (all agencies)

- Median tax inspection hours

- Government officials have become more effective (% Yes)

- Trips to obtain stamps and signatures reduced (% Yes)

- Paperwork reduced (% Yes)

- Fees reduced (% Yes)

- Inspections have decreased in past two years (%) (dropped)

- Days spent on bureacracy reduced in past two years (%) (dropped)

5. Informal Charges A measure of how much firms pay in informal charges, how much of an obstacle those extra fees pose for their business operations, whether payment of those extra fees results in expected results or “services,” and whether provincial officials use compliance with local regulations to extract rents.

- Percentage of firms that felt that enterprises in their line of business were subject to bribe requests from provincial authorities

- Percentage of firms paying over 10 percent of their revenue in extra payments

- Government uses compliance with local regulations to extract rents (% Strongly Agree or Agree)

- Informal charges delivered expected result (% Usually or Always)

- Do firms pay commissions on government contracts? (Yes)

- Percentage of firms that believe that extra payments are a major obstacle to doing business (dropped)

6. Proactivity of Provincial Leadership A measure of the creativity and cleverness of provinces in implementing central policy, designing their own initiatives for private sector development, and working within sometimes unclear national regulatory frameworks to assist and interpret in favor of local private firms.

- Provincial officials are knowledgeable enough about present national law to find opportunities within existing law to solve firm problems (% Strongly Agree or Agree)

- Provincial officials are creative and clever about working within the national law to solve the problems of private sector firms (% Strongly Agree or Agree)

- Perceived attitude of provincial government toward private sector (% Very Positive or Very Positive)

- All good initiatives come from the provincial government, but the center frustrates them (% Strongly Agree or Agree) (dropped)

- There are no good initiatives at the provincial level; all important policy comes from the central government (% Strongly Agree or Agree) (dropped)

7. Business Support Services Used to be named “Private Sector development services”, this is a measure of provincial services for private sector trade promotion, provision of regulatory information to firms, business partner matchmaking, provision of industrial zones or industrial clusters, and technological services for firms.

- Trade fairs held by province in previous year and registered for present year

- Number of private public service providers in province

- Firm has used business information search services (%)

- Firm used private provider for above business information search services (%)

- Firm intends to use above service provider again for business information search services (%)

- Firm has used consulting on regulatory information (%)

- Firm used private provider for consulting on regulatory information (%)

- Firm intends to use above service provider again for consulting on regulatory information (%)

- Firm has used business match making services(%)

- Firm used private provider for business match making services (%)

- Firm intends to use above service provider again for business match making services (%)

- Firm has used trade promotion services (%)

- Firm used private provider for trade promotion services (%)

- Firm intends to use above service provider again for trade promotion services (%)

- Firm has used technology related services (%)

- Firm used private provider for technology related services (%)

- Firm intends to use above service provider again for technology related services (%)

- Services provided by provincial agencies: provision of market information (% Very Good or Good)(dropped)

- Services provided by provincial agencies: matchmaking for business partners (% Very Good or Good) (dropped)

- Services provided by provincial agencies: export promotion and trade fairs (% Very Good or Good)(dropped)

- Services provided by provincial agencies: industrial zones and SME Concentrations (% Very Good or Good) (dropped)

- Services provided by provincial agencies: technology and technology-related services (% Very Good or Good)(dropped)

8. Labor and Training A measure of the efforts by provincial authorities to promote vocational training and skills development for local industries and to assist in the placement of local labor.

9. Legal Institutions A measure of the private sector’s confidence in provincial legal institutions; whether firms regard provincial legal institutions as an effective vehicle for dispute resolution, or as an avenue for lodging appeals against corrupt official behavior.

- Legal system provided mechanism for firms to appeal officials’ corrupt behavior (% Always or Usually)

- Firm confident that legal system will uphold property rights and contracts (%Strongly Agree or Agree)

- Cases filed by by non-state entities at Provincial Economic Court per 100 firms

- Non-state claimants as a percentage of claimants at Provincial Economic Court

- Business used courts or other legal institutions to resolve disputes (%)

- Median days to resolve court cases

- Median formal and informal costs as a percentage of case

- Use of legal institutions as primary modes of dispute resolution(dropped) image1.png