Vietnam’s Provinces Vie for Best Business Enabling Environment

Chairman of Dong Thap province Nguyen Van Duong (second left) visits a melon farm of Ecofarm
Nguyen Van Duong, chairman of Dong Thap province, second from left, visits an Ecofarm melon farm.
Photo courtesy of Ecofarm Dong Thap
New business development jumps 28 percent in Dong Thap
“If provinces address specific ... issues like Dong Thap did, they too can expect to get many investors.”

October 2017—Ecofarm has been extremely profitable in Vietnam’s Dong Thap province, thanks to the company’s sound investments and strong business enabling environment. It sells tens of thousands of dollars of farm produce from 85 hectares of land harvested on a three-month planting cycle using high-tech practices.

But just a decade ago, this supportive business environment would have been unheard of, with companies having to wait months to receive a business registration certificate.

Ecofarm’s decision to open a branch in Dong Thap was influenced by the province’s second place position in the Provincial Competitiveness Index (PCI), an annual survey that rates each province on the ease of operating and investing in a business.

Dong Thap’s high score reflected 10 years of effort by provincial leaders to consistently rank among the top performing provinces on the PCI. The index, which has generated much pride and bragging rights for provinces with the highest scores, is produced through a partnership with the Vietnam Chamber of Commerce and Industry and USAID.

Vietnamese businesses face many challenges, as reflected on the PCI, including significant delays when registering, accessing land, and paying taxes while also dealing with unsupportive local government leadership and requests for bribes.

Local government leaders made many trips to Phu Quoc, where Ecofarm is headquartered, to promote Dong Thap as a destination for cutting-edge agricultural investment. And in 2015, when Ecofarm first opened operations in Dong Thap, provincial leaders frequently visited to inquire about and help resolve any obstacles facing the business.

“PCI is creating healthy and effective competition among localities,” noted Nguyen Van Duong, chairman of Dong Thap province.

Provincial leaders understand how important it is to improve their PCI scores to attract new investment. Despite a remote location, few geographic advantages, and relatively poor infrastructure compared to other provinces, Dong Thap witnessed its new business development increase by 28 percent in 2016 over 2015, higher than the national average of 16 percent, according to the General Statistics Office.

Dong Thap’s leaders set a policy goal to create a strong enabling government that serves people and businesses. The local government has emphasized this message: “Dong Thap will not wait for the businesses to come but will take the initiative and offer to help resolve difficulties (if any) for businesses.”

“Mr. Duong—Dong Thap province’s chairman—instructed the Department of Agriculture and Rural Development and the local People’s Committee to support Ecofarm in developing and expanding its high-tech agricultural production,” said Tran Van Son, the head of Ecofarm operations in Dong Thap. “If provinces address specific PCI issues like Dong Thap did, they too can expect to get many investors.”

USAID’s Provincial Competitiveness Index project, which runs from July 2013 to June 2019, has created an effective monitoring and motivational tool to help improve provincial governance and promote reforms for a business-friendly regulatory environment in Vietnam. To date, 51 out of 63 provinces have improved their index scores and all provinces have PCI improvement plans, which has led to an improved business environment and increased overall competitiveness for Vietnam in the global economy.

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Last updated: December 11, 2017

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