Vietnam’s growth in 2009 has been projected at 5% and 6.5% by the IMF and World Bank respectively. The Vietnamese economy grew 6.23% this year, which is the lowest level in nearly a decade and below government expectations. The export-reliant Southeast Asian country has been battling annual inflation of nearly 23%, the highest since 1991, after three years of GDP growth above 8%.
Opportunities in Vietnam beckon partly due to its young and fast-growing population which has exceeded 86 million people. Vietnam ranks third in the world by population density and 13th in terms of total population. About one million babies are born in Vietnam each year. Young people under the age of 30 years represent more than half of the Vietnamese population, with 18 million in Ho Chi Minh city alone.
The country’s most populous city, Ho Chi Minh, posted 11.7% GDP growth rate for this year and attracted new FDI pledges of nearly US$8.5 billion in 2008, four times more than last year. The amount of registered foreign direct investment (FDI) into Vietnam has tripled in 2008 to reach US$60.2 billion over 1,171 projects, while the FDI forecast for next year is $30 billion, according to the Ministry of Planning and Investment’s Foreign Investment Agency.
The Vietnam Provincial Competitiveness Index 2008 (PCI), now in its fourth year, is developed by the U.S. Agency for International Development’s Vietnam Competitiveness Initiative (VCCI) in collaboration with the Vietnam Chamber of Commerce and Industry. Survey responses were gathered from 7,820 private domestic enterprises this year and findings were released in December.
The PCI report is a comparison of 64 provinces and cities nationwide on a 100-point scale, based on ten dimensions of economic governance impacting the business and investment environment for private sector development.
Da Nang, a top-performing central coastal city, ranked #1 this year with 72.18 points, narrowly beating Binh Duong with 71.76 points in second place and Vinh Phuc Province coming in third. Southern city Bin Duong was the top PCI province for the consecutive past three years. Ho Chi Minh city slipped to 13th place from its 10th ranking last year while Hanoi fell 4 spots to 31st position.
The rated factors are those that can be directly influenced by the provincial authorities -1)low entry costs for business start-up; 2)uncomplicated access to land and security of business premises; 3)transparent and equitable legal and business information; 4)minimal informal charges; 5)limited time wasted on bureaucratic procedures and inspections; 6)lack of bias toward particular types of firms, especially state-owned enterprises; 7)a proactive and creative leadership; 8)special private sector development (PSD) initiatives to address market failures; 9)well-trained labor; and 10)fair and effective legal procedures for dispute resolution.
Vietnam Provincial Competitiveness Index 2008
