Hải Dương seeks ways to improve investment climate

The fall in Hải Dương’s Provincial Competitive Index for the second consecutive year has prompted the northern province to figure out ways to improve its investment and business environment.

The results of the PCI in 2016, released by the Việt Nam Chamber of Commerce and Industry, VCCI, shows that Hải Dương ranks 36th in the country and ranks ninth among 11 provinces and cities in the Red River Delta, followed only by Thái Bình and Hưng Yên provinces.

This is the second year in a row that Hải Dương’s position has dropped in the ranking. In 2014, the province was ranked 31st out of 63 provinces and cities nationwide, but it was down to 34th and 36th in 2015 and 2016, respectively.

In particular, five indicators surveyed by VCCI have had their points increased (the higher the point, the worse the situation), namely: market entry costs, access to land, dynamism of provincial leaders, business support services, and labour training services. One indicator unchanged is the unofficial charges, and four indicators which saw decreases are transparency, time costs, legal institutions and fair competition.

Reasons

In a meeting with provincial leaders this week, Nguyễn Ngọc Lan, a specialist from the VCCI, pointed out that the four indices declined because the province did not pay enough attention to small and micro enterprises. Small and micro enterprises account for 90 per cent of the total number of firms operating in Hải Dương.

VCCI’s survey shows that small and micro businesses are often at a disadvantage and receive unfair treatment when compared with medium and large enterprises.

For example, 67 per cent of small and micro enterprises in the province confirmed that they did not receive written information related to policies for production and business. Meanwhile, only 30 per cent of medium-sized and large enterprises in the locality had the same answer.

Small and micro businesses are also put at a disadvantage in accessing support policies. Only 28 per cent of micro firms and 46 per cent of small ones are entitled to corporate support policies. Meanwhile, as many as 60 per cent of medium-sized and large enterprises assume they benefit from the policies.

When enterprises ask for information, more than 80 per cent of large enterprises and FDI enterprises receive feedback, but 30 per cent of small and medium enterprises get responses from the local government or authorities.

VCCI’s survey also shows that 34 per cent of enterprises in Hải Dương must spend 10 per cent of their time in a year learning and implementing administrative procedures, such as taxation, land, fire prevention and social insurance.

The annual inspections and checks still overlap. For example, 20 per cent of private enterprises in Hải Dương are subject to at least four inspections. Businesses have complained that the inspections were troublesome, and businesses have had to pay a lot in unofficial fees.

Nguyễn Đình Kiêm, director of the provincial Department of Planning and Investment, said that the decline in the province’s PCI was due to administrative reform of the agencies, still far beyond the real demand and expectations of enterprises.

Co-ordination among State agencies in handling administrative procedures is not tight, information related to procedures has not been regularly updated, and civil servants and employees have limited capacity and a low sense of responsibility, Kiêm said.

Solutions

VCCI specialist Nguyễn Ngọc Lan said that to lift its PCI ranking, Hải Dương needs to build an equal business environment for all sectors, and have suitable solutions to support small and micro business groups.

In addition, the province should continue working on administrative procedure reform, especially in the fields of taxes, fees, land and social insurance as well as reducing the burden on the enterprises during inspections.

Lan also highlighted the need to increase business consultation and promote the role of provincial business associations to consolidate the trust of the business community.

VCCI Vice Chairman Đoàn Duy Khương said that geographical position is no longer an advantage to the province, and so it needs to focus on three solutions: building an effective government, building supportive mechanisms and creating a competitive environment for business development.

Khương also suggested that localities select industries and products with high competitiveness and develop strategies to promote the products and services.

Localities should create mechanisms and policies to support small and medium enterprises, such as capital support, information, training and policy advice, but should not expect that the economic efficiency of small businesses would be the same as that of big ones, Khương said.

Small businesses create job stability, ensure social security, provide logistics and supportive products for large businesses, he added.

Nguyễn Mạnh Hiển, Secretary of Hải Dương provincial Party Committee, said the province was determined to promote the application of information technology to reduce the unofficial costs and time for businesses.

Provincial agencies would provide public hotlines for feedback from people and businesses. Provincial leaders and localities needed to increase the dialogue with business communities to solve pressing problems quickly, Hiển noted.

At the same time, the inspection of public duties would be strengthened and civil servants who caused trouble for businesses or violated regulations would be strictly punished, he added.

Source VNA