PCI 2024: 20 Years of Fostering Business-friendly Environment

VCCI President Pham Tan Cong presents trophies and certificates of recognition to the top performers in the 2024 PCI rankings

Relentless reform journey

At the recent launch of the Provincial Competitiveness Index (PCI) 2024, organized by the Vietnam Chamber of Commerce and Industry (VCCI), VCCI President Pham Tan Cong said PCI originated as a groundbreaking and innovative research initiative in 2005. At that time, few could have imagined that PCI would become one of Vietnam’s most effective and influential tools for administrative reform.

"PCI has evolved into a comprehensive, scientific and objective assessment system, become a reliable benchmark of provincial economic governance," he said, adding that “PCI has even empowered private businesses to raise their voices, not only to reflect current conditions but to actively drive reforms and inspire healthy competition among provinces and cities in a spirit of openness and innovation.”

PCI is more than just a ranking, he added. It is an annual platform for dialogue between the business community and local governments, a space where businesses can speak candidly from real-world experience and a place where authorities are encouraged to listen and act. From the "single window" model for market entry and centralized public service centers to innovative initiatives like "business coffee talks" and Department and District Competitiveness Index (DDCI) assessments, all these efforts reflect the reform-driven spirit inspired by PCI.

Mr. Dau Anh Tuan, VCCI Deputy General Secretary and Director of the Provincial Green Index (PGI) Initiative said the PCI 2024 Report portrays a positive picture of provincial economic governance. The median score reached 67.67 points, a 1-point increase from the last-year scoring, marking the eighth consecutive year above the 60-point threshold, commonly seen as indicative of a favorable business environment. Notably, the original PCI - the measure of the quality of core economic governance - rose to 68.18 points, continuing a steady upward trend since 2016. This illustrated the perseverance of local authorities and the active oversight of the business community.

In this year’s rankings, Hai Phong advanced to the top spot for the first time, scoring 74.84 points, a result of dynamic economic growth and sustained efforts to enhance the investment climate. Other top-tier performers include Quang Ninh, Long An and Bac Giang. Notably, Hung Yen entered the Top 10 for the first time, alongside Ba Ria – Vung Tau, Thua Thien – Hue, Hau Giang, Phu Tho and Dong Thap.

As Vietnam aims for 8% GDP growth in 2025, VCCI President Cong emphasized the PCI’s role as a “policy radar,” helping identify bottlenecks and invisible barriers early on to promote a transparent, favorable, secure, fair business environment.

Particularly, while Resolution 68, recently issued by the Politburo, substantiates the key role of the private sector, PCI will continue to serve as a vital source of practical data for policymaking to support the private sector’s rise to regional and global prominence and become a key driver of Vietnam’s economy.

The 2024 edition also marks the final year PCI covers all 63 provinces and cities, as administrative restructuring at the provincial level is set to begin later this year. VCCI President Cong described this as a pivotal moment that marks the finale of a consistent reform and the beginning of a new development phase where governance effectiveness and innovation will be key driving forces.

“VCCI remains committed to working with local governments and the business community, not only through PCI but also through new initiatives like the Provincial Green Index (PGI). This is a tool to measure environmental governance aligned with sustainable development and climate resilience goals so as to create a ‘dual index’ that drives both economic growth and environmental protection,” he affirmed.

The PCI journey - an itinerary of tireless reforms for a dynamic, transparent, fair, and sustainable Vietnam - will continue to inspire to grow stronger in the era of the nation’s rise.

Hai Phong tops the 2024 PCI rankings for the first time with 74.84 points, marking a milestone in its business environment reforms

Emerging challenges

The 2024 PCI survey gathered feedback from nearly 11,000 participating businesses, including both domestic private enterprises and foreign direct investment (FDI) firms. Businesses continue to express confidence in local authorities, particularly in information transparency, labor quality and the reform of online administrative procedures.

The PCI 2024 survey results showed that 33% of domestic private enterprises plan to expand their operations within the next two years, an increase from 27% in 2023, while 37% of FDI firms expect to scale up business operations, soaring from 26% the year before. While this signaled a positive shift, the recovery has yet to return to pre-COVID-19 levels when around 50% of respondents usually envisaged expansions. Moreover, companies are facing a new wave of challenges, especially due to global economic uncertainties early in 2025, triggered by new tariff policies launched by the United States. These developments demanded a more active engagement of authorities to improve the investment and business environment and support businesses to boost the private sector development, which is increasingly seen as “a catalyst for a prosperous Vietnam” as expected in a recent message by General Secretary To Lam.

Notably, five key difficulties in business faced by private companies in 2024 include access to credit (54%), customer search (49%), market volatility (38%), business partner search (20%) and suitable personnel recruitment (20%).

Besides, this year’s PCI results point to several persistent issues needed to be addressed, especially in land access, the cost of legal compliance and the declining dynamism of local government apparatuses.

To meet businesses’ expectations and the country’s development requirements in the new development phase, PCI 2024 underscored the need for authorities at all levels to intensify institutional reform, foster public-private dialogue and enhance policy enforcement. As Vietnam enters a new period of ambitious development, featured by an 8% GDP growth in 2025 and double-digit growth later on, maintaining and improving the quality of local economic governance is both an urgent and decisive task. Enhancing the business environment is not just a prerequisite but a core driver for Vietnam to realize its aspirations of becoming a powerful, prosperous nation that marches par with leading economies in the region and in the world.