Comparing the Competitiveness Index of Hanoi City with Other Central Cities

Finding business partners is very weak, only 31.52/100 points. Market information or technical advice, which always requires updating and quickness, seems to be not paid attention to. Thus, private enterprises in Hanoi operate entirely on their own strength without being able to take advantage of any significant support from the government.

e. Inadequate labor training

Labor training can be considered a form of selective intervention in the market. Currently, although skilled and highly qualified human resources are very necessary, it is very difficult for each enterprise to train them themselves because the risk of workers quitting their jobs after being trained is very high. Thus, it requires the government to increase investment in training centers, to provide a source of highly skilled and highly skilled labor for enterprises in the capital city of Hanoi.

In terms of quantity, Hanoi is highly appreciated for the number of vocational schools and job placement centers per 10,000 people. However, in terms of quality, it is still below potential. According to the survey results of VNCI, only 55.43% (in 2006) and 55.9% (in 2007) of the surveyed enterprises rated Hanoi's vocational education and training as very good or good; 48.62% (in 2006) and 59.43% (in 2007) of enterprises were satisfied with job brokerage activities.

The reality is that the number of unemployed trained workers is still increasing because they cannot meet the requirements of businesses, while businesses are in great need of highly skilled human resources. According to statistics, only nearly 30% of Hanoi's workforce has been trained, the quality of human resources is not high, not uniform, and not used effectively. Among more than half a million workers in Hanoi who have been trained with various degrees, the number with elementary and technical worker degrees accounts for 37% (of which the number with technical worker degrees accounts for only 10%), the number with vocational secondary school degrees accounts for 21%, the number with university and college degrees accounts for 40%, and the number with post-graduate degrees is 2%. In particular

The number of highly skilled technical workers (level 6 or 7/7) and skilled practical engineers is very rare.

2.3. Comparison of the Competitiveness Index of Hanoi City with other centrally-run cities

Vietnam has five centrally-governed cities: Hanoi, Hai Phong, Da Nang, Can Tho and Ho Chi Minh City. It can be said that all these cities have the same macroeconomic environment and are directly managed by the Central Government. However, the differences in microeconomic characteristics make the competitiveness of each city different, or as Michael Porter said: "microeconomics is the foundation of prosperity".

Table 12: Competitiveness index of five centrally-run cities

City

PCI 2005	PCI 2006	PCI 2007
Hanoi	60.32	50.14	56.73
Hai Phong	59.40	49.82	53.19
Danang	70.67	75.82	72.96
Can Tho	61.29	58.30	61.76
Ho Chi Minh City	59.61	64.75	64.83

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(Source: Provincial Competitiveness Index Report 2007)

Compared to other centrally-run cities, Hanoi has a very low PCI (56.73 points), just slightly higher than Hai Phong, much lower than Ho Chi Minh City and Can Tho, and even worse than Da Nang (72.96 points), on all component indicators. In 2006, Da Nang and Ho Chi Minh City PCI increased and continued to maintain good scores in 2007. Hanoi also tried very hard to bring its PCI from the average group in 2006 to the good group in 2007.

Consider the specific comparison of some component indicators in 2007 below:

(Source: VNCI)

Hanoi's market entry cost index and land access index are much lower than those of the other four cities. One of the objective factors affecting market entry costs is that the price of business registration services of consulting companies in Hanoi is often 1.5 to 2.5 million VND higher depending on the type. Regarding land, Hanoi currently has 18 small and medium-sized industrial parks and clusters with a total natural land area of 773 hectares. About 253 enterprises have leased land and about 45% of enterprises have demand but do not have land to lease. Meanwhile, 2,307 units (both central and local) lease 1,642.5 hectares but use them inefficiently, or for the wrong purpose and have not been able to recover them. This is the main reason for the

Access to land to expand production is very difficult.

(Source: VNCI)

In terms of the informal cost index and the index assessing incentives for state-owned enterprises , Da Nang is highly appreciated by enterprises and ranked first. Hanoi and Ho Chi Minh City - the two largest cities in the country - are at the bottom. On the one hand, due to the influence of the old, stagnant and bureaucratic working style, a number of officials in public agencies have degenerated. On the other hand, many enterprises in Hanoi are afraid of wasting time, so they are willing to voluntarily pay fees to facilitate their work.

In the socialist-oriented multi-sector economy in Vietnam, the state-owned economic sector always plays an important role. Therefore, Hanoi, as the locomotive, where many large state-owned enterprises are concentrated, has more preferential policies and regimes for state-owned enterprises than any other city. Many incentives for state-owned enterprises will negatively affect private enterprises and the number 5.19 at the bottom of the comparison table is understandable. However, Hanoi's index of 5.19 in fifth place is still quite far from the fourth place, Ho Chi Minh City with 6.01 points. This is because Ho Chi Minh City's policies to support state-owned enterprises are more reasonable, causing less direct impact on private enterprises.

private sector and competitive environment.

(Source: VNCI)

The index of transparency and accountability of Da Nang and Ho Chi Minh City are approximately the same and both reach over 7 points. Next is Hanoi with 6.47 points, much higher than the index of Can Tho and Hai Phong. In the index of dynamism and pioneering of the government , the order of these 5 cities has not changed. When a policy or regulation issued by the Central Government is not specific or clear, the city government can act in different ways. The solutions of Da Nang and Ho Chi Minh City are always in the direction of creating the most favorable conditions possible for businesses .

encourage private sector development

III. ASSESSMENT OF HANOI'S BUSINESS ENVIRONMENT

3.1. Advantages of Hanoi's business environment

The business environment of Hanoi, as the capital - economic hub, has many advantages.

Regarding human resources , Hanoi is the place with the highest concentration of intellectuals in the country with many research institutes, academies, universities, many leading scientists, scientific and technical staff, and skilled workers in all fields. This is an important condition for training skilled workers.

high-level vocational training, while simultaneously conducting linkages between research, technology transfer and production and business.

Regarding infrastructure , Hanoi always focuses on investing and upgrading the traffic system, water supply and drainage, public lighting; postal system, telecommunications ... actively contributing to meeting the development needs of the economy. The city has invested in 18 large and small industrial parks/clusters with a total area of about 700 hectares. Of which, 7 industrial parks/clusters have been completed and put into operation. The government has also supported the construction of technical infrastructure outside the fence and 30% of the cost of site clearance within the fence of industrial parks.

In terms of market size , Hanoi is a large market with strong consumption. In 2007, Hanoi's population was nearly 3.4 million people, of which 65% lived in urban areas with high and stable incomes. Therefore, the people's demand for buying and selling goods and using services is very diverse.

3.2. Limitations of Hanoi's business environment and causes

Although in recent times, Hanoi has tried and made efforts to improve its business environment, there are still limitations.

First of all, access to land is still difficult for the majority of businesses, especially small and medium-sized enterprises. According to a survey by the Vietnam Chamber of Commerce and Industry, the need for access to land of Hanoi businesses is currently very large: nearly 2/3 of businesses surveyed said that they would expand their business if access to land was easier.

Furthermore, the business registration process still has barriers . Business founders only need to go to the Business Registration Office, under the Hanoi Department of Planning and Investment, to submit their application and receive the results (business registration certificate, seal engraving license and tax code). However, this “one-stop” process only stipulates the maximum time limit for the Business Registration Office to return the results from the date the business submits a complete set of documents. Accordingly, for each error in the application, the business must go to the

Business Registration Office. In addition, the Business Registration Office is also irresponsible in advising and supporting businesses to complete a complete and valid dossier as well as promptly notifying the business founder of any shortcomings in the dossier (spelling errors, uppercase and lowercase letters) as soon as possible (instead of on the appointment date to receive the results). On the other hand, the "one-stop" business registration process is only limited to the stage of receiving a seal engraving license, not adjusting the stage of engraving and returning the seal (which has been archived) to the business from the police agency. Thus, after receiving the results of the above three procedures, the business owner is still not considered to have completed the business establishment procedure because the business does not have an official seal, and all business documents are only considered legal when they are stamped with the official seal of the business.

The reason is that the responsibilities of the relevant agencies are not clearly defined. The Hanoi Business Registration Office is the focal agency responsible for transferring the input information of enterprises to the police and tax agencies and returning the final results to the enterprises. Thus, in addition to receiving business registration dossiers, in principle, the staff of the Business Registration Office must also have sufficient professional qualifications and information to check the completeness and validity of the dossiers transferred to the agency granting the seal engraving license and the agency granting the tax code. However, it is very difficult to determine the responsibility of each agency for responding to the enterprise, especially in cases where the dossier is only found to have errors after it has been transferred to the tax agency or the police agency. Enterprises do not know which agency will be ultimately responsible to the enterprise and answer any delays or problems in the dossier processing process.

The ability to apply Information Technology is still limited. After more than four years of operation, the Hanoi Portal (Hanoi Portal: http://www.hanoi.gov.vn) has revealed weaknesses such as: poor information, many sections are still blank; incomplete content; slow response to online questions from businesses. Statistics show that in the past 3 years, only 97/1074

answered questions, that is, less than 10%. And in May 2008, there were hardly any questions answered. (See Appendix 6)

There are many reasons for this situation. The first reason is that the units (departments, branches, sectors, People's Committees of districts) are not interested in providing information and services. The second reason is that the awareness and level of enterprises in changing habits from paper environment to electronic environment are not yet quick; and finally, the financial mechanism according to current regulations for information provision activities is not reasonable, not effective in encouraging people to post information on the Electronic Communication Portal.

Thus, through the PCI index of Hanoi, the City government still has a lot of work to do to improve the business environment of the capital. The immediate problem is to solve the complicated and cumbersome management mechanism of private enterprises in order to aim for the long-term goal of creating an operating framework so that any individual economic sector can develop smoothly. From that practical requirement, many solutions have been proposed, evaluated, identified and applied. However, the key solution must be suitable and practical to the situation of Hanoi in order to hope to bring about quick results, resolve existing problems, frankly recognize the problem-solving capacity and propose feasible solutions. This is the content mentioned in the next chapter of this thesis.

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