VCCI releases 2025 competitiveness index with major upgrade
Since its inception two decades ago the Provincial Competitiveness Index has evolved into an important data ecosystem helping connect the voice of business with the process of institutional reform
On May 15, the Vietnam Chamber of Commerce and Industry (VCCI) unveiled the 2025 Private Sector Economic Report and Provincial Competitiveness Index (PCI) 2.0, marking a significant methodological enhancement over two decades of implementation. The report is based on input from 5,128 businesses across 34 regions, with the inclusion of 1,001 business households for the first time.
The PCI 2.0 has been revamped, featuring nine component indices and 98 indicators, including a new Business Performance Index (BPI) with 23 indicators. Moreover, provinces and cities have been categorized into six groups based on governance quality.
VCCI Chairman Ho Sy Hung emphasized that PCI 2.0 has evolved beyond its initial role as a conduit between businesses and government, transforming business insights into data to foster dialogue and reform. The report highlights five localities—Bac Ninh, Danang, Haiphong, Phu Tho, and Quang Ninh—as having "Good" governance quality, with consistent improvements across various domains. This suggests that PCI data can translate into tangible changes in administration.
Private enterprises' performance is reflected through the BPI, exemplified by Tan Hiep Phat, a beverage company that traces its origins to 1994. The company has grown from a small production facility to a major player in Vietnam's beverage industry through long-term investment in technology, innovation, digitalization, and quality management systems.
Tan Hiep Phat now operates four factories and 12 aseptic lines in key economic zones, meeting the standards and certifications of international markets like France, the Netherlands, Australia, and Canada.
The BPI underscores the company's transformation from relying on cost-based competition to focusing on quality, innovation, and operational capabilities. Nguyen Duy Hung, a board member of Tan Hiep Phat, highlighted that the company has benefited from institutional reforms by continuously investing in technology, innovation, quality, and human resources, thereby bolstering its competitiveness.
The report underscores the importance of institutional reform in enhancing business capabilities. While institutional reforms provide space and confidence for investment, businesses must convert this space into tangible assets such as technology, management, and innovation. Vietnam, in its pursuit of becoming a high-income country by 2045, must address gaps in competitiveness, particularly in product innovation and access to capital.
Only 8.8% of businesses engage in product innovation, significantly lower than regional counterparts like Malaysia and Thailand. Additionally, a higher proportion of loans in Vietnam require collateral compared to some regional economies.
To strengthen competitiveness, Vietnam should pivot from labor-intensive, low-cost growth models to those emphasizing productivity, technology, and innovation. The report's analysis suggests that competitiveness can be examined through four dimensions: institutional competitiveness, productivity competitiveness, innovation competitiveness, and attracting high-quality investment.
Improving the transparency, stability, and predictability of policies is crucial, with only 6–8% of businesses able to anticipate policy changes reliably. Boosting productivity, optimizing supply chains, and fostering innovation are also vital. Establishing a transparent business environment to retain long-term capital is essential for Vietnam's future as a developed nation.
Written by urgent.news from Vietnam Investment Review's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
