Bac Ninh , Da Nang, Hai Phong, Phu Tho, and Quang Ninh are the top 5 localities in the PCI 2025 ranking.

After 21 years of continuously publishing the Provincial Competitiveness Index report, this year's report introduces the Provincial Competitiveness Index 2.0 version and, for the first time, launches the Private Sector Performance Index (BPI) under a new name: Vietnam Private Sector Report 2025.

This is an important adjustment, reflecting the new requirements of the investment and business environment reform process in the new development space of 34 provinces and cities after administrative unit reorganization.

From measuring the business environment to measuring the development ecosystem.

The report is based on a large-scale empirical survey involving 3,546 domestic private enterprises, 586 foreign-invested enterprises, and 1,001 household businesses across all 34 provinces and cities. This scale demonstrates an effort to gain a deeper understanding of the operational realities of the private sector, from formal enterprises to individual household businesses.

The Provincial Competitiveness Index 2.0 comprises nine component indices with 98 indicators, covering areas such as market entry, access to resources, transparency, administrative compliance costs, informal costs, fair competition, business support policies, legal framework, and a proactive government. According to previously released information, the Provincial Competitiveness Index 2.0 expands its scope of assessment from "business environment" to a more comprehensive "private sector development ecosystem."

A notable change is that in 2025, the Vietnam Federation of Commerce and Industry (VCCI) shifted from publishing specific rankings to publishing six groups of governance quality indicators. This approach is justified as more appropriate given the significant differences in conditions among localities after mergers, while also aligning with international practices. The national median Provincial Competitiveness Index score reached 63.90 out of 100, indicating that the reform process continues despite increasing pressure to improve governance quality.

The 2025 Provincial Competitiveness Index Report honors the top 5 localities in alphabetical order: Bac Ninh, Da Nang, Hai Phong, Phu Tho, and Quang Ninh. A common feature of this group is a relatively balanced governance structure, with at least 5 out of 9 component indicators ranking among the top 10 localities nationwide.

In particular, Bac Ninh leads in the areas of proactive governance and administrative procedure compliance costs; Da Nang ranks first in market entry; Hai Phong makes its mark with 7 out of 9 component indicators ranking among the top 10 localities. Phu Tho excels in access to resources, while Quang Ninh continues to maintain its high position in the indicators of fair competition and proactive governance.

According to Ho Sy Hung, President of the Vietnam Federation of Commerce and Industry, from an initial initiative, the Provincial Competitiveness Index has become a reliable benchmark, accompanying localities in their efforts to improve the business environment, enhance competitiveness, and nurture the private sector. Over the past two decades, the Provincial Competitiveness Index has also been recognized as one of the key indicators influencing provincial governance reforms.

The announcement of the Provincial Competitiveness Index 2.0 comes at a particularly significant time, as Vietnam is simultaneously implementing several major reforms: reorganizing the number of provincial-level administrative units from 63 to 34; transitioning to a two-tiered local government model; and institutionalizing Resolution No. 68-NQ/TW of the Politburo on the development of the private economy. This context opens up new opportunities for development, but also places higher demands on the government's policy implementation capacity and the adaptability of businesses.

Let's look directly at the bottlenecks in the private sector.

Alongside signs of reform, this year's report also highlights several noteworthy bottlenecks. Difficulties in finding customers have increased significantly, access to capital remains heavily reliant on collateral, informal costs persist in some interactions with the public sector, while the innovation capacity of private enterprises remains modest.

According to the Provincial Competitiveness Index 2025, up to 60.2% of businesses are facing difficulties in finding customers, the highest level in the past five years. This signals that market demand remains a major pressure on businesses, especially small and medium-sized enterprises (SMEs).

Access to capital continues to be a major barrier. 75.5% of businesses reported being unable to obtain loans without collateral, significantly higher than the 33.4% in Malaysia. This indicates that the financial market is still not truly conducive to businesses with good business ideas but lacking collateral.

Another challenge is the low predictability of the policy environment. Only about 6-8% of businesses can predict policy changes. Meanwhile, innovation has not become a widespread driver in the private sector, with only 8.8% of businesses engaging in product innovation, lower than Malaysia, Thailand, and the regional average.

Notably, the household business sector continues to operate under conditions of thin profit margins and a predominantly defensive mindset. For this group, the burden of legal compliance is becoming a major pressure. This is an issue that needs attention in the process of promoting the transformation of household businesses into corporate models, especially since this sector still plays a crucial role in job creation and livelihood maintenance.

Along with the Provincial Competitiveness Index 2.0, this year the Vietnam Federation of Commerce and Industry is launching the Private Sector Economic Efficiency Index for the first time. While the Provincial Competitiveness Index measures "institutional inputs," i.e., the quality of governance and the business environment, the Private Sector Economic Efficiency Index aims to measure "market outputs," including the ability of businesses to survive, be profitable, innovate, and move up the value chain.

The Private Sector Economic Performance Index comprises 23 indicators across two dimensions: the development of the private sector and its innovation capacity. The 2025 pilot results show that the top three localities are Ho Chi Minh City, Hanoi, and Quang Ninh; the national median score is 4.20 points.

The significance of the Private Sector Performance Index lies in the fact that this index not only looks at administrative reforms or the quality of government services, but also asks more direct questions: can private businesses grow, create more jobs, innovate, and improve their position in the value chain?

According to the report, the private sector currently comprises over 1 million businesses and more than 6.1 million business households, creating jobs for approximately 26 million workers, accounting for 50.2% of total employment nationwide. These figures demonstrate the significant role of the private sector not only in GDP growth but also in job stability, income, and the vitality of the economy.

In the current transitional period, the success of reforms is not measured solely by scores or rankings in the Provincial Competitiveness Index. More importantly, it is the ability to transform a favorable institutional environment into genuine business competitiveness. In other words, a proactive government must be reflected in the growth of businesses, in the innovation capacity, profitability, and resilience of the private sector.

With that approach, Chairman of the Vietnam Federation of Commerce and Industry, Ho Sy Hung, believes that the Provincial Competitiveness Index 2.0 and the Private Economic Efficiency Index 2025 can become two complementary tools: one measuring the quality of governance, the other measuring development results. This also provides a basis for central agencies, local governments, investors, and the business community to have additional data for reference in policy planning, resource allocation, and enhancing competitiveness.

In this new era of development, where the private sector is identified as the most important driving force of the economy, the requirements go beyond simply improving procedures or reducing compliance costs. More importantly, it is essential to build an ecosystem that is sufficiently transparent, equitable, and conducive for private businesses to invest, innovate, and grow sustainably.

https://nhandan.vn/pci-20-va-bpi-2025-thuoc-do-moi-cho-suc-bat-kinh-te-tu-nhan-post962338.html?gidzl=Yn83LC_6VMs93mfKpz1qQOq31r_IrI1bm0HLNTU78Z37MLGCXOSYDv5MK0xJrNKtnmK603PnvqOEoyPmRm

According to nhandan.vn

Source: https://huengaynay.vn/kinh-te/pci-20-va-bpi-2025-thuoc-do-moi-cho-suc-bat-kinh-te-tu-nhan-165659.html