In results launched yesterday, the city gained the top score of 66.87 points.
Da Nang's success has been attributed to effective implementation of the "Year of Enterprise" programme, under which the administration took practical steps in creating a favourable business environment.
The initiatives included strengthening administrative and procedural reforms, improving security of land and business premises, facilitating access to credit, and actively organising dialogues and meetings to remove barriers identified directly by the business community.
Following Da Nang were the Mekong Delta province of Dong Thap (65.28 points) and the northern province of Lao Cai (64.67 points).
While, Dong Thap's treatment of enterprises as partners in socio-economic development was greatly appreciated by local firms, Lao Cai created its own district competitiveness index to receive governance feedback from businesses and other economic actors.
After 10 years of the PCI Survey, HCM City entered the top-five group of the best-governed provinces and cities in Viet Nam.
In this category the northern province of Quang Ninh was listed among the top five performers for the second year running.
The rest of the top 10 provinces and cities in 2014 are made up by Long An, Thai Nguyen, Kien Giang, Bac Ninh and Vinh Phuc. Ha Noi went up seven places to reach the 26th rank.
Northern mountainous localities were still in the lowest PCI group with Dien Bien Province at the bottom.
The PCI, first launched in 2005, aims to assess the ease of doing business, economic governance and administrative reform efforts of local governments of 63 provinces and cities in Viet Nam.
The 2014 report was developed on the basis of feedback received from more than 9,800 domestic private firms.
The survey found increased business confidence in 2014, with 10.8 per cent of domestic firms planning to increase their operations after two years at a historical nadir and the number of firms adding employees almost doubling to 11.5 per cent from the record low levels of 2012 and 2013.
In 2014, nearly half the firms (46.1 per cent) expected to expand their businesses over the next two years, an increase from the 32.5 per cent reporting such plans in 2013.
The PCI 2014 report also revealed the results of the fifth annual PCI foreign direct investment survey of nearly 1,500 businesses from 43 different countries whose operations are located in 14 provinces with the highest concentrations of foreign invested enterprises.
Around 16.3 per cent of foreign invested enterprises increased their investments in existing operations and 65.1 per cent added new employees to their payrolls. Over half of the surveyed businesses intended to increase the size of their operations in the next two years.
The FDI business survey also showed that Viet Nam continued to have competitive advantages over other countries, such as low expropriation risk, policy stability, reasonable taxes and the ability to influence policies that affect their business.
However, enterprises also said the business environment of Viet Nam is still significantly less attractive when it comes to corruption, regulatory burdens, quality of public services (such as education and health care) and the quality and reliability of infrastructure.
US Ambassador to Viet Nam Ted Osius said the PCI was a key polity tool because it amplified the voice of entrepreneurs, the domestic private sector and foreign invested firms. It was developed to help create a more competitive and transparent business environment, he said.
"Over the past ten years, the PCI has played a widely recognised role in advancing economic governance in Viet Nam, during a time when improvements in governance have been critical to Viet Nam's ability to take full advantage of trade agreements like the US-Viet Nam bilateral trade agreement and the World Trade Organisation," he said.
"The survey findings show renewed optimism about future investment, along with a widespread positive outlook, shared by both domestic and foreign companies, on the potential of the Trans-Pacific Partnership to spur new investment and growth. As I often say, nothing is impossible."
Chairman of the Viet Nam Chamber of Commerce and Industry (VCCI), Vu Tien Loc, said the PCI has motivated localities to speed up reforms and be more active in creating a more favourable business environment. It has recorded positive results as seen in efforts made by provinces and cities to improve governance quality, he said.
Significant improvements can be seen in terms of joining markets, transparency, labour training and services in support of businesses, he added.
"The report shows that both domestic and foreign firms are more positive about business prospects in the coming time," he said.
The overall PCI comprises important sub-indices reflecting economic governance areas that affect private sector development, including entry and time costs, land access, transparency and informal charges.
It also deals with policy bias, proactivity, business services and labour and provides policy-makers and provincial leaders with useful information and recommendations for action.
The PCI was jointly launched by the VCCI and the US Agency for International Development (USAID). — VNS
