Vietnam’s foreign investors often focus their efforts on either Hanoi, the political capital, or Saigon, the financial capital — or both. But new data show the country’s more promising places to do business are far from both major cities.
The latest Provincial Competitiveness Index ranks more rural areas in the Mekong Delta, the far north and the central coast highest overall on nine critical factors such as transparency, entry costs, land access, workforce training, and support services. Ho Chi Minh City ranks 13th among Vietnam’s 63 provinces and Hanoi ranks 51st — partly because bureaucracy and corruption in the big cities stifles business.
The Vietnam Chamber of Commerce, which first published the index in 2005, found backsliding in many provinces, especially Hanoi, in the latest annual update — based on a survey of 8,053 enterprises, including 1,540 foreign companies that tended to be less optimistic than in the past.
In contrast to Hanoi and Ho Chi Minh City, this year’s best five provinces to do business in Vietnam as measured by the competitiveness index are:
- Dong Thap (1) and An Giang (2). These two relatively remote Meking Delta provinces lie on the Cambodian border west of Saigon. Dong Thap has the most proactive local government in Vietnam and also ranks ranked among the best places to deal with land access, time costs and “informal charges,” presumably a euphemism for bribery. An Giang has a well-developed legal structure and relatively low entry costs.
- Lao Cai (3). Home of a multitude of ethnic minority cultures as well as Sapa, one of Vietnam’s most popular tourist destinations, Lao Cai borders China in the northern mountains. The province ranks among the best in Vietnam when it comes to transparency, low entry costs, low informal fees; it ranks among the highest in proactivity and legal institutions.
- Binh Dinh (4). This central coastal province was highlighted in this blog last fall as one of the most attractive investment destinations. Quy Nhon, provincial capital, has forward-looking managment, an ambitious development plan, advanced transportation infrastructure and the lowest business entry costs in Vietnam.
- Vinh Long (5). Situated in the center of the Mekong Delta in southern Vietnam, Vinh Long Province ranks especially high in proactivity, land access, and time costs.
Other regions of Vietnam that are rated high among places to invest include several other provinces in the Mekong Delta (Kien Giang, Bac Lieu, Tra Vinh, Long An and Can Tho City); Bac Ninh and Thai Nguyen in the North; and the central city of Danang.
Overall, the rankings make it clear the best return on investment is likely to accrue to those who venture outside Vietnam’s largest cities.