Vietnam’s business reform drive entered a new phase this week as the Vietnam Chamber of Commerce and Industry (VCCI) unveiled its first-ever competitiveness assessment covering the country’s newly reorganized system of 34 provinces and centrally governed cities.
The report, released on May 15, combines the 2025 Provincial Competitiveness Index (PCI 2025) with a broader review of Vietnam’s private sector economy, offering one of the most comprehensive snapshots yet of the country’s business environment and economic governance.
According to VCCI Chairman Ho Sy Hung, the report arrives at a pivotal moment as Vietnam aims to transition into a new era of economic expansion, targeting double-digit GDP growth from 2026 onward.
Mr. Hung assesses that Vietnam’s legislative philosophy is also evolving toward a more development-oriented model, where businesses and citizens are placed at the center of policymaking.
“The law must pave the way for innovation and growth,” he said, warning against outdated approaches that restrict new ideas simply because they are difficult to manage.
PCI 2.0 Introduced
A key highlight of this year’s report is the launch of PCI 2.0, a major upgrade to Vietnam’s long-running provincial competitiveness index after more than two decades of implementation.
The revamped framework was designed to evaluate economic governance within Vietnam’s new administrative structure of 34 provinces and cities. Unlike previous editions that focused primarily on the business climate, PCI 2.0 expands its scope to assess the broader ecosystem supporting private-sector development.
The new index measures areas including: Transparency, Administrative compliance costs, Informal business expenses, Equal competition, Access to resources, Proactive local governance
This year, VCCI shifted away from publishing a strict numerical ranking and instead grouped provinces by governance quality, aligning the methodology more closely with international standards.
Five Provinces Recognized for Outstanding Governance
Five localities were recognized as belonging to the country’s top-performing governance group: Bac Ninh, Da Nang, Hai Phong, Phu Tho, Quang Ninh
Officials said these provinces demonstrated balanced performance across multiple governance indicators rather than relying on a single competitive advantage.
Among the standouts: Bac Ninh scored highly in proactive governance and streamlined administrative procedures. Da Nang maintained its reputation for easy market entry and business establishment. Hai Phong posted strong results across seven of the nine component indicators. Phu Tho ranked near the top nationwide for access to resources. Quang Ninh continued to perform strongly in fair competition and government responsiveness.
New Private-Sector Efficiency Index Debuts
Alongside PCI 2025, VCCI also introduced the Business Performance Index (BPI) for the first time. The new metric aims to evaluate the real economic effectiveness and innovation capacity of private enterprises at the provincial level.
Under the BPI framework, Ho Chi Minh City, Hanoi and Quang Ninh emerged as leading performers.
According to Dr. Ho Sy Hung, a healthy business environment should not be measured solely by licensing speed, but by whether companies are able to survive, generate profits, and move up the value chain.
Vietnam’s Private Sector Growing — But Still Fragile
Speaking at the event, Mr. Dau Anh Tuan – Deputy Secretary General, Head of the Legal Department of VCCI said the report presents a mixed picture of optimism and unresolved structural bottlenecks.
Vietnam’s private sector now accounts for 96.6% of all active businesses nationwide, with more than one million enterprises operating across the country. Together with approximately 6.1 million household businesses, the sector employs around 26 million workers — more than half of the national workforce.
However, the report warns that most private firms remain small and financially vulnerable:
More than 80% employ fewer than 50 workers.
Over 70% have registered capital below VND10 billion.
Only 30.9% of businesses plan to expand operations in 2025, while 54.8% intend to maintain current scale and wait for clearer market signals.
The report identifies three major barriers holding businesses back including weak market demand and difficulty finding customers; limited access to financing due to collateral requirements; low predictability in legal and policy changes
Innovation Gap Remains Significant
The report also highlights Vietnam’s lagging innovation performance compared with regional peers.
Only 8.8% of Vietnamese businesses reported introducing innovative products or services — far below rates seen in countries such as Malaysia and Thailand.
Meanwhile, 81.5% of household businesses said their revenues had declined over the past year, underscoring the need for deeper structural reforms and stronger support mechanisms for small enterprises.
Private Sector Calls for Long-Term Policy Stability
Business leaders attending the event stressed that private-sector growth will require more than entrepreneurial resilience alone.
Speaking from the practical perspective of businesses, Nguyen Duy Hung – Member of the Board of Directors of Tan Hiep Phat Group said that for Vietnam’s private sector to grow stronger, more sustainably, and expand further, internal resilience alone is not enough.
“What businesses need most is not preferential treatment. They need a stable, predictable, transparent and fair environment; protection of business and property rights; streamlined administrative procedures; and an effective policy implementation system from the central government to local authorities,” Mr. Hung said.
According to him, private enterprises themselves must make greater efforts to overcome challenges, become more transparent, improve governance, strengthen compliance, invest with a longer-term vision, pursue sustainable development, and act more responsibly toward employees, customers, partners, communities, and the country.
He also noted that the report not only reflects issues within the business environment, but also helps identify bottlenecks, measure progress, and spread effective governance and implementation models across localities.
“This is a valuable source of data for policymakers to continue refining institutions, mechanisms, and policies. At the same time, it helps businesses reassess themselves so they can become more transparent, improve governance, invest for the long term, and develop more sustainably,” he emphasized.
With more than 30 years of development, Tan Hiep Phat Beverage Group is currently the only Vietnamese company ranked among the top five beverage producers in Vietnam. The company has consistently pursued a strategy focused on modern technology investment, innovation, strengthening internal capabilities, comprehensive quality improvement, and sustainable development.
Beyond making its mark in the beverage industry, the company has also contributed significantly to economic growth, job creation, supply chain development, and enhancing the competitiveness of Vietnam’s private sector — particularly through green development initiatives within the beverage industry.
According to Tan Hiep Phat representatives, partnering with VCCI in the Vietnam Private Sector Economic Report and Provincial Competitiveness Index Program is not merely support for a research initiative, but also reflects the company’s responsibility in helping build a transparent, efficient, and modern business environment.
Through these efforts, the company aims to contribute to improving the competitiveness of the private sector, local economies, and the national economy as a whole, supporting Vietnam’s goal of achieving rapid and sustainable growth in the country’s next phase of development.
At the event, the VCCI Chairman also acknowledged and highly appreciated the participation of Tan Hiep Phat Beverage Group as a founding partner and strategic companion of the Vietnam Private Sector Economic Report Program.
“The participation of a Vietnamese private enterprise in a national-scale policy research program demonstrates a spirit of initiative, responsibility, and a shared aspiration to help build a transparent and modern business environment, contributing to the sustainable development of the business community and the national economy,” the VCCI leadership stated.
