For the first time since Vietnam reorganized its administrative system and transitioned to a two-tier local government model, the 2025 Provincial Competitiveness Index (PCI 2025) has been released under a new administrative framework comprising 34 provinces and centrally governed cities.

The report, announced by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on May 15, marks not only a new phase in evaluating local economic governance, but also introduces the Private Business Performance Index (BPI) for the first time - a new metric designed to measure the real vitality of the domestic private sector.

Speaking at the launch ceremony, VCCI Chairman Ho Sy Hung said PCI 2025 is a landmark edition as it is the first assessment conducted under the country’s newly merged administrative structure of 34 provinces and cities.

After 21 consecutive years of implementation, this year’s PCI has been upgraded to PCI 2.0, featuring nine component indices and 98 evaluation indicators.

The criteria include market entry, access to resources, transparency, compliance costs for administrative procedures, informal charges, fair competition, business support policies, legal institutions and proactive local governance.

Notably, instead of publishing a traditional ranking table, VCCI has shifted to grouping localities into six governance quality tiers. The move is intended to better reflect differences among localities following mergers and align the assessment more closely with international practices.

The national median PCI score this year reached 63.9 out of 100, indicating that reforms aimed at improving the business environment continue to progress.

Rather than assigning specific rankings, VCCI honored five localities classified in the “excellent governance” group: Bac Ninh, Da Nang, Hai Phong, Phu Tho and Quang Ninh, listed alphabetically.

These leading localities shared a balanced governance structure, with at least five of the nine component indices ranking among the nation’s top 10.

Bac Ninh stood out for proactive governance and low administrative compliance costs, while Da Nang maintained its long-standing strength in market entry procedures, ranking first nationwide in that category.

Hai Phong drew attention with seven out of nine component indices placed among the country’s highest-performing localities, reflecting consistently strong governance across multiple areas.

Meanwhile, Phu Tho ranked second nationwide in access to resources, while Quang Ninh continued to perform strongly in fair competition and proactive governance.

For Vietnam’s two largest economic hubs, Hanoi and Ho Chi Minh City, the PCI 2025 results showed contrasting strengths.

Hanoi posted relatively high scores in access to resources and business support policies, though its fair competition score remained modest.

Ho Chi Minh City, meanwhile, demonstrated more balanced overall performance, standing out particularly in fair competition and access to resources.

Private sector moves beyond “defensive mode”

Another major development in this year’s report was the launch of the Private Business Performance Index (BPI).

According to VCCI, BPI 2025 evaluates the effectiveness of private-sector development through 23 indicators, focusing on business health, innovation capacity, participation in supply chains and profitability.

The results revealed significant divergence among localities, with the top three performers clearly ahead of the rest.

The national median BPI score stood at 4.2, while Ho Chi Minh City scored 5.67, Hanoi 5.51 and Quang Ninh 5.33.

Ho Chi Minh City ranked first nationwide in private-sector performance thanks to its large market size and the depth of its innovation ecosystem.

The city recorded the country’s highest number of newly established private enterprises and active businesses per 1,000 residents. It also led the nation in the participation of local firms in foreign supply chains.

Hanoi ranked second due to its strong research and development capabilities and close integration with domestic supply chains.

The capital recorded 3.7 newly established businesses and 22.22 active enterprises per 1,000 residents.

Quang Ninh ranked third thanks to its balanced development structure, particularly its strong business profitability.

More than 72% of businesses in the province reported profits - the highest rate nationwide.

According to VCCI Chairman Ho Sy Hung, Vietnam’s private sector has moved beyond a defensive phase and is now ready for stronger growth.

“However, for the private sector to accelerate further, bottlenecks related to markets, capital access and policy transparency must be decisively addressed within the next 12 to 18 months,” Hung said.

VCCI leadership also stressed that to achieve the target of 2 million businesses by 2030, governance policies need to shift decisively from a mindset of “management” to one of “partnership,” moving beyond merely reducing procedural burdens toward actively building business competitiveness.

Hong Khanh