The Provincial Competitiveness Index (PCI) was developed in 2005 by the Vietnamese Chamber of Commerce and Industry and the U.S. Agency for International Development-funded Vietnam Competitiveness Initiative. Since that time, the PCI has come to be seen as a critical tool for measuring and assessing the standards of economic governance in Vietnam’s 63 provinces from the perspective of over 10,000 private sector businesses. The year 2009, which marks the fifth iteration of the PCI analysis, is especially important because it takes place during a period of declining private sector optimism. Only 65 percent of private operations in Vietnam intend to expand their businesses over the next two years, compared with 78 percent in 2008 and 77 percent in 2007. Small firms have been more severely traumatized by the current global economic crisis than others; only 47 percent claim they plan to expand. It is in these periods of declining business confidence that economic governance becomes most important to entrepreneurial decision making. Business owners are concerned about their prospects for the future because they are uncertain both about economic events outside of the control of Vietnamese policy makers and about the policy decisions of Vietnamese officials themselves. In such an environment, clear, transparent, and fair regulatory rules and policies become paramount for assuaging firms’ fears and helping them make accurate predictions about future business prospects. Thus, the 2009 PCI can be a helpful signpost to help provincial policy makers address weaknesses, and thereby help private entrepreneurs overcome the current economic hardships
