Hanoi fell 18 places to 52nd last year for best business environment in Vietnam, its lowest ever ranking, in an annual survey released on March 14.
The Vietnam Provincial Competitiveness Index (PCI) analyzes the country's cities and provinces in terms of ease of access to information and favorable conditions for private investment.
The survey, done by the Vietnam Chamber of Commerce and Industry since 2005, ranks the 63 cities and provinces in the country on a 100-point scale based on polling of 8,053 companies in all sectors.
The PCI measures nine criteria -- transparency, access to land use, labor training, assistance services for businesses, legal institutions, unofficial costs, entry cost for businesses, activeness of leaders, time costs.
Hanoi fell in the rankings due to poor performances in the categories of legal institutions, activeness of leaders, and access to land use.
The Mekong Delta of Dong Thap topped the 2012 list with 63.79 points, improving upon its fourth place in 2011.
Another delta province, An Giang, was in second place, up from 19th.
The northern provinces of Dien Bien and Tuyen Quang finished at the bottom of the list.
Lao Cai, the chart topper in 2011, fell to third.
Ho Chi Minh City moved up to 13th place from 20th.
The overall average decreased from 59.1 points to 56.2.
None topped 65 points, the "very good" level that six provinces achieved in 2011.
Edmund Malesky, lead researcher for the Vietnam PCI, said the 2012 index showed that petty corruption has decreased while serious corruption seems to have increased.
Over 50 percent of businesses said their unofficial expenses -- a euphemism for bribes -- accounted for only 6.5 percent of revenues, less than half the 2011 figure.
But the scale of corruption has expanded.
More than 20 percent of foreign-invested firms said they had to pay a lot of money in bribes, Malesky said, adding they are worried about having to get too many different licenses, which entail bribery.
Dau Anh Tuan, deputy head of the VCCI's Legal Department, said: Around 41 percent of companies -- compared to 23 percent in 2011 -- said they paid bribes to government officials to get contracts from government agencies and state-owned companies.
Most surveyed companies are much less optimistic about future business prospects compared to a year ago.
Before Vietnam joined the World Trade Organization in 2007, 76 percent of surveyed companies said they planned to expand. But only 33 percent said so last year, down 14.4 percentage points from 2011.
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