[Podcast] Current status and Solutions to improve Provincial Innovation Index (PII) of Hau Giang Province

Key words: Provincial Innovation Index, PII, Hau Giang Province

Hau Giang Province, located in the center of the Southwest region, converges numerous favorable factors with great potential and advantages for socio-economic development, especially agriculture, logistics, and energy and tourism and more. On the other hand, the fact that Hau Giang’s Provincial Innovation Index (PII) is neither high nor positive does not commensurate with the province’s potential. Starting from this problem, a group of authors from the University of Economics Ho Chi Minh City (UEH) conducted the research project “Current status and solutions to improve Provincial Innovation Index (PII) of Hau Giang Province”.

The importance of science, technology and innovation towards local economic and social development

The Provincial Innovation Index reflects the nature, the level, and the results of local innovation activities so that policy makers and local leaders have the foundation in determining and selecting appropriate orientations and solutions for the socio-economic development of their locality in accordance with science, technology and innovation. To be illustrated in details as follows:

In terms of local governments at all levels:

(1) Providing backgrounds for strengths, weaknesses, potential factors and necessary conditions with the purpose of promoting socio-economic development based on science, technology and innovation of each locality.

(2) Serving as a scientific and practical foundation to develop and to effectively implement policies so as to promote and to create a favorable environment for science, technology and innovation activities in the locality.

(3) Promoting the implementation of local socio-economic development initiatives in accordance with science, technology and innovation, taking advantage of strengths and overcoming challenges.

(4) Providing tools and techniques that allow assessment and comparison of capacity and results of science, technology and innovation activities among localities as well as the quality of governance and state management of science, technology and innovation of each locality.

(5) Contributing to improving the capacity and the results of national science, technology and innovation activities; especially contributing to implementing, monitoring and evaluating the implementation of the Science, Technology and Innovation Strategy to 2030, the Socio-economic Development Strategy to 2030, the Intellectual Property Strategy to 2030 and other sustainable development goals.

In terms of investors: The results of local innovation assessment are useful reference information regarding the local investment environment for investors and businesses to make appropriate investment decisions.

In terms of research areas: The index provides a comprehensive database with a system of evaluation indicators that can be compared over time and promotes other researches.

In terms of the community of international organizations and donors: This is the foundation for reviewing and considering relevant sponsorship and activities in localities in Vietnam.

Overview of the current situation of Provincial Innovation Index 

The 2023 PII, with 52 indicators, are divided into 7 pillars according to the principles of the Global Innovation Index (GII) as follows:

• 5 input pillars reflect factors that create favorable conditions for socio-economic development inaccordance withscience, technology and innovation: (1) Institutions, (2) Human capital and Research and Development, (3) Infrastructure, (4) Market development level and (5) Business development level.
• 2 output pillars reflect the impactsof science, technology and innovation on socio-economic development: (6) Intellectual, creativity and technologyproducts, (7) Impact.

Figure 1: PII outcomes for the whole Viet nam country

Source: Ministry of Science and Technology (2024)

The overall picture of the current state of the socio-economic development model is dependent upon science, technology and innovation of each locality is presented in Figure 1. In general, there are significant differences among regions and localities together. In the leading group are localities with favorable natural and geographical conditions, concentrated in the Red River Delta (45.17 points), the Southeast (44.81 points), with construction-industry and services accounting for a high proportion in the economic structure with diverse industrial parks, developed infrastructure besides strong scientific, technological and innovation activities. Upcoming are the localities in the Southwest region (36.36 points). In the last group, on the contrary, are the localities that still have limitations in socio-economic development. In other words, these localities have geographical locations and natural conditions that are unfavorable for the development and the application of science, technology and innovation contributing to socio-economic development (concentrated in the Northwest and Northeast).

Particularly, for the 13 localities in the Southwest region, according to scores and rankings, it can be recognized that the regional localities are divided into three quite obvious groups with Can Tho and Long An in the first group; Dong Thap, Tien Giang, Ben Tre, Vinh Long, Hau Giang and Tra Vinh are in the second group with scores ranging from 34.94 to 38.32 points; and Bac Lieu, Soc Trang, An Giang, Ca Mau, Kien Giang are in the bottom group with scores from 29.80 to 32.54 points. All of these results are consistent with the characteristics, natural conditions and economic structure of each locality in the region.

Hau Giang Province, located in the center of the Southwest region, converges numerous favorable factors with great potential and advantages for socio-economic development, especially agriculture, logistics, energy and tourism and so on. However, the fact that the Provincial Innovation Index is neither high nor good does not commensurate with Hau Giang Province’s potential. Hau Giang Province’s Provincial Innovation Index ranked 32^nd compared to all 63 Provinces and Cities nationwide; ranked 7^th compared to all 13 localities in the Southwest region (with a score of 36.54). The innovation input score reached 37.42 points and the innovation output score reached 35.66 points. Regarding the component index that constitutes PII, according to Figure 2, only 3 out of 7 pillars, overall, have scores higher than that of the national average, including: Institutions (60.15 points), Infrastructure (64.33 points) and Impact (54.84 points), especially the Infrastructure pillar has the leading score in the Southwest region. The remaining 4 pillars are much lower than the national average score, with the pillars of Human capital and Research and development products (21.66 points), Market development level (25.06 points), Enterprise development level (15.89 points) and Knowledge, Creativity and Technology products pillar (12.19 points). It should be noted that only Knowledge, Creativity and Technology product pillar recorded the lowest points in the entire region. This result indicates that, besides the strengths that need to be maintained, Hau Giang Province is having some weaknesses that need to be overcome to improve Provincial Innovation Index. Therefore, a timely and detailed assessment of the PII situation in Hau Giang Province is necessary, pointing out a comprehensive, multi-dimensional picture of reality, strengths, weaknesses, potential factors and potential challenges as well as crucial conditions for socio-economic development based on Science, Technology and Innovation of Hau Giang Province, providing solutions to improve and to enhance in the upcoming time; additionally, on this foundation, evaluating the reasonable and unreasonable aspects of the current ranking method to make more complete recommendations.

Figure 2: Pillar scores of Hau Giang’s PII in 2023

Source: Compiled by the research team

Assessment outcomes regarding the current situation of each PII pillar in 2023

*Institutional Pillar

Hau Giang Province is recorded a high Institutional pillar score of 60.15 points, being among the top 15 leading localities in the country and top 3 localities in the Southwest region. The pillar includes 2 indicators: policy environment (with 3 component indicators) and business environment (with 4 component indicators). In terms of the policy environment index, the component indexes include policies to promote science, technology and innovation to serve socio-economic development, legal institutions and security and order, and business support policies reaching 27,26; 7.55 and 5.85, respectively; all of which contributing to helping this index reach 46,332 points. In terms of the business environment index, the component indexes including market entry costs, local government dynamism, administrative reform and fair competition reached 7.25; 7.26; 86.51 and 7.00, respectively; contributing to helping this index achieve a relatively high score of 73.96 (only 5.08 points less than that of the Province with the highest score). From the above results, it can be identified that the business environment index is a bright spot in Hau Giang Province. Hau Giang Province is the first locality to organize a trade-investment promotion conference in the Southwest. Thanks to this event, Hau Giang is considered a province that quickly grasps the advantages of new policies and guidelines. In the coming years, Hau Giang Province should continue to promote their business environment advantages to continue promoting the development of the institutional pillar in particular and the PII index in general.

Table 1: Pillar scores 1. Institutions

Source: Compiled by the research team

*Human capital and research and development

Table 2: Pillar 2 Score. Human capital and research and development

Source: Compiled by the research team

The second pillar in evaluating the PII index is Human capital and research and development. From the table data, it can be identified that Hau Giang scored 21.66 points (the highest score is 63.06) and ranked 53^th compared to all 63 Provinces, among the top Provinces with the lowest pillar 2 scores. This pillar includes 2 indicators: education with 26.62 points and research and development with 16.71 points. For the education index, the three component indexes are the average score on the high-school graduation exam (5 subjects), the rate of high school students participating in science and technology research competitions, and the average expenditure on education and training for each person attending school to score points several times achieve 6.30; 0.54 and 15.57, respectively. For the research and development index, the four component indexes are R&D human resources (full-time)/10,000 citizens, spending on science and technology/GRDP, spending on research and development/GRDP and number of science and technology organizations/10,000 citizens scored 4.08, 0.05, 0.04 and 0.08, respectively; in which, the last three component indexes have the lowest scores in the human capital and research and development pillars. This suggests plans and strategies to build spending sources for Science, Technology and Research-Development activities for Hau Giang to improve this pillar score.

*Infrastructure

From the table data, it can be stated that the Infrastructure pillar achieved a relatively high score of 64.33 (compared to the highest score as 82.47), ranking in the Top 10 in the country and having the highest score of the infrastructure pillar in the provinces in the Southwest region. This pillar includes 2 indicators: ICT infrastructure with 65.48 points and general infrastructure and ecological environment with 63.17 points. In terms of the ICT infrastructure index, the two component indices including digital infrastructure and E-governance have scores of 0.73 and 2.95, respectively. For the general infrastructure and ecological environment index, the three component indexes including basic infrastructure, proportion of agricultural land with infrastructure built and environmental governance have scores of 48.09; no data and 4.37, respectively. In general, the scores of all component indexes in the infrastructure pillar are relatively high. Hau Giang Province should continue to promote and to follow the current digital infrastructure development strategy in the upcoming years.

Table 3: Pillar 3 scores. Infrastructure

Source: Compiled by the research team

*Level of Market development

The fourth pillar in evaluating the PII index is the Level of market development. From the table data, it can be identified that Hau Giang Province scored 25.06 points (the highest score is 77.81) and ranked 51^th compared to all 63 Provinces, among the top provinces with the lowest market development scores in the country. This pillar includes 2 indexes: finance and investment with 26.52 points and market size with 23.59 points. For finance and investment, there are 4 component indexes including: Credit to the private sector/1,000 employees, Microfinance/GRDP, Average annual production and business capital of enterprises and fixed asset value, Enterprises’ long-term financial decisions and investments have scores of 85.16; 0.04; 33.20 and 12.56, respectively. In terms of market size, there are 3 component indexes including the number of businesses in the science and technology professional services industry/1,000 businesses, business density/1,000 people and contribution to the country’s GDP with scores of 66.84; 3.50 and 0.52, respectively. In general, compared to the whole country, the component indexes in the market development level Pillar in Hau Giang Province are relatively low; implying that there needs to be changes in the future in terms of the Province’s education development strategy.

Table 4: Pillar 4 scores. Level of Market development

Source: Compiled by the research team

*Development level of the local enterprises

The development level of enterprises in Hau Giang Province reached 15.89 points, ranking 44^th compared to all 63 Provinces and Cities and reaching the average level compared to that of the whole country (with the highest score of 56.85). The level of development of an enterprise is measured based on three indicators: intellectual workers, creativity connections and knowledge absorption. For enterprises in Hau Giang Province, Intellectual labor index achieved the highest total score of 20.89 points; however, compared to that of the whole country (with the highest score of 81.68), this figure is still at a low level. This index has 3 component indexes wwith the detailed scores as follows: Ratio of labor training expenditure in total enterprise expenditure with 8.05 points; Rate of workers aged 15 and older who have been trained is 12.48 points and Rate of businesses with R&D activities is 0.3 points – the lowest score in the knowledgeable labor index. Next is Creativity connections index with 12.71 points, reaching the lowest score among the 3 indexes of Pillar 5. This index has 3 component indexes, including: Research cooperation between science and technology organizations and enterpries with 0.00 points – the lowest score among the pillar 5 component indexes; Ratio of active investment projects in industrial zones/1,000 enterprises is 9.48 points and Ratio of active investment projects in industrial clusters/1,000 enterprises is 20.54 points. Finally, the third index of pillar 5 is Intellectual absorption with a score of 14.08, reaching a relatively low level when compared to this index with other domestic enterprises across the country. Intellectual absorption index has 3 component indexes, including: Foreign direct investment/GRDP (%) with 0.00 points; Rate of businesses with innovation activities is 0.4 points and Rate of businesses with ISO certificates/1,000 businesses is 12.24 points.

Table 5: Pillar 5 scores. Level of Enterprise development

  Source: Compiled by the research team

*Intellectual, innovation and technology products

Table 6: Pillar 6 scores. Intellectual, innovation and technology products

Source: Compiled by the research team

The pillar score of Intellectual, Creativity and Technology Products of Hau Giang Province ranked 62^th compared to all 64 Provinces and Cities, with only 12.49 points, in which the index group Intellectual Creativity, Intangible Assets and Intellectual spreading reached the following points: 11.21, 11.80 and 14.45, respectively. In general, all of the indicators in the Province’s Intellectual, Innovation and Technology Products pillar scored low. Even the Trademark Application and Startup Rate indexes reached 0 point. The value of the Trademark Registration Index per 1,000 enterprises reached 39.20, the lowest score in the country. The proportion of innovative startups in the total number of newly-established enterprises is 0%. In addition, the index of plant variety registration applications per 10,000 people and geographical indications that have been granted protection certificates per total commune only reached a value of 0.01 while the Province’s value was the lowest at 0.

*Impact

Table 7: Pillar 7 scores. Impact, Index groups and Component indexes of Hau Giang Province

Source: Compiled by the research team

The Impact pillar score of Hau Giang Province reached a relatively high level compared to that of the whole country with 58.84 points, ranking 11^th in the country, in which the Impact on manufacturing-business index group reached 64.88 points. (the highest score is 76.23 points) and the Socio-Economic Impact index group reached 52.80 points (the highest score is 83.73 points). In particular, the Province’s index of OCOP products with 4 stars or higher reached 0.91, equivalent to 100 points, holding the Top 2 position in the country along with Hanoi Capital. This results from the strength of agricultural production, this Hau Giang locality has diverse qualified agricultural products according to the characteristics of each region, which is very convenient in choosing specific types of agricultural products to implement OCOP. OCOP products of Hau Giang Province are dependent upon the local key and typical agricultural products as follows: rice, pineapple, jackfruit, sliced ​​fish and so on to produce, to process, and to diversify new products as follows: khô mít, pate mít, bánh phồng chả cá thát lát and morre. Most OCOP products are certified with appropriate quality standards like ISO, VietGap, GlobalGap, GMP, HACCP and so on. With Production and processing technology is increasingly advanced, OCOP entities have applied many modern machines and equipment into production, innovated designs, packaging, product labels and so on, creating produce products that both ensure quality and are highly aesthetic, creating trust for consumers.

The index with the lowest score in Pillar 7 is Export Value, reaching 0.36, corresponding to 9.77 points on a scale of 100. The reason results from the general difficult consequences from the domestic and the international situations: geopolitical conflict between Russia and Ukraine, disruption of global supply chains, sharp increase in inflation, tightening monetary policy in many countries and so on, all of which cause large and traditional export markets to be withdrawn narrow with fewer orders while domestic production costs remain high, making production and business activities of enterprises difficult. Hau Giang Province’s per capita income only reached a value of 4.19, equivalent to 35.30 points. The remaining indexes in the pillar maintain relative scores compared to those of the whole country which range from over 50 to 80 points.

Conclusion

Hau Giang Province, located in the center of the Southwest region, converges many favorable factors with great potential and advantages for socio-economic development. However, Hau Giang Province’s economic development is not commensurate with their potential and strengths. VCCI’s research results indicate that Hau Giang has not been a locality with socio-economic development based on Science, Technology and Innovation with good innovation index.

The results of analyzing the current situation of the PII index 2023 clearly demonstrate that Hau Giang Province is the leading locality in the Southwest region in the Infrastructure pillar thanks to high scores in the component indices of Digital Infrastructure and Environmental Management. In addition, Hau Giang Province ranked second in the Regional Impact pillar score and third in the Institutional pillar score. This implies that the locality does have ‘bright spots’ and achievements in infrastructure development and actively improving the business environment, quality of public administrative services, digital transformation, and quality assurance, high aesthetics for OCOP products. Therefore, in the upcoming years, Hau Giang Province should continue to promote the advantages of local government dynamism, fair competition in the business environment, digital infrastructure, environmental management and promote strengths thanks to on agricultural production, producing specific agricultural products to implement OCOP.

Besides these strengths that need to be maintained, Hau Giang Province are having some weaknesses that must overcome in order to improve the innovation index at the local level. Typically, the number of research and development human resources is small; not many human resources with equipped with deep expertise; the average expenditure on education and training per person attending education is low; the rate of workers aged 15 and higher have been trained accounts for a small number; the number of trademark registration applications and the ratio of creative startups to the total number of newly-established businesses is the lowest in the country.

In short, it can be stated that there is much room for local governments to promote innovation through the PII Index:

• Policies for digital and creative services are rather vague and need to be strengthened and clearer. The institutional environment needs to be bettered so that businesses can feel secure in doing business. This includes streamlining business formation procedures, product licensing, reducing tax burdens, and more effective copyright protection. Continuing to promote administrative reform associated with building E-government; digital transformation; Improving provincial competitiveness indexes.
• To promote the human capital input and development and research pillars, Hau Giang Province needs to have policy orientations as well as synchronous activities to promote and to support the development of science, technology and innovation. Some proposed solutions are as follows: Training and improving the quality of human resources for R&D and innovation activities; Increasing budget for research and development projects; Developing a long-term and sustainable budget plan for research and development; Encouraging businesses and organizations to engage in R&D activities by providing supportive policies and tax incentives, grants and start-up support. Promoting public-private partnership models to increase investment and development in the field of science and technology.
• In terms of Pillar of enterprise development level, the rate of trained workers aged 15 and higher is limited. This means the need to improve the quality of education and training, building links between schools, research institutes and businesses in order to ensure that training programs reflect the actual needs of the labor market. Motivating and providing internship and employment opportunities for students.Training programs and teaching methods need to be innovated in a streamlined, modern, and practical direction. Besides the knowledge in coursebooks, learners need to practice more as well as be equipped with soft skills to meet the increasing demands of society. Furthermore, organize career counseling activities to help students clearly understand career options as well as the benefits and the opportunities that study and training can bring.
• In terms of Pillar of intellectual, creativity and technology products is being low because the number of collective trademark registration applications per 10,000 people is small; therefore, there needs to be policies to support businesses to access and register more easily. Furthermore, localities should simplify the registration process and procedures related to patent protection, reducing complexity and costs for businesses. Creating a stable and transparent legal environment to motivate businesses to participate in patent activities. Creating networks and communities so that businesses can share experiences, ideas and resources with each other. Collaborating with research and educational institutions to promote innovation and technology development in business.

*References: Ministry of Science and Technology (2024), Report on the Local Level Innovation Index (Provincial Innovation Index – PII) in 2023.

Author group: Assoc. Prof., Dr. Phan Thi Bich Nguyet, Assoc. Prof., Dr. Nguyen Thi Hong Nham – Ho Chi Minh City University of Economics (UEH)

This is an article in a series of articles spreading research and applied knowledge from UEH with the message “Research Contribution For All – Research For The Community”, UEH respectfully invites readers to look forward to the upcoming the UEH Research Insights.

News and photos: Author group, UEH Department of Communications and Partnerships