Ph.D Huynh The Du: "Develop Thu Thiem special economic zone in Ho Chi Minh City like Shanghai Pudong in China"

"If Ho Chi Minh City (HCMC) defines the proper direction, budget allocation mechanism and rationality for the city, it will take only 10 years to create a basic change of a modern city and only 30 years to transact from a third world city to a first world city," said Ph.D Huynh The Du.

HCMC is competing with other regional cities

What are the biggest obstacles to fully exploit the potential and strength of Ho Chi Minh City?

Ph.D Huynh The Du: The basic reason is that the mechanism and policy are mostly determined by the central government or policy of the whole country; Also, there are not enough resources to create a precondition for the city to develop. Since 1990, the budget expenditure for the city has accounted for just under 8.3 per cent of its Gross Regional Domestic Product (GRDP) and tends to decrease in recent years.

Currently, HCMC can only use one-fourth of the mobilized budget, which is too low for it to meet the essential needs, especially infrastructure construction.

If the mechanisms are well handled, HCMC will have more activities and the economic cake will grow. 

Megacities that create added value and job opportunities have become the driving force of such global economic giants as South Korea, China and Singapore.

However, Vietnam still lacks those megacities; and instead of being the driving force and closing the gap with other big cities in the region, HCMC has been squeezed.

What is the key to solve those problems?

Ph.D Huynh The Du: The point here is that HCMC is competing with the city of other countries to attract three important groups including businesses, and talented and rich people.

In the context of globalization today, developing countries like Vietnam face many obstacles in attracting those groups. Once HCMC or Hanoi is not competitive enough, they would not be able to attract the local talented and rich citizens. That is why  Vietnamese people invested US$3 billion in real estates in the U.S. and hundreds of thousands of overseas students try to seek for opportunities to work in the foreign countries, leading to the brain drain in Vietnam.

Currently, HCMC has to contribute a part of its budget revenues to support other localities. However, it is too much for the city to maintain its striving engine and ability to promote the advantages of the region. Vietnam focusing too much on this equity goal will affect its long-term and prosperous development.

The government should thoroughly consider the wishes of its citizens, especially peasants. Most of them want their children to live in urban cities and have a better life. Therefore, resources should be focused on developing big cities like HCMC and Hanoi to create jobs for people and driving force for the development of the country.

Budget of HCMC is too low and unreasonable

What do you think about the financial solution in the draft resolution of the National Assembly on the mechanism and policies piloting the development of HCMC?

Ph.D Huynh The Du: The current low budget of HCMC is unreasonable. This will not only hinder the development of the city but also negatively impact on the country at large. Therefore, proposing solutions and mechanisms for HCMC to fully exploit its resources and increase its budget revenues for the development purposes is very necessary.

Also, HCMC should be given more autonomy and have better mechanisms to do better in promoting the role of some companies such as Tan Thuan Industrial Promotion (IPC), HCMC Infrastructure Investment (CII). These are pioneers having capability of building the key infrastructure of HCMC.

Can these financial solutions make a breakthrough to help HCMC focus resources to develop?

Ph.D Huynh The Du: We cannot expect too much from the property taxes if the new tax level which is VND3,000-5,000 billion (roughly US$132.3-220.5 million) per year, equal to 0.3-0.5 per cent of gross regional domestic product, is approved.

Also, HCMC expects a lot on the mobilizing capital from the society through the Ho Chi Minh City Finance and Investment State-Owned Company (HFIC). However, it needs tens of billions of US dollars for this model to effectively operate and promote its role. While HFIC’s total assets are too small compared to the size needed, accounting for just over one per cent of HCMC’s GDP.

Meanwhile, raising the central budget rate for the city from 18 per cent to 23 per cent is impossible. Therefore, developing special economic zone will be a breakthrough solution.

Currently, HCMC has a large market and the capability of attracting human resources, which is a basic condition for the construction of SEZs. Therefore, HCMC should develop Thu Thiem new urban area and neighboring areas into an SEZ like Shanghai Pudong SEZ to create a push for the development HCMC’s economy

Thank you very much!