However, ever since the outbreak of the Covid-19 pandemic and other difficulties created by the global slowdown and rising inflation, the economy of Ho Chi Minh City has fallen drastically to only 15.46 percent in 2021, 15.55 percent in 2022, and now showing the lowest increase of only 0.7 percent in the first quarter of 2023.
It is true that the economy of Ho Chi Minh City is more vulnerable and more likely to be affected by changes in market conditions than many other provinces across the country. But it must also be acknowledged that the economy of Ho Chi Minh City has revealed its internal limitations. To return back to its former status, Ho Chi Minh City must comprehensively evaluate its entire economic structure and reconstruct its strategies towards more resilience in the future.
Internal limitations
While disbursement of public investment and government spending is rated by international organizations and domestic agencies as one of the most important drivers for economic growth of Vietnam in 2023, in the first quarter, Ho Chi Minh City disbursed only 2 percent of public investment capital compared to the national average of 9.7 percent. The decline of the real estate industry to 16 percent can be in large part related to sluggish legal procedures, while the drastic removal of the authorities is not yet clear. Therefore, in the ranking of Provincial Competitiveness Index (PCI) in 2022, Ho Chi Minh City ranks at 27 out of 63 provinces, and the dynamic index of government agencies of Ho Chi Minh City ranks at 62 out of 63 provinces.
Such figures show that the growth momentum in Ho Chi Minh City is not entirely due to external factors but mostly to internal factors. The slow disbursement of public investment capital and handling of procedures to remove difficulties for enterprises is due to a slow mechanism, because officials and employees are afraid of taking responsibility, and do not dare to act, give advice, or offer a proposal.
This is an issue recognized by the leaders in Ho Chi Minh City as a challenge that needs to be overcome. Ho Chi Minh City urgently needs mechanisms for government leaders at all levels to be bold, proactive, and drastically implement schemes so as to create a safe and attractive investment environment. These mechanisms will help Ho Chi Minh City to escape being termed as a declining economy.
Ho Chi Minh City contributes up to 15 percent towards the GDP and 30 percent towards the state budget of the country. However, Ho Chi Minh City has to follow the same regulations, policies, and mechanisms as that of all other localities. As a result, the authority that Ho Chi Minh City has on people, apparatus, budget, resources, investment, culture, education, health, science, and technology is not much different from the regulations applied in other provinces.
When the regulations are too tight and unclear, plus with fear of applying responsibility, it is understandable that decision-making will be delayed and regular written consultations to central ministries and branches will hold back progress. Finally, businesses, investors, and the people as well as the economy of Ho Chi Minh City are affected, which leads to a loss for the whole country.
Reaffirming position
Ho Chi Minh City holds many cards to accelerate growth. These are large-scale investment projects of registered and soon-to-be-implemented private enterprises and foreign-invested enterprises. There is a long list of projects of domestic and foreign investors who are under research and are in the process of completing investment registration procedures in Ho Chi Minh City.
In addition, there are large-scale public investment projects such as inter-regional traffic projects like the Ho Chi Minh City-Moc Bai expressway; the expansion of the Ho Chi Minh City-Long Thanh-Dau Giay expressway; the Ring Road 3; the Ring Road 4; Can Gio international transshipment port; Thu Thiem-Long Thanh light railway; Ho Chi Minh City-Can Tho railway; and the Ben Thanh-Suoi Tien metro. But in order to accelerate these projects, Ho Chi Minh City needs to have outstanding specific mechanisms to speed up the project approval process, mobilize capital from sources and from the participation of the private sector.
Ho Chi Minh City also has the largest consumer market in the country. The potential for service and tourism development has advantages that few other localities can match. Ho Chi Minh City has the largest number of businesses in the country with more than 210,000 SMEs, 7,300 FDI enterprises, and 387,500 business households. This potential can be exploited more strongly if the business atmosphere and enthusiasm match the desire to compete the projects.
If Ho Chi Minh City boldly and proactively implements measures to reform the business environment, investment environment, and solve difficulties and obstacles for businesses and investors, then Ho Chi Minh City can return to its previous rapid growth trajectory and reassert its position as the economic hub and growth engine of the country.
A new Resolution replacing NQ54 is being developed with the expectation of forming a unique and superior mechanism for Ho Chi Minh City with clear regulations, protected cadre who dare to think, dare to do, and dare to act for people, businesses, and investors. From here on there must be step by step ways to repel the stagnation of the administrative apparatus, which Ho Chi Minh City leaders have identified as one of the biggest obstacles to economic growth.
