However, looking back at the development process in the last three decades, it is necessary to study many aspects to see and understand whether Ho Chi Minh City can still be the driving force for economic growth of the whole country, or whether we need to restructure and redesign the economic polices and its institutions.
The position and role of Ho Chi Minh City for the Southern region as well as the country was determined in early 1980s under Resolution 01/BCT of the Politburo. The process of opening up and integrating raised the level of the City as an economic center and a modern city comparable to other major cities in the ASEAN region, but now it seems that Ho Chi Minh City is beginning to lose that position, and its role as a growth engine for the Southern Economic Zone and the whole country, is now falling in very many aspects.
Although Ho Chi Minh City still contributes more than one-fifth of GDP and nearly 30% towards the national budget, the proportion in some industries and essential fields, such as import-export, industrial production, banking services, and investments, is gradually declining. Although, the Total Factor Productivity (TFP) has improved, this mainly depends on capital investment, productivity, and labor.
During the 20-year period from 1991 until 2010, the GDP growth rate in Ho Chi Minh City averaged 10.5% per year, about 1.5 times higher than the national GDP growth rate. But in the ten year period from 2011until 2020, the above figures declined to only 7.2% per year and 1.2 times higher than the national GDP growth rate. For the first time since 1975, in 2020, the economic growth rate of Ho Chi Minh City was only 45% of the national growth rate. Of course, the sudden occurrence of the Covid-19 pandemic has had a drastic blow, but it also shows that the resilience of the City to face abnormal fluctuations is very weak, revealing inadequacies and the poor adaptive capacity of the economic structure of the City in general.
Looking back at the development process in Ho Chi Minh City in the last 20 years, we see many problems of sustainable development. Firstly, the economic structure has no geo-economic strengths or sufficient human resources, nor is there a potential science and technology system in place. Secondly, since the mid-1990s, under urban spatial planning in the transportation system linking Ho Chi Minh City with the key economic region in the South, it seems that the urban construction is still not completely in place. Consequently, the target to increase the proportion of public passenger transport according to the 2010 and 2020 timeline has been missed many times. Besides this, the implementation of anti-flooding and anti-traffic jam programs have become more difficult and are an obstacle in exploiting the strengths of seaports in the area.
The many inadequacies in management for a future hi-tech Ho Chi Minh City was raised in early 2000s, with suggestions for an easy and understandable approach. Since then, the building of an urban government model was set up and the project is being built accordingly, but until now, it has been implemented only in small part, and only a silhouette of this dream is being deployed in the form of Thu Duc City.
Thus, challenges towards the development of Ho Chi Minh City in the next ten years must overcome psychological and institutional barriers, for breakthrough thinking in economic structuring and upgrade of institutions, and for Ho Chi Minh City to become a global business attraction. This effort must be prioritized for the sake of major investors, if they are to continue to see opportunities in Ho Chi Minh City.
Future digital economy
The period of 2021 until 2030 will have decisive significance for turning our country into an industrial country, and must be the stage that shows the highest aspiration of the nation to rise. The consensus and determination of the whole political system to achieve high and sustainable economic growth will be vital for this to happen. Therefore, the development of Ho Chi Minh City from the point of a regional economy, including development and forming the economic structure of the Southern economic zone is crucial.
The main link between the economy of Ho Chi Minh City and the national economy is the urban economy, as urban development and economic development are closely connected. Solving urban development problems will create a driving force for economic development. In the next few decades, the Ho Chi Minh City region will grow into a megacity. Therefore, the most important and urgent issue is to effectively implement the planning of the urban area of Ho Chi Minh City.
On 22 December 2017, the Prime Minister issued Decision 2076/QD-TTG adjusting the Regional Plan of Ho Chi Minh City to 2030 with a vision until 2050, which included urban centers of eight provinces and cities of the Southern economic zone, within a radius of about 100km to150km. The area will have an expected population of about 25 million people by 2030, and will link with 20 cities with a connected transportation system. The goal is to develop the Ho Chi Minh City Region into a large urban area through dynamic and sustainable development, while also playing an important role in Southeast Asia and in the world.
This central urban area will include Ho Chi Minh City-Duc Hoa-Can Giuoc-Ben Luc in Long An province-Thu Dau Mot-Di An-Ben Cat-Tan Uyen in Binh Duong Province-Bien Hoa-Nhon Trach-Trang Bom-Long Thanh-Vinh Cuu a part of Dong Nai province. The Northern urban area will include Cu Chi-Hau Nghia-Duc Hoa. The Eastern suburban area will include Ba Ria-Vung Tau and the rest of Dong Nai province, while the North and Northwest will have Binh Phuoc-Tay Ninh.
The strength of nine groups of service industries and four main groups of industries and products must be developed on a digital platform, when considering the economic development of Ho Chi Minh City in the next ten years. Since early 2000s, especially since the 8th Party Congress of Ho Chi Minh City in December 2005, the City has identified nine groups of service industries and four key industrial groups. That was the right direction for the period until 2020 in accordance with Resolutions 20 and 16 of the Politburo, but if in the next ten years Ho Chi Minh City continues development plans under the old pattern of thinking, it certainly will not be appropriate. The City's economy in the next ten years will become fully digital and the area will be a global innovation hub.
It is also necessary to adapt to an unexpected post Covid-19 scenario. In coming years or decades, unpredictability will be a factor in many fields of geopolitics, geo-economics, international trade, globalization, production chain, circulation chain, commodity products, several essential services and technology, with visible changes everywhere. The perennial traditional problems in developing countries like Vietnam will completely change in the future.
Therefore, the biggest challenge for Vietnam in general, and Ho Chi Minh City in particular, is how to design the economic policies that can adapt to the oncoming changes across the world. Ho Chi Minh City needs to put a digital transformation program as the main focus for the economy to move forward towards sustainability in the period of 2021 to 2025. The City must take the lead in the successful implementation of the National Digital Transformation Program issued by the Government in mid-2020.
Breakthrough policies needed
For identifying the various problems facing Ho Chi Minh City now and in the coming years, it is necessary to give priority to policies and breakthrough solutions that will be relevant to future needs. One important one will be a breakthrough in transport infrastructure connecting the entire region, according to the Ho Chi Minh City Traffic Plan approved by the Prime Minister under Decision 568/QD-TTG dated 8 April 2013, with plan until 2020 and thereafter. However, so far, the implementation of this vital project has just been dragging.
Therefore, it is necessary to move fast and follow up on such breakthrough projects and complete implementation in the next five years. These include the Ho Chi Minh City-Long Thanh-Dau Giay Expressway over a 55km stretch with six to eight lanes; the Ho Chi Minh City-Thu Dau Mot-Chon Thanh Expressway over 69km and with six to eight lanes; the Ho Chi Minh City-Moc Bai Expressway over 55km and with four to six lanes; the Ben Luc-Long Thanh Expressway over 58km with six to eight lanes; the Bien Hoa-Vung Tau Expressway over 76km with six to eight lanes; the widening of eight lanes of the Ho Chi Minh City-Trung Luong Expressway over 40km; and the Ring Roads connecting areas 2, 3 and 4 must be closed ring roads 2 and 3 in the next five years. For example, the Cau Cat driver connecting District 2 in Ho Chi Minh City with Nhon Trach City will provide a breakthrough to develop Nhon Trach City and expand the regional space, creating better conditions for Thu Duc City to develop.
The urban management model is suitable for maximizing the strength of Ho Chi Minh City, to an elevated position and role in the country. Currently, Ho Chi Minh City has more than 300,000 businesses and more than 350,000 individual business and production establishments, in a nearly 10 million populous, which is still a modest number. However, the weaknesses in infrastructure and some policies, have not attracted multinational corporations and companies of regional and international scale such as in Singapore, Bangkok, and Kuala Lumpur. So far, there is still no gigantic pull, or greater incentive to attract and draw vital small, medium and large enterprises.
Dr. Tran Du Lich, Economist
- Vietnam welcomes US role in Indo-Pacific region for economic development
- Ho Chi Minh City aims to be a smart, world-class city
- HCMC living costs cheaper than many Southeast Asia cities
- Vietnam driving force behind growing digital economy and e-commerce in ASEAN
- Innovation district in eastern HCMC – new economic motivation
- HCMC expects to become economic, financial hub in Asia
- Moody's Analytics: Vietnam among fastest-growing economies in 2021
- Int’l journalists affirm CPV’s role in Vietnam’s renewal achievements
- HCMC should choose strategic priorities for its development orientation: expert