Ho Chi Minh City (HCMC) has long been regarded as the commercial “capital” of Vietnam and the largest contributor to the state budget. It has been the economic spearhead for the whole Mekong Delta region since “Doi Moi”.
However, in recent years the growth rate in HCMC has been slowing down. In 2010 GDP growth was 11.8%, and between 2010-2015 ranged from 9.2 to 11.8% while in 2016 and forecasted 2017 the rate will be in the range of 8%.
In a move to reverse this trend, the National Assembly has been debating giving more autonomy to HCMC allowing the city room to grow. The national Assembly was advised that the City needs more autonomy in urban planning, infrastructure development, and the management of public servants’ payroll.
Ho Chi Minh City has long been the area to pilot new innovative projects including export processing zones, industrial parks, the stock exchange, joint stock commercial banks, and more.
Other discussions are being considered around HCMC having the right to set its own tax rates and subsidies and allowing the city to pilot new management methods and policies.
It is clear that these discussions will be ongoing for some time and will need consensus among several different ministries, in particular the Ministry of Finance. However, the fact these options being discussed is very good news.
In the meantime I believe that by increasing transparency and reducing administrative regulations on business, growth rates can be improved.