Dead premises
Ms. Huynh Ngoc's sticky rice stall has only appeared on the sidewalk of Hai Ba Trung Street (District 1, Ho Chi Minh City) for nearly a month. The number of people going to work and stopping to buy sticky rice for breakfast is quite large. "Every day, I sell nearly 80 portions of sticky rice to customers. By about 9am, the goods are sold out, so I go home to rest," she said.
Not far from where Ms. Ngoc stood was Ms. Trang’s noodle cart. This woman from An Giang makes a living on the sidewalks of the country’s largest city. After deducting the cost of ingredients, she earns more than 10 million VND/month from her food cart.
Street vendors are increasingly appearing on Hai Ba Trung Street. They can stand and sell because behind them are closed billion-dollar stores, with phone numbers posted on the walls, looking for tenants.
At the intersection of Nguyen Van Chiem and Hai Ba Trung, a large space has a “For Rent” sign. About 50m away, the 1-ground-floor, 2-story house at 139 Hai Ba Trung also has a “For Rent” sign. This place used to be a large fashion store. A few steps further, the transaction office of KSFinance at the corner of Tran Cao Van and Hai Ba Trung has a “For Rent” sign. Following Tran Cao Van street about 200m to the Turtle Lake area, large F&B brands such as Saigon Casa Cafe, PhinDeli... have also left.
The frontage of the central streets of District 1, convenient for introducing and trading products and services, is a part symbolizing the dynamism of Ho Chi Minh City's economy.
In terms of retail space for lease, the first quarter 2023 market report from Savills Ho Chi Minh City Research Department shows that tenants tend to continue to leave vacant and not renew contracts at projects outside the city center. The main reason is the low number of visitors at premises with poor rental locations, along with ineffective marketing and management policies from investors.
According to Savills statistics, the food and beverage industry accounts for 30% of vacant space; the fashion industry accounts for 21%; the entertainment industry accounts for 20% and the education industry accounts for 6%.
Business confidence
However, the numbers are not all bad. According to the Ho Chi Minh City Statistics Office, in May, some industries and services are showing positive changes such as: Retail sales of household appliances increased by 6.5%; retail sales of phones, computers, and electronic components increased by 8.4% after a sharp decline in the first 3 months of the year; travel services increased by 12.2%; accommodation and catering services increased by 7.9% due to the long holiday... Total retail sales of goods and consumer service revenue in May is estimated to increase by 3.1% compared to the previous month; up 10.1% compared to May 2022.
The agency forecasts Ho Chi Minh City’s GRDP growth in the second quarter at 5.87 percent, after growing at 0.7 percent in the first quarter. The surge is based on changes in industrial production and increased retail sales, making the growth momentum more and more positive.
However, in the May socio-economic press conference, Mr. Tran Phuoc Tuong, Deputy Director of the Ho Chi Minh City Statistics Office, also admitted that the local GRDP in the second quarter may have increased compared to the first quarter, but compared to 63 provinces/cities, the city's growth index was at a low average level (ranked 35/63).
For example, among centrally-run cities, Ho Chi Minh City ranked behind Hanoi (5.98%) and Hai Phong (10.45%). In addition, the local growth rate of 5.87% was only 0.15% higher than the same period in the second quarter of 2022.
The report on the socio-economic situation in May of Ho Chi Minh City sent to the Government Office also assessed that the number of newly registered enterprises reached 18,630, an increase of 7.9%, but the scale of capital decreased by 21.2%; export turnover in May increased by 13.4% compared to April but decreased by 19.5% compared to the same period; the scale and operation of enterprises continued to decline.
The reason is explained that Ho Chi Minh City's economy has a large openness, the main development pillars are based on production, business, trade, services and import-export activities, so it is greatly affected and influenced by external factors.
Meanwhile, the general difficulties of the market since the beginning of the year have not been resolved yet, the lack of production orders, unemployment of workers, and slow implementation of real estate projects are still happening. Prolonged difficulties affect the market confidence of the business community.
However, Dr. Tran Du Lich, an economic expert, said that the GRDP growth rate of 0.7% in the first quarter of 2023 of Ho Chi Minh City has hit rock bottom and there cannot be a second deeper bottom. The situation is gradually improving. The city government is making efforts to remove infrastructure bottlenecks, focusing on solving problems related to the environment, housing and urban planning.
In addition, to prepare for the new Resolution 54 (a resolution regulating the pilot implementation of special mechanisms and policies for Ho Chi Minh City) which is about to be approved by the National Assembly, the locality is also preparing hundreds of tasks in parallel. When the resolution is issued, the work will be implemented immediately, not waiting until then to start making plans.
"The city has been wearing a shirt that is too tight. When the shirt is made wider with the new resolution, Ho Chi Minh City will solve many bottlenecks and create a large space for development in the coming time," Mr. Lich assessed at a recent discussion organized by the Ho Chi Minh City Business Association.
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