Without any more unfavorable factors, will Ho Chi Minh City's economy still slow down in the first quarter?

(Dan Tri) - Associate Professor Dr. Tran Hoang Ngan said that unfavorable factors no longer affect Ho Chi Minh City's economy as they did last year. In the first quarter of this year, the locality will see improvements in growth index and public investment disbursement.

Going back nearly a year, Ho Chi Minh City ended the first quarter with surprising and forgettable indicators for a city that is the economic center of the whole country. This locality only grew by 0.7%, the lowest among the 5 centrally-run cities. At that time, a series of questions were raised about "what is happening in Ho Chi Minh City?", "What problems is Ho Chi Minh City facing?". At the 2023 year-end conference of the City Party Committee, Mr. Phan Van Mai, Chairman of the Ho Chi Minh City People's Committee, also reiterated the low growth momentum in the first quarter of 2023 (0.7%) and requested that agencies and units identify the causes and seek solutions to avoid repeating the above scenario.

The central area of ​​Ho Chi Minh City seen from above, when the Ben Thanh underground metro station has removed the barriers and returned the land (Photo: Hai Long).

Speaking to Dan Tri reporter, Associate Professor Dr. Tran Hoang Ngan, Assistant Secretary of the Ho Chi Minh City Party Committee, said that in the first quarter of this year, the city no longer had the unfavorable factors like a year ago. He believes that in an unfavorable scenario, the city's economic growth index will not repeat the scenario of a year ago.

Identify the cause of bradycardia

Associate Professor, Dr. Tran Hoang Ngan stated that in the first quarter of each year, the slowdown occurs and is easily seen in many places due to the time factor. In the first quarter of 2023, the Tet holidays fall in January, and production and business activities have been finalized in December of the previous year. However, in 2024, the city will catch up better than every year when the Lunar New Year comes late. "This year, the Tet holiday period begins on February 8th of the solar calendar. The city still has the whole month of January to maintain production and business activities. This is one of the factors that will cause the city to achieve a very high growth rate in the first quarter of this year compared to 2023," said Mr. Tran Hoang Ngan.

Associate Professor Dr. Tran Hoang Ngan, Assistant to the Secretary of the Ho Chi Minh City Party Committee (Photo: Q.Huy).

Analyzing the first quarter of many years ago, Associate Professor, Dr. Tran Hoang Ngan pointed out the unfavorable factors that have come to the economy of Ho Chi Minh City. These factors have caused the growth momentum of the locality to be slowed down. Specifically, the first quarter of 2020 was the time when the Covid-19 epidemic broke out. In which, the first infection case in the country appeared in Ho Chi Minh City. During this time, people and tourists did not dare to go anywhere during Tet. In the first quarter of 2021, the epidemic situation has changed a lot, and activities have gradually recovered. In fact, in the first quarter of 2021, the city's economy increased compared to the previous year. The change continued to take place in the first quarter of 2022, but was still limited. After the Covid-19 pandemic, activities were restored but still at a moderate level. In the first quarter of 2023, Ho Chi Minh City recorded a very low growth index. According to the expert, the cause of the problem lies in economic cases such as Van Thinh Phat and SCB Bank that took place before Tet, foreign orders began to be cut. This is also the reason why Ho Chi Minh City's economy grew very slowly even though other localities still had positive results.

Major cases occurring at Van Thinh Phat and SCB bank have impacted Ho Chi Minh City's economy in early 2023 (Photo: Nam Anh).

"In the first quarter of 2023, the city was adversely affected from all sides. Major cases occurred, real estate businesses were almost unable to issue bonds due to tightened inspection and control, everything was almost frozen," Associate Professor, Dr. Tran Hoang Ngan recalled. The assistant to the Secretary of the Ho Chi Minh City Party Committee commented that in the first quarter of this year, the above unfavorable factors no longer affected the city. Moreover, Ho Chi Minh City still had a high growth momentum in the fourth quarter of 2023 of more than 9.6%. "The city is on very good momentum to start 2024. Even if this momentum declines, the city will still grow at 5-6% in the first quarter, not as low as last year," Mr. Tran Hoang Ngan predicted.

Notes on public investment disbursement

In 2023, Ho Chi Minh City was assigned by the Central Government a total public investment capital of more than 68,000 billion VND. By the end of the first quarter of 2023, the locality had only disbursed more than 2%. At that time, Dr. Tran Du Lich, National Financial and Monetary Policy Advisory Council, said that public investment disbursement could create a multiplier effect for the city's economy. He also questioned whether Ho Chi Minh City would completely abandon this tool when it had only disbursed 2% of the total capital in the first quarter of the year. Associate Professor Dr. Tran Hoang Ngan analyzed that in the first quarter of 2023, the war situation in the world had somewhat affected the city's economy. Domestically, bonds could not be issued to mobilize capital, and bank interest rates were very high, making businesses hesitant to participate in bidding and bidding. Major cases have had a widespread impact on many areas, making project implementation difficult. In early 2023, raw material prices also increased at a very high level. Even the gasoline and oil price fever lasted from the end of 2022 to early 2023. "This year, we have learned from the experience of 2023. On the other hand, it is easier for businesses to access capital because banks have released all their credit balances from the beginning of the year for distribution, bank interest rates are also very low, businesses can participate in bidding and bidding more openly," said Mr. Ngan. Another factor is that in 2023, the city has focused on land acquisition and site clearance. Therefore, projects have a clean site to implement, and disbursement work is also very favorable. Associate Professor, Dr. Tran Hoang Ngan also forecasted that in the first quarter of this year, the city will disburse about 10% of the total annual capital, and it will be difficult to reach a higher level. The reason is that at the beginning of the year, the locality has to carry out the important step of organizing bidding for many projects with large capital. In the worst case, some projects have to be abandoned and started over from the beginning if there are no participants.

Phuoc Long Bridge connecting District 7 and Nha Be District is one of the projects whose progress was affected by land acquisition problems (Photo: Trinh Nguyen).

The expert also noted that in recent times, public investment disbursement has been focused on the whole country, not just Ho Chi Minh City. A current situation is that the number of project management consulting, bidding and construction consulting enterprises in our country is still limited. In addition, the scarcity of construction materials is also something to consider. "Capital absorption capacity also depends on the workforce. When the workforce is only that much and the projects are spread across the country, they have to choose which projects to do and for which locality," the assistant to the Secretary of the Ho Chi Minh City Party Committee stated. Mr. Tran Hoang Ngan also assessed that in 2023, the city was assigned a very large amount of capital. The disbursement rate of 70% last year is also very encouraging. In the past 5 years, the whole area has disbursed an average of 25,000 billion VND per year. In terms of absolute value, the city has disbursed nearly 50,000 billion VND, double the average annual value. "The central government always gives Ho Chi Minh City a huge amount of capital and the city always takes this responsibility. The city also accepts a low disbursement rate but the disbursement value always increases," Associate Professor Dr. Tran Hoang Ngan shared. Talking about the necessity of disbursing public investment, the expert analyzed that each project and construction not only brings benefits to each district but also has a ripple effect on the entire city. A school with public investment capital will create facilities and infrastructure for students throughout the area, a new hospital will serve not only the people of Ho Chi Minh City but also the entire region.

Q.Huy - Dantri.com.vn

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