If the second half of the year goes smoothly and "every effort is made", the city's GRDP growth in 2023 could best reach 7%, according to Mr. Phan Van Mai.
The assessment was made by Chairman of the Ho Chi Minh City People's Committee Phan Van Mai at a meeting on the socio-economic situation in the first 6 months and tasks and solutions for the second half of the year on the afternoon of June 29. This year, Ho Chi Minh City set a target of GRDP growth of 7-8%. However, with the situation in the first half of the year, the city leader said that the results for the whole year may only be "close" to the target, the most optimistic scenario is nearly 7%. "But achieving this number is also very difficult," Mr. Mai assessed.
According to the Ho Chi Minh City Statistics Office, the city's GRDP growth in the first 6 months reached 3.55%, thanks to the acceleration in the second quarter to 5.87%, from 0.7% in the first quarter. The two driving forces are public investment and an active service sector.
Of which, by June 29, the city had disbursed 21% of the public investment target assigned by the Government and is expected to reach 23% by June 30. "Although it did not reach the target of 35%, the public investment capital disbursed was more than 14,000 billion VND, compared to the same period last year when it was only nearly 6,000 billion, it is still a large amount," said Mr. Mai.
Mr. Phan Van Mai spoke at the meeting on the afternoon of June 29. Photo: Ngo Tung
According to Dr. Tran Du Lich, Ho Chi Minh City's economy hit rock bottom in the first quarter and is on the path to recovery. "Compared to the end of the first quarter, although the city is still facing difficulties, the mood is happier thanks to the economic recovery and the passing of Resolution 98," said Mr. Lich. According to experts, the highlight is the "spectacular" GRDP growth in the second quarter, surpassing the country's GDP. In the first half of the year, industry increased by 2.59%, higher than the country's rate of 0.44%.
The Ho Chi Minh City Institute for Development Studies (HIDS) assessed that the economy of the locomotive continued to improve. Of which, industrial production maintained its recovery momentum since April. Tourism, accommodation, catering and travel services also maintained their recovery momentum with a fairly high growth rate. Consumer demand for goods improved in the second quarter.
However, experts also predict that Ho Chi Minh City will find it difficult to achieve the GRDP growth target of 7.5-8% this year. Ms. Le Thi Huynh Mai, Director of the Department of Planning and Investment, predicts that Ho Chi Minh City's GRDP growth this year could reach 7%.
The reason is that the world economy continues to fluctuate, is unstable and is affected by the tightening monetary policies of major economies. The city itself has not fully recovered from the pandemic, and is affected by the general difficulties of the domestic financial and real estate markets.
According to Dr. Tran Du Lich, the growth forecast for the second half of the year may reach 8%, but this figure is not enough to pull the GRDP for the whole year to reach the target. Therefore, the target of 2023 as the year of acceleration after the pandemic will not be achieved. "The goal of Ho Chi Minh City after the pandemic is to recover in 2022 and accelerate in 2023, but this situation will delay the appointment by one year until 2024," said Mr. Lich.
Mr. Lich predicted that exports would continue to face difficulties because the world economy is at risk of not only stagnating but also becoming "stagnation" (stagnation and inflation). Domestically, the central and local governments have made many efforts, but in reality, businesses are still in a state of stagnation and resources are being eroded.
Mr. Nguyen Phuoc Hung, Vice President of the Ho Chi Minh City Business Association, said that export enterprises in the area still lack orders by 30-50% depending on the industry. Revenue of enterprises in the leather, footwear and garment industries decreased by 30-50%, wood decreased by 30%, rubber - plastic decreased by 20%, steel decreased by 40-50%. 95% of enterprises surveyed by the association reported losses and large inventories.
"Businesses are lacking capital to operate and need capital to maintain a broken cash flow. The program to connect banks with businesses has not been very effective, interest rates have decreased but are still high," said Mr. Hung. In addition, the association assessed that administrative procedures have not improved, especially investment and tax refund procedures, which are very difficult due to the fear of making mistakes and defensiveness of some officials.
According to HIDS, for 2023 growth to be 7.5%, the third quarter needs to grow by 11.31-15.35% and the fourth quarter by 7.98-11.89%. Meanwhile, the 8% target requires GRDP to increase by 12.8-16.0% in the third quarter and 9.35-12.45% in the fourth quarter.
"HCMC has two great opportunities: the economy in the second quarter has clearly recovered with services and public investment flourishing. But in the second half of the year, because the risks outweigh the opportunities, it is difficult to achieve the target of 7.5-8%," said Mr. Pham Binh An, Deputy Director of HIDS.
To continue supporting businesses and maintaining the recovery momentum, HIDS recommends continuing to promote public investment disbursement and public spending. In the context of difficult export markets, it is necessary to focus on exploiting the domestic market through promotional programs, linking trade and tourism stimulus, and expanding consumer credit.
"Stimulating the domestic market is extremely important at this time," Dr. Tran Du Lich agreed. In addition, he said that it is necessary to create momentum for the real estate market. Focus on removing two bottlenecks: adjusting planning and land pricing. In addition, support businesses through a mechanism of linking with banks, and faster handling of tax, customs, and fire prevention procedures.
The Ho Chi Minh City Business Association believes that the central government needs to direct the implementation of more practical support packages, speed up tax refund procedures, and extend the VAT reduction policy to 8% until the end of 2024. For Ho Chi Minh City, the business community expects policies to support the development of new markets and release inventory.
Chairman of the Ho Chi Minh City People's Committee Phan Van Mai forecasts that the situation in the third quarter and the last 6 months will continue to improve but there will still be many difficulties. He requested departments, branches, and districts to focus on disbursing public investment capital and public targets. Units that need additional capital for projects with good disbursement should quickly submit their plans.
The city is also planning policies to support export businesses with inventory costs, consolidate the market, and increase demand by extending the promotional month from one to three months. Mr. Mai also asked the tax authority to implement faster and simpler tax refund procedures for businesses.
113/232 problems of state-owned enterprises have been resolved in the past and will continue to be resolved in the coming time. 169/189 problems from 148 real estate projects have been transferred to departments and branches and there are notices of receipt and resolution. In addition, 20/44 project dossiers requesting investment approval and investment extension have been submitted to the People's Committee for consideration. "In the coming time, we will schedule weekly and monthly to resolve the dossiers and will widely publicize the resolution progress," said Mr. Mai.
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