The root cause of Ho Chi Minh City's growth slowdown is that localities are not given enough power, according to Dr. Nguyen Dinh Cung.
Assessing the growth of Ho Chi Minh City, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, said the locality mainly relies on existing advantages, without new added value.
"HCMC is rapidly falling into the middle-income trap," Mr. Cung said at the consultation workshop on HCMC planning for the 2021-2030 period, with a vision to 2050, on the morning of February 28.
Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management. Photo: Contributor
The “middle income trap” is a situation where an economy reaches a certain level of average income and then stagnates there, unable to cross the threshold to become richer. In the case of Ho Chi Minh City, Mr. Cung said, the city is facing a number of problems such as the next generation of industries not developing strongly enough, large enough to replace the first generation (largely labor-intensive) while having to industrialize and modernize. Modern, high value-added service industries have not appeared quickly enough.
He analyzed that in fact, the city has enough potential and conditions to aim for higher growth targets and scenarios, but is stuck because it does not have the right policies and institutions.
"The root cause is that Ho Chi Minh City has not been given enough power and autonomy to have new thinking with a large enough space for specific policies and institutions in building an apparatus, a team of leaders and civil servants with enough capacity to build, implement, and resolve requirements and conflicts in socio-economic development," Mr. Cung acknowledged.
Ho Chi Minh City Chairman Phan Van Mai acknowledged this problem when he said that the model and institutions are the local bottlenecks. Mr. Mai, in some previous meetings, also said that Ho Chi Minh City itself only needs mechanisms, not money.
In addition, Mr. Nguyen Dinh Cung suggested that it is necessary to boost investment in development for Ho Chi Minh City because the current spending level is too low. According to him, for many years, Ho Chi Minh City has lost too much budget revenue but in return, there are no suitable mechanisms, policies, and tools that are attractive enough to mobilize social resources. "Recently, Ho Chi Minh City has Resolution 98 but it is only halfway through the spring," Mr. Cung said.
Architect Ngo Viet Nam Son also raised the issue of the necessity of increasing the city's retained budget regulation rate (currently 21%) in the context of the huge capital demand for local development investment.
"HCMC does not ask for the entire amount, but only needs seed capital. Urban development associated with public transport - TOD requires billions of USD, but if done well, when put into operation, the city will have a source of revenue to pay back to the budget," said Mr. Son.
This expert also believes that Ho Chi Minh City is taking the lead in doing "unprecedented" things and if successful, it will have great significance in replicating nationwide.
Ho Chi Minh City contributes nearly 20% of the country's GDP and 25% of the total budget revenue. According to the Minister of Planning and Investment Nguyen Chi Dung, this is a special urban area, a gateway connecting the region, and at the same time an economic locomotive with great influence. However, in recent times, Ho Chi Minh City has faced many challenges when many potentials, strengths and creative breakthroughs have not been effectively exploited; economic growth has not been commensurate with advantages; the role of a locomotive and leader is on the decline. Therefore, in the upcoming planning, the city needs to identify the focus, breakthroughs, and priority economic sectors to open up potentials and development drivers.
Duc Minh
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