Ho Chi Minh City: Enhancing Economic Growth Quality, Intensifying Economic Structuring

According to the report on the socio-economic situation of the 7^th meeting of the city’s 7^th People Council in Ho Chi Minh City, the consumer price index (CPI) is estimated to rise less than 5.5 percent, reaching the goal that the city has set of CPI increase of less than 7 percent. Gross domestic product (GDP) in 2012 was estimated at more than VND 595,375 billion, up 9.2 percent. Although this number is lower than that in 2011 but still 1.77 times as big as that of the country (the country's GDP is expected to increase 5.2 percent). In particular, the service sector increased 10.2 percent (in the same period last year, it was 10.5 percent), industry and construction increased by 8 percent (in the same period last year it was 10.2 percent), agriculture, forestry and fishery production increased 5.1 percent (in the same period last year it was 6 percent).

 

Total retail sales of goods and services was estimated at VND540 trillion, up 17.3 percent compared with the same period of 2011. Exports reached US$30.2 billion, increasing 7.36 percent. In 2012, expected total revenue of accommodation services, restaurants, travel and tourism is estimated at VND74,800 billion, increasing 21percent. The number of international visitors to the city is estimated at about 3.8 million, up 8 percent year on year. In attracting FDI, new projects and project’s capital value declined sharply. It is estimated that 400 new projects will be granted investment registration certificate (down 8.9 percent) with a total investment capital of US$650 million (down 76.8 percent year on year).

 

In the 30 socio-economic indicators in 2012, the city has completed and exceeded 24 targets. Especially it continued effective implementation of six breakthrough programs on traffic, water flooding reduction, environmental pollution reduction and administrative reform. Achieving this result in the context of domestic global economic riddled with difficulties is really a great effort of Ho Chi Minh City, helping it to continue to assert a leading role in the economy of the country.

 

However, according to the City People's Committee, economic development of the city is unstable and not really sustainable. In the indicators of socio-economic development, six indicators have not been fulfilled including: GDP, total exports, export turnover (excluding crude oil), revenues in the province, creating new jobs for workforce, housing area per capita. Vice Chairman Hua Ngoc Thuan of Ho Chi Minh city People’s Committee said that although the city's CPI growth has reached the target set (below 5.5 percent), lower than that of the whole country, yet it is not solid. Goods and real estate market is riddled with many difficulties. Specifically, they are low purchasing power, huge inventory, increased bad debts in the banking system, high lending interest rates, which have made it difficult for many enterprises to access capital. Capital allocated for investment and development is limited while the real demand is huge. Construction progress and disbursement of key projects has been slow. Facilities and equipment for urban infrastructure, education and health have not met the requirements of the city’s development.

 

In the development plan of 2013, Ho Chi Minh City aims to fulfil the criteria which have not met yet. The most important of which are the annual GDP growth rate of around VND 684,700 to 686,700 billion, increasing 9.5 to 10 percent, GDP per capita of about US$4,000 per person, total investment of social development of about VND 248,500 - 255,000 billion, accounting for 36 – 37 percent of GDP and exports of double digits (13 percent). In 2013, the City People's Committee also determined to ensure social security and welfare. This is one of the key tasks. Accordingly, the city set goals to create jobs for 265,000 people, reduce the unemployment rate to 4.8 percent, increase the number of urban households having access to clean water to about 89 percent, reduce the flooded areas due to heavy rain to seven from 18. The city will also try to reduce the poverty rate to 2.32 percent of the total households.

 

To accomplish these goals, the city has set out several key solutions. Specifically, it will focus on improving the quality of growth in accordance with economic restructuring of the city, contribute to the whole country’s efforts to overcome difficulties, lower inflation rate and raise the GDP growth rate. At the same time, it will reduce inventory, tightly manage the monetary and financial markets, strengthen the management of planning and ensure social security. Besides, the city will focus on implementing effectively six breakthrough programs, making the economy development rapid and sustainable and creating momentum for the successful implementation of the objectives of the socio-economic development plan of city for the period 2011 - 2015 and Resolution 16 of the Political Bureau on direction and development tasks of Ho Chi Minh City by 2020.