Ho Chi Minh City (“HCMC”) has long been regarded as the commercial “capital” of Vietnam and the largest contributor to the state budget. It has been the economic spearhead for the whole Mekong Delta region since “Doi Moi”. However in recent years the growth rate in HCMC has been seen to be slowing. In 2010 GDP growth was 11.8% and between 2010 and 2015 ranged from 9.2 to 11.8% whilst in 2016 and forecast 2017 the rate will be in the range of 8%.
In a move to reverse this trend the National Assembly has been debating giving more autonomy to HCMC to give it the freedom to grow. The national Assembly was advised that the City needs more autonomy in urban planning, infrastructure development, and the management of public servants’ payroll.
Ho Chi Minh City has long been the area to pilot new innovative projects including export processing zones, industrial parks, the stock exchange, joint stock commercial banks etc etc.
Other discussions were around HCMC having the right to set it’s own tax rates and subsidies and allowing the city to pilot new management methods and policies.
It is clear that these discussions will be ongoing for some time and will need consensus amongst several different ministries, in particular the ministry of finance, so we should not get too excited. However, the fact this is being discussed is still good news.
In the meantime I believe that by increasing transparency and reducing the administrative regulations on business growth rates can be improved.