Change for growth

VietNamNet Bridge – As the biggest economic center of Vietnam, HCMC is feeling tied by a slew of prevailing regulations. It is desperate for a special governance mechanism so that the metropolis will be able to grow faster and thus fuel development in the rest of the nation.

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Over the years the most populous city of the country has repeatedly proposed a separate mechanism to unlock its huge potential.

If it continues to be bound by the same rules applicable to other cities and provinces in the country, its development path would be obstructed.

In an interview with Sai Gon Giai Phong in late April, the chairman of the city, Nguyen Thanh Phong, admitted the city’s economic growth is not proportional to its leading role.

Meanwhile, the quality of growth and the competitiveness of the city remain poor. Given the nation’s broader and deeper international integration, the application of the same development policies and regulations to different cities and provinces irrespective of their development levels and conditions is impeding the city’s growth.

According to Phong, the city wants greater access to ODA capital to fund its major projects and more help to raise capital for development projects.

In addition, it wants Government Decree 93/2001/ND-CP on decentralization to be revised in some respects so that the city could have more authority to issue legal documents to increase the efficiency of its management.

At a meeting with Deputy Prime Minister Vuong Dinh Hue last month, the city government put forth a host of proposals including a special financing mechanism.

In particular, the city needs to retain 8-12% of export-import tax revenues and retain funds raised from equitization of State-owned enterprises and divestment of State capital from non-core business operations.

HCMC Party chief Dinh La Thang said the city holds great potential to achieve double-digit growth but there exist certain ceilings which the city have not been able to break through.

According to him, the city has been plagued by a lot of problems.

There is no special policy for the city. Many important projects are in dire need of finances but the current laws and regulations have tied the city’s hands.

Hanoi City has enjoyed all sorts of priorities to develop and upgrade its roads and bridges while HCMC has got no such treatment.

HCMC is responsible for around 30% of the nation’s budget revenues but can retain only 23% of its annual budget revenue and the remainder must go to the central State budget.

In 2014, the city’s budget revenues amounted to VND252 trillion. Meanwhile, Hanoi contributes less to the central State budget but enjoys a much higher percentage, 43%.

At a meeting with the National Assembly Financial and Budgetary Committee early this week, the HCMC government once again asked for a special financing mechanism to stimulate its growth.

Thang made clear the city’s viewpoint that its proposed special financing mechanism is for the benefit of the entire country, not the city alone.

He described the city’s development as a cake, saying the current cake is too small, so the city needs a special mechanism to enlarge the cake so as to earn more and contribute more to the country.

HCMC has long been regarded as the locomotive of the rest of the country but its current status does not match that point. Its economic growth could not rise at a double-digit pace of a breakthrough mechanism is absent, Thang said.

Speaking at the meeting with Deputy Prime Minister Hue, Thang said the city urges the Government to see a special mechanism for the city as what the Government needs to do to fuel growth.

Nguoi Lao Dong quoted Associate Professor Tran Dinh Thien, director of the Vietnam Institute of Economics as saying that in the current circumstances it is critical to grant HCMC a special mechanism since the city as the economic hub needs to address integration challenges. If things remain unchanged, the city would be unable to compete.

It is a must to develop the city into a center for integration of the country.

Vietnam has signed a series of free trade agreements which are not just about tariff cuts and exemptions but improvement of competitiveness, Thien added.

A positive sign is that Deputy Prime Minister Vuong Dinh Hue told the HCMC government last month to propose a breakthrough mechanism for submission to the Government.

If a new mechanism for governance is adopted to unlock the city’s potential, the city would certainly achieve higher growth in foreseeable future.

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