Ho Chi Minh City is the most important economic center in Vietnam as it accounts for a high proportion of Vietnam’s economy. Ho Chi Minh City plays an important driving impetus of economy of Vietnam.
This city just accounts for 0.6% land area, 7.5% population of Vietnam nevertheless accounts for 20.2% GDP, 27.9% industrial output and 34.9% FDI projects in this country in 2005. In 2005, this city had 4,344,000 laborers, of which 130,000 are over the labor age norm (in Vietnam it’s 60 for male and 55 for female workers). In 2009, GDP per capita reached $2,800 USD, compared to the country’s average level of $1042 in 2009.
The economy of Ho Chi Minh City covers different fields, from mining, seafood processing, agriculture, construction to tourism, finance, industry, trading. The state-owned sector makes up 33.3%, private sector of 4.6%, the other remaining percentage lays in foreign businesses. As far as economic structure is concerned, service sector accounts for 51.1%, industry and construction accounts for 47.7%, forestry, agriculture and others make up just 1.2%.
Accounting for 0.6% of Vietnam’s total land area and 6.6% of the total population, HCM City is part of the Southern Focal Economic Zone (SFEZ), which comprises the city, Dong Nai, Ba Ria-Vung Tau, Binh Duong, Long An, Tay Ninh and Binh Phuoc provinces.
Considered the nucleus of the SFEZ and the heart of the southern region, HCM City makes up 66.1% of the SFEZ’s GDP and 30% of the southern region’s.
HCM City in comparison with the whole country (%)
1. Natural area
3. Gross Domestic Product
4. Total industrial output
5. Foreign Investment projects
Total registered capital (US$ million)
6. Retailed goods and service revenue
7. Export turnover
8. Import value
(Source of HCM City Statistics Bureau)
In 2004, HCM City’s industrial production was more than VND102 trillion. The State sector accounted for the largest share with 37.5%, followed by the foreign investment sector with 35.3%. Major industrial products are garments, footwear, electricity, automobiles, electronics, food, mechanical products, motorcycles, plastics, rubber tires and computers.
As of June 2006, this city is home to 3 Export Processing Zones, 12 Industrial Parks. Ho Chi Minh City is the leading FDI receiver of Vietnam, with 2,530 FDI projects, 16.6 $ billion at the end of 2007. In 2007, it got over 400 FDI projects with $US 3 billion. In 2008, it attracted $US 8.5 billion from FDI.
The consumption demand of Ho Chi Minh City is much higher than other provinces and municipalities of Vietnam, 1.5 times higher than that of Hanoi.
Some 300,000 businesses, including many large enterprises, are involved in high-tech, electronic, processing and light industries, also in construction, building materials and agro-products. Also crude oil is a popular economic base in Ho Chi Minh City. Investors are still pouring money into the city. Total local private investment was 160,000 billion dong ($10 billion) with 18,500 newly founded companies.
Investment is trended to hi-tech and services, real estate projects. Currently, the city has 15 industrial parks and export-processing zones, in addition to the Quang Trung Software Park and the Saigon Hi-Tech Park. Intel invested about 1 billion dollars in a factory in the city. Over 50 banks with hundreds of branches and about 20 insurance companies are also located inside the city. The first stock exchange in Vietnam was opened in the city in 2001.There are 171 medium and large scale markets, several supermarket chains, shopping malls, fashion, and beauty centers.
Quang Trung Software Park is a software park situated in District 12. The park is approximately 15 km from down town Saigon and hosts software enterprises, dot.com companies. The park also includes a software training school. Dot.com investors here are supplied with other facilities and services such as residences, high speed access to internet as well as favorable taxation.
Together with the Hi-tech Park in District 9 and the 32 ha. software park inside Tan Thuan Export Processing Zone in District 7 of the city, Ho Chi Minh City is ambitious to become an important hi-tech city of the country and the South-East Asian region. This park helps the city in particular and Vietnam in general to be an outsourcing place for other enterprises in developed countries as India has performed.
In 2007, the city’s Gross Domestic Product was estimated at $14.3 billion, or about $2,180 per capita, (up 12.6 percent on 2006) and accounting for 20 percent GDP of the country. The GDP adjusted to Purchasing Power Parity (PPP) reached $71.5 billion, or about $10,870 per capita (approximately 3 times higher than the country’s average).
The city’s Industrial Product Value was $6.4 billion, equivalent to 30 percent of the whole nation. Export - Import Turnover through HCMC ports accounted for $36 billion, or 40 percent of the national total, of which, export revenue reached $18.3 billion (40 percent of Vietnam’s total export revenues). In 2007, Ho Chi Minh City contribution to the annual revenues in the national budget increased by 30 percent, accounting for about 20.5 percent of the total revenues.
In 2007, 3 million foreign tourists, about 70 percent of total number of tourists to Vietnam, visited the city. Total cargo transport to Ho Chi Minh City’s ports reached 50.5 million metric tonnes, nearly one-third of the total for Vietnam.
Under the strategy for industrial development to 2010 and the vision for 2020, HCM City is expected to become an industrial city by 2015 and play the role as an economic driver of the southern focal economic zone and the whole country. Its share of the national GDP should make up 29.1% and national industrial production 29.1%. The GDP growth in 2006-2010 should reach 11.7% and the industrial growth rate an average 10%.
Key industries to receive priority for development are mechanical engineering, electronics, information technology and chemical.
By 2020, the total land area for industrial development will be 14,900ha, including 7,000ha for industrial parks and export processing zones. The investment for industrial development in the city from 2001 to 2020 is estimated at US$37.6 billion or 35-44% of the total investment capital.
Since the Law on Foreign Investment in Vietnam was promulgated, HCM City has become one of Vietnam’s most powerful magnets for foreign direct investment (FDI). Nearly one-third of the total number of FDI projects in Vietnam arrived in HCM City. By the end of 2004, the city had 1,621 valid FDI projects with total capital of US$12.2 billion, as compared with the total of 5,204 projects with a combined capital of US$46 billion in Vietnam. Most projects are in industry with 1,032 projects (64.9%) totaling US$5.2 billion (42.7%), and property with 307 projects (18.1%) totaling US$2.32 billion (19.1%) and the rest in trade and hospitality.
In terms of the number of projects, the top investor was Taiwan, with 347 projects, followed by South Korea with 278 projects and Japan with 163 projects. In terms of capital, Hong Kong was the top investor with US$2.27 billion, followed by Taiwan with US$2.26 billion and Singapore with US$1.52 billion.
A large proportion of the country’s tax revenue comes from HCM City. In 2004, tax collected in HCM City was VND48.97 trillion as against the total of VND171 trillion in Vietnam.
Regarding trade, HCM City is one of the country’s major import-export centers. Import and export revenue of the city makes up an increasingly larger part of that of the entire country. HCM City remains the country’s hub of import-export activities as throughput at seaports here in 2004 increased 11% to 25 million tons, or nearly one-third of the total 73 million tons nationwide.
In 2004, the city’s exports increased 33.6% on 2003 to US$9.816 million, or more than one-third of the total of US$26 billion in Vietnam. The domestic sector made up US$7,789.8 million and the foreign investment sector US$2,026.2 million.
HCM City is home to a large network of markets and supermarkets. More modern, well-located marketplaces will be built in line with the city’s urban zoning plan.
Thanks to its position as the center of the southern region, HCM City enjoys a strong growth in tourism. The city is home to 5,811 hotel rooms of between three and five stars and 3,722 rooms of one and two stars, and many resorts, recreation parks and historical sites. Since 1990, tourism revenue of the City has made up 28%-35% of that of the country. In 2004, despite the impact of SARS and bird flu, the city’s tourism performed well, with revenue growing 37% year-on-year to VND10.8 trillion. The city received 2.5 million domestic tourists, up 60% on 2003, and 1.58 million international visitors, up 21%.
To boost tourism growth, the city government will double the budget for tourism promotion in 2005 to VND10 billion. It expects to receive 1.8 million international tourists and 3 million domestic tourists in 2005.
HCM City is also the largest banking and financial hub in Vietnam, heading the country regarding the number of banks and revenue earned from financial and credit services. Earnings of HCM City’s banks make up one-third of those in Vietnam. In 2004, commercial banks in the city did good business, with pre-tax profit totaling VND2.56 trillion, an increase of 59% on 2003. The banks mobilized a total of VND147.5 trillion, up 29.4% on 2003, and lent VND136 trillion, up 34.8%.
In the future, the city will boost the development of key economic fields and become the first to focus on such fields as mechanical engineering, bio-technology, information technology, banking and finance, and hi-tech. HCM City will also remain the country’s import-export hub and that of tourism thanks to its developed ports. Construction of transport arteries such as the Trans-Asia Highway, East-West Highway and the belt roads will facilitate the city’s economic growth.
In the process of development and integration, HCM City always plays the role of an economic, financial, commercial and service hub of the country, the nucleus of the SFEZ and the driving force for industrialization, modernization and economic development for the entire country and for the southern region in particular.
HCM City’s GDP growth:
2004: 11.6 percent
2005: 12 %