"Institutional runway": Ho Chi Minh City needs a breakthrough mechanism to attract 12 billion USD and reach international level

Expanding priority portfolio, attracting strategic capital flows

According to the Draft Resolution on amending and supplementing a number of articles of Resolution No. 98 on piloting a number of specific mechanisms and policies for the development of Ho Chi Minh City, to realize the goals in the next 5 years, the City is expected to need to mobilize an additional 8-12 billion USD each year. Of which, the budget expenditure source only meets about 30%.

The most important point in this revision is to expand the list of priority strategic investors. Compared to the current Resolution 98, the new draft resolution adds 11 priority project groups, ranging from transport infrastructure, urban infrastructure, specialized healthcare , tourism, culture, sports, clean energy, logistics to the environment.

Mr. Nguyen Xuan Thanh - Senior Lecturer at Fulbright School of Public Policy and Management, Fulbright University, commented: "This draft expands the scope of subjects, not only covering the processing and manufacturing industries but also including service sectors such as healthcare, entertainment and many urban infrastructure items. In my opinion, this will create conditions for investors to be considered and classified as strategic investors to enjoy incentives, depending on the scale and specific field. In addition to specific regulations and amendments, the National Assembly also incorporates greater authority for the locality, namely Ho Chi Minh City, with specific regulations and incentives with a mechanism that instead of specifically including them in Resolution 98, the authority is given to Ho Chi Minh City, the authority belongs to the City People's Council, which will have the authority to decide on specific incentives and specific mechanisms in the spirit of stronger decentralization to localities."

*Mr. Nguyen Xuan Thanh (Senior Lecturer, Fulbright School of Public Policy and Management, Fulbright University)*

Overcoming tax incentives, focusing on cultural environment

For the technology sector, strategic investors have different criteria.

Mr. Nguyen Trung Chinh - Chairman of the Board of Directors and Executive Chairman of CMC Technology Group shared: "To attract strategic investors in the field of technology and innovation, the subjects that require high conditions. Standards of living environment, access to policies, and whether the country's human resources are abundant or not. We often focus on land tax policies, but in this field, they are interested in the cultural environment and working environment. To have this environment, Ho Chi Minh City must improve many things: traffic, environment, living, working... social development to be interested and trusted. So in addition to taxes and land, we need to focus on this."

Dr. Nguyen Dinh Cung - Former Director of the Central Institute for Economic Management, proposed a new approach: "The support incentives do not have a defined regulation but are flexible agreements between the strategic investor and Ho Chi Minh City. That organization also needs to add more criteria to select strategic investors for transparency and then have supervision to create motivation and pressure on Ho Chi Minh City. In my opinion, 98 should be designed with a new mindset and a new method as an institutional experiment sandbox, not a decree or resolution asking to do otherwise within a current legal framework. But it is also necessary to clarify what Ho Chi Minh City wants to do and what goals it wants to achieve. It is necessary to determine the priority areas for institutional experimentation. Second, it is necessary to determine the goals that Ho Chi Minh City is aiming for in each experimental area. Third, it is necessary to allow the Party Committee and Ho Chi Minh City to do what they want to do, what they can do, and that includes the implementation organization, implementation tools, implementation apparatus, recruitment select human resources, treat human resources..."

Free Trade Zones (FTZs): Breakthrough Competitive Advantage

Ho Chi Minh City is entering a new phase of development with a broad vision and great aspirations, becoming a modern, internationally-oriented city with the ability to compete globally. Establishing a Free Trade Zone (FTZ) is considered a strategic solution, creating a superior competitive advantage.

Mr. Pham Quoc Long - Deputy General Director of Gemadept Joint Stock Company, Chairman of the Vietnam Association of Maritime Agents, Brokers and Services, emphasized: "We really need to have an institution for the new generation of free trade zones, which Ho Chi Minh City inherently has a long and beautiful coastline and at the same time has many benefits for sea development, logistics service development, especially international transit ports, Thi Vai - Cai Mep, the port to Can Gio Port, along with free trade zones. Therefore, it is necessary to supplement the content of these new generation of free trade zones for the City. One is the port part, two is the logistics part, third is the banking and financial services inside, fourth is the warehouses, which means that goods come here, are stored here, then distributed and delivered to other places. This is a complete model of port services."

Mr. Luong Quang Thi - Vice President of Ho Chi Minh City Logistics and Seaport Association, further analyzed the regional vision:

The free trade zone turns Ho Chi Minh City into not just a normal production place, but it turns Ho Chi Minh City into a regional HUB. It is not just a matter of tax exemptions, but here the free trade zone needs a policy change in the approach to investors. A very important point for countries when they implement a free trade zone is that they apply the law here very clearly and transparently. And for example, Singapore applies international law, international trade law and international arbitration in the free trade zone. Like Shanghai, they have a very clear, transparent policy and even very similar to them turning this place into a place to test new policies of the State. And that helps to attract investors in a favorable way.

The advantages in attracting investors will create momentum for Ho Chi Minh City to accelerate. When the institutions are smooth and resources are unleashed, the City will make a stronger breakthrough, worthy of its role as the economic locomotive of the whole country.

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