Why is Ho Chi Minh City's GRDP growth among the lowest in the country?

The conference on the socio -economic situation in the first quarter and tasks and solutions for the second quarter of 2023 held by the Ho Chi Minh City People's Committee on April 1 focused on analyzing and clarifying the causes of the above situation; at the same time, it proposed a number of solutions to restore growth in the coming time.

Not yet effectively utilizing the "3 tools" of recovery

According to data from the Ho Chi Minh City People's Committee, Ho Chi Minh City's GRDP in the first quarter of 2023 increased by only 0.7% over the same period in 2022; of which, the agriculture, forestry and fishery sector increased by 2.06%; the industry and construction sector decreased by 3.6%; the trade and service sector increased by 2.07%; and product tax increased by 1.14%.

Notably, of the nine main service sectors (accounting for 60.4% of GRDP), four out of nine had negative growth. Specifically, the transportation and warehousing sector decreased by 0.63%, information and communications decreased by 2.7%, real estate business decreased by 16.2%, and healthcare and social relief activities decreased by 4.82%.

With the above results, Ho Chi Minh City is the locality with the lowest growth rate among the five centrally-run cities: Ho Chi Minh City, Hanoi, Hai Phong, Da Nang , Can Tho and lower than the national average, ranking 56/63 localities. The story of the most dynamic economy and economic locomotive of the country falling into this situation is worth paying attention to.

According to Mr. Nguyen Van Nen, Politburo member, Secretary of the Ho Chi Minh City Party Committee, in the past 3 years, the situation has developed in accordance with the forecast of experts, which is fluctuating, uncertain, complicated and ambiguous. Ho Chi Minh City has a deep level of integration, so its activities are more or less affected by the world and domestic situation. Although it anticipated difficulties and set a lower growth target, it was unexpected that the results would be so deep and much lower than predicted.

“After the "severe illness" of 2021, Ho Chi Minh City bounced back very strongly and achieved many results. However, it then continued to face difficulties again. Is this a rule? The cause is of course due to external influences, but the "health" of the city is clearly still problematic. Is the "treatment regimen" correct for this illness?”, Secretary of the City Party Committee Nguyen Van Nen asked.

Accordingly, the Secretary of the Ho Chi Minh City Party Committee requested that each industry and field need to review themselves objectively and seriously to propose what needs to be done for the second quarter of 2023, the remaining quarters of the year and the following years.

At the conference, economic expert Tran Du Lich pointed out a number of main reasons for Ho Chi Minh City's GRDP growth to decline sharply compared to previous forecasts. According to Mr. Lich, since the Politburo issued a separate Resolution on Ho Chi Minh City's development in 1982, this is the first time the city's growth has been among the "red lantern" group of the whole country. Although experts have made poor forecasts for the fourth quarter of 2022, the actual results are even worse.

This expert believes that the rule has been proven that when macro factors and the world situation are positive, the city will exploit it more effectively. But when the general context turns negative, the city will also be more negatively affected.

Unfortunately for the economy of the whole country and Ho Chi Minh City, in the fourth quarter of 2022, it has suffered two major impacts, from the outside: fluctuations in the world financial market and the correction of the domestic real estate and financial market. The two factors combined make the economy of the whole country extremely difficult; in which Ho Chi Minh City is the area most affected.

However, in the first quarter of 2023, the situation in the country has become more comfortable, controlling inflation, exchange rates and responding to the world financial market. Analyzing the reasons for Ho Chi Minh City's low growth in the first quarter of 2023, Mr. Tran Du Lich said that there are 3 driving forces that the Government and the city have agreed to propose to pull the economy back but the city has not been able to do so.

One is the disbursement of public investment capital, which is a very important factor to revive the economy. However, Ho Chi Minh City missed this tool when in the first quarter of 2023, only 2% of public investment was disbursed. Second, the Government is focusing on removing capital pressure, increasing the economy's ability to absorb capital, including public and private investment, and removing backlog projects. However, this problem in the city is still "hopeless" so far. And third, Ho Chi Minh City has not developed the domestic market well.

“Thus, Ho Chi Minh City has not yet taken advantage of all three pillars - three medicines for the economy to continue recovering. This is the root cause of slower growth compared to the whole country,” Mr. Lich analyzed.

Removing bottlenecks in public investment

With the general situation forecast to improve from the third quarter of 2023, experts say that Ho Chi Minh City needs specific and clear solutions to truly create positive changes. The most important issue is that the city must absorb capital, promote public investment and private investment. In addition, Ho Chi Minh City must be transparent in all matters. This is considered the key to creating trust for businesses, contributing to the city's development.

According to Ms. Le Thi Huynh Mai, Director of the Department of Planning and Investment of Ho Chi Minh City, implementing the action program on promoting the disbursement of public investment capital is one of the key tasks of the city in the coming time; including proposing to invest in the project of building a solid waste treatment plant and recovering energy at the Northwest Solid Waste Treatment Complex under the PPP method; speeding up the implementation of T3 station, Metro 1, Rach Xuyen Tam project, An Phu intersection, expanding National Highway 50... and the projects that have started construction.

To support economic recovery, in the coming time, Ho Chi Minh City will also implement transparent and healthy real estate market measures; have plans to handle slow-moving projects, ensuring the rights of land users as well as investors.

In the context of the city's economic difficulties, Mr. Phan Van Mai, Chairman of the Ho Chi Minh City People's Committee, acknowledged that each department, district and unit needs to think seriously, determine and take drastic actions to quickly escape this situation and continue to rise.

The head of the city government questioned whether any unit was confused, struggling, not knowing where to start in the context of a backlog of work, arising a lot. "I don't think Ho Chi Minh City has lost control of this. We have had key programs and plans, checking and ensuring progress and specific results. With the volume, breadth of tasks, intensity, work productivity has also increased," Mr. Phan Van Mai affirmed.

The leaders of the Ho Chi Minh City People's Committee requested each agency, department, branch, locality, and each cadre, civil servant, and public employee to review their work with the highest sense of responsibility.

Pointing out that units with many pending tasks such as the Department of Planning and Architecture, Department of Natural Resources and Environment, Department of Planning and Investment, Department of Construction, Department of Labor, War Invalids and Social Affairs and the Office of the City People's Committee, the leader of the Ho Chi Minh City People's Committee requested that the heads of these units need to group tasks to handle and urge progress, not to prolong the processing time. Regarding coordination tasks, units need to promote coordination, not to wait and not to let a document run back and forth many times.

Chairman of the Ho Chi Minh City People's Committee Phan Van Mai also requested that departments and project management boards promptly remove obstacles and allow public and private projects to be implemented; in particular, units need to pay attention to the difficulties of 138 real estate projects that the Ho Chi Minh City Real Estate Association has proposed to remove recently.

In addition, the leaders of the Ho Chi Minh City People's Committee also requested departments and branches to focus on resolving administrative procedures to keep capital flowing and projects moving forward. This has been a factor that has accelerated the city's growth in recent times; at the same time, focus on removing difficulties for businesses in accessing credit, VAT refunds, and promoting industrial production development...

According to VNA

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