Sustainable Development Faces Challenges from Urbanization

10:09:06 AM | 28/10/2019

As outlined in a study on Vietnam urbanization by the World Bank, the urbanization process in Vietnam has been on a downward trend in the past five years. On the other hand, the rapid urbanization process over the past decade has caused great consequences and challenges for sustainable development.

Tradeoffs between fairness and efficiency

According to the authors of the World Bank, the consequences of urbanization along with emerging challenges of tightening fiscal resources and narrowing the urban labor force have brought Vietnam's urbanization process to a new turning point. Specifically, the equalization of fiscal policy has diverted resources from the higher growth sector to the underdeveloped sector with the model of "spatial disbursement" largely towards "equity".

Also agreeing with this view, Dr. Vu Thanh Tu Anh, a member of the Prime Minister's Economic Advisory Group, said that currently localities with high budget revenues are transferring their budgets to the Government, reducing motivation for localities to collect budgets, thus the growth rate of Ho Chi Minh city and Hanoi, the two pillars of the country, are not much higher than the national average.

Mr. Tu Anh cited the results of a 2016 report by A.T.Kearney on the role of cities, in which Vietnam's urban picture is very different from the global one. Accordingly, while the 123 largest cities in the world account for 13% of the population and 32% of GDP, in Vietnam, five centrally run cities under the central government account for about 21% of the population but only 34% of the country's GDP.

In Vietnam, big cities are not really a growth engine as in other countries in the world. The contribution rate to GDP of five centrally run cities has almost no significant change in the past 15 years: In 2005, the contribution was about 36 - 37% and it is now about 40%.

"For a long time, when there was a trade-off between fairness and efficiency, we chose fairness. Because urbanization and industrialization are nearing the threshold, if we continue this policy, then it is neither effective nor fair," Mr. Tu Anh said.

Challenges in urban planning

Preliminary statistics of the 2019 Population and Housing Census show that over the past 10 years, rapid and widespread urbanization in many localities has cast an impact on population growth in the city. The urban population in Vietnam in 2019 is 33,059, accounting for 34.4% of the total population. Currently, Vietnam has the largest urbanization speed in Southeast Asia, every year over one million people become urban residents. It is forecast that by 2025, Vietnam's urban population will account for about 50% of the country's population.

According to the 2018 National Environment Report by the Ministry of Natural Resources and Environment, most urban areas lack centralized wastewater collection and treatment systems, and the percentage of greenery and parks is very low.

Most development plans in Vietnam were broken in a short time, causing waste of land resources and other resources of the country. Meanwhile, urban infrastructure and social infrastructure have not been developed synchronously, which will cause chaos like flooding, traffic congestion and pollution.

According to a report by the Ministry of Planning and Investment, in the period of 2016 - 2020, due to difficulties in balancing resources for development investment in general and investment in transport infrastructure in particular, newly started transport projects using State budget capital are very limited compared to demand (almost no new projects are implemented). Notably, ODA funding for infrastructure development has been declining since Vietnam became a middle-income country. This has led to infrastructure development lagging behind urbanization.

According to experts, in order to solve this problem, it is impossible for Vietnam to continue the current urbanization path and it requires changes and transformation of the national urbanization model and specific development roadmap with cohesive links between urban areas.

Luong Tuan