Danang Hi-Tech Park
Dinh Vu

Local Economy

Last updated: Tuesday, May 22, 2018


HCM City Placing Focus on Business Support and Development

Posted: Tuesday, March 28, 2017

On April 29, 2016, the Meeting between Prime Minister and Businesses 2016 under the theme of “Vietnam businesses - Driving force for national economic development” took place in Ho Chi Minh City under the chairmanship of Prime Minister Nguyen Xuan Phuc. Under the witness of the Prime Minister, Ho Chi Minh City signed a commitment with the Vietnam Chamber of Commerce and Industry (VCCI) on forming the best business environment for local enterprises. The results achieved after one year of carrying out the commitment was introduced to Vietnam Business Forum by Ms Tran Thi Binh Minh, Deputy Director of the Department of Planning and Investment of the city. My Chau reports.
After a year of fulfilling this commitment, what has Ho Chi Minh City achieved so far? What will the city need to do to heal existing weaknesses?
In the past year, the city's investment and business environment has improved significantly and its economic competitiveness has been ensured for all types of markets to operate fully and smoothly, thus enhancing the trust of investors in the local investment climate. Innovative business start-ups have driven the economic development (in 2016, the province had 36,339 new business start-ups, an increase of nearly 16 per cent over 2015). Foreign investment flows have kept going up.
Local banks have continued to maintain stable growth. With a credit growth of 16 per cent, bank loans have fully met capital demand for economic development. Business support and trouble-shooting programmes have continued to facilitate local enterprises to develop and boost operations. Investment resources mobilised for economic development has made a headway. Total social investment capital accounts for 30 per cent of the city’s GRDP as expected and the private sector contributes 64.5 per cent of the value.
In the past year, Ho Chi Minh City has focused on carrying out scientific and technological programmes and projects, protecting intellectual property rights of organisations, individuals and enterprises, and supporting intellectual property development. It has chosen eight scientific and technological assignments and placed orders for their development, which will serve the Ho Chi Minh City-branded key product development programme. It has assisted 300 start-up projects and 700 innovative start-up entrepreneurs through consultancy, training, networking and incubation. It has stepped up market research and development and gradually raised the efficiency of scientific research.
Hence, HCM City’s gross regional domestic product (GRDP) expanded 8.05 per cent in 2016 and total factor productivity (TFP) contributed over 35 per cent to GRDP.
However, the city still faces numerous difficulties and challenges such as business environment and competitiveness remaining under expectations, notwithstanding improvement, labour and capital-driven growth, low effect of scientific and technological application and hard market development.
In 2017, the world economy is forecast to bear unexpected development. The growth rate may be higher than that of 2016 but the recovery might be slow, uneven and risky. The fulfilment of international integration commitments, especially new-generation free trade agreements, will bring in new good opportunities as well as difficulties and challenges. Particularly in Ho Chi Minh City, the economy has shown signs of recovery, but the competitiveness of the economy and enterprises themselves is weak, especially local SMEs are facing hardship in competition in the context of deeper international economic integration. The State budget revenue is forecast to be affected by tax exemption and reduction policies in line with committed international integration roadmaps in 2017. In addition, the budget revenue proportion between central budget and municipal budget applied in the stable period of 2017 - 2020 is reduced to 18 per cent. In the current context, it is a real challenge for the city to achieve GRDP growth of 8.4 - 8.7 per cent, the TFP to GRDP ratio of 36 per cent or more, total social development capital equal to 35 per cent of GRDP, and 50,000 new business start-ups in 2017.
Based on recommendations from enterprises and proposals of ministries and sectors made at the Meeting between Prime Minister and Businesses in 2016, the Government issued Resolution 35/NQ-CP dated May 16, 2016 on business support and development to 2020. What do you think about this Resolution?
In the light of business support and development goals in the 2016-2020 period, placing businesses at the heart of development and creating a favourable environment for enterprises development, the Government issued Resolution 35/NQ-CP with the spirit of building an enabling government and supporting business. The resolution clearly states the specific responsibility of every ministry, branch and locality in carrying out business support solution and creating an enabling business and investment climate.
To support enterprises in the spirit of Resolution 35, on August 1, 2016, the Ho Chi Minh City People's Committee issued Resolution 3907/QD-UBND, on the implementation of Resolution 35/NQ-CP of the Government, with the following targets: “building competitive, sustainable enterprises, with at least 500,000 enterprises active by 2020, including many large-scale, powerful ones. By then, the private sector will contribute 65 per cent of GRDP and 64 per cent of total social investment. TFP will contribute 36 per cent onwards. Total labour productivity will rise by 6.5 per cent a year. About 30 - 35 per cent of local businesses have innovations every year.” The resolution also assigns specific tasks of business support and development to departments and districts.
In the coming time, in order to continue carrying out the commitments, what will Ho Chi Minh City focus on?
In order to create the best business environment for local enterprises, Ho Chi Minh City will further encourage and inspire enterprises to renovate technology and improve product quality and competitiveness. The city will simplify administrative procedures; enhance information technology application to administrative procedures in support of enterprises; focus on solutions to reduce market entry and land access costs and improve corporate competitiveness; supplement support policies to make business the main actor of the science and technology market, actively invest in software research and development, enhance production management and business management and raise TFP contribution to economic growth.
Ho Chi Minh City will continue to implement the Science and Technology Development Strategy for the 2016-2020 period, with focus placed on effective science and technology application programmes. To promote the formation of science and technology companies, the city will quickly adjust land-use planning to 2020 to build Quang Trung Software Park 2 to lure world-leading technology corporations.
Ho Chi Minh City will also gather efforts to effectively implement Decision 3907/QD-UBND and Decision 3293/QD-UBND dated June 28, 2016 on the launch of the plan for deployment of key tasks and solutions to better the business and investment environment and raise the Provincial Competitiveness Index (PCI), particularly concentrating on major tasks and solutions on enhancing business environment, investment environment, administrative reform and business facilitation. The city will organise activities to attract investment, especially for supporting industries; communicate on investment attraction policies; support FDI companies to tackle emerging difficulties in doing business and investment in Vietnam, enhance operational quality for better FDI investment efficiency and better support for important sectoral development of the city.
In order to attract and encourage investors from all economic sectors to invest in infrastructure construction, the city will take initiative in reviewing, proposing, supplementing and adjusting mechanisms and policies appropriate to new developments. At the same time, the city will perfect mechanisms and policies to draw more investment capital and effectively use infrastructure development capital sources, particularly urban infrastructure; and encourage public-private partnership (PPP) investment projects.

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