Within two decades, Vietnam’s urban population has increased to 31 million, equivalent to 34 percent of the society, and is forecast to reach 46 million, or 44 percent, by 2030. This rapid increase in the number of urban residents brings many challenges in controlling the speeding urbanisation in Vietnam.
According to the Economic Outlook 2016 announced by the ADB, urbanisation was a relatively new trend in Vietnam. Until the 1980s, as a result of the government’s focus on agriculture, workers had been encouraged to stay in rural areas, and by the end of 1990 only 20 percent of Vietnam's population lived in urban areas. The economic reform and easier migration from rural to urban areas after the mid-1990s kicked off the rapid development of urban areas to become centres of manufacturing and services.
The rise of urban centres and employment was the driving force of the economy, it was estimated that a minimum of 70 percent of current GDP was generated in cities. However, urban transport network, water supply and drainage systems, sanitation, health services and education, as well as infrastructure, struggled to keep pace with this fast-paced growth. Moreover, the increased urban population put pressure on natural resources and caused environment pollution. In order to continue on the path of becoming a strong industrial economy, the report said that Vietnam needed to develop urban centres in a more efficient way, capable of providing for a denser population. To achieve this goal, progress on three fronts is required.
The first was urban planning. According to the report, the current urban planning law emphasised the decentralisation urban planning and the consultation with relevant parties, which required local authorities to improve planning capacity and urban management. It could be seen that the planning often showed an idealised vision of the city in the future without taking into account the real needs of households, businesses and local authorities.
The second is funding for urban infrastructure. Besides Hanoi and Ho Chi Minh City, very few local authorities were able to raise sufficient revenues to develop infrastructure, thus largely dependent on the annual budget allocated by the central government. This situation hindered development as local authorities needed long-term funding commitment in order to complete major projects such as upgrading city drainage system. Raising capital was more challenging for those projects that were of great importance but not capable of generating much revenues, such as drainage, and these projects had to resort to borrowing official development assistance from other countries.
To deal with the shortage of equity capital, many local authorities sometimes turned to private enterprise for infrastructure supply through exchange contracts lands for infrastructure. These contracts could cause poor deals when public lands were traded for infrastructure of poor quality for cheap prices. Moreover, a private domination in urban development could distort the supply of services, for example excessive investment in expensive housing segment while too little in reasonable priced housing for the low-income urban people. These problems could be treated by strengthening local planning, constructing medium-term frameworks to finance urban services, and encouraging local authorities to scale down their role in investment, instead focusing more on the planning and state management of urban services, land use and resource management.
And the last, the report reaffirmed that urban development must take into account the environment factor. The exchange contracts lands for infrastructure often led to expansion of urban development and unreasonable construction in high-risk areas, including areas that were exposed to flooding. Moreover, the current planning system did not encourage authorities to integrate climate change issues effectively into city planning. Consequently, cities often only focused on expansion while paying little attention to the risk of natural disasters and climate change.
Quynh Chi
Vietnamese
