Toward Smart, Sustainable HCM City

Vietnam is considered one of the success stories of implementing the Sustainable Development Goals (SDGs) of the millennium. Vietnam has adopted SDGs through the National Action Plan for the implementation of the 2030 Agenda for Sustainable Development promulgated in May 2017, with a focus on sustainable urbanization in provinces and cities across the country. Particularly, smart city development is seen as a promising solution to sustainable development. Being a major center of economy, culture, education-training and science-technology and the biggest contributor to the economic development of the nation, Ho Chi Minh City has taken the lead in realizing the country’s SDGs and becoming a smart and sustainable city.

Bitexco Financial Tower - a skyscraper in Ho Chi Minh City

Carrying out Resolution 16-NQ/TW in 2012 of the Politburo and National Action Plan 2017, the National Assembly issued Resolution 54/2017 on piloting specific mechanisms and policies for the sustainable development of Ho Chi Minh City. Based on the above orientations, the Ho Chi Minh City Party Committee issued Resolution 08-NQ/TU dated December 6, 2017 and the city achieved certain outcomes. Except in the years severely affected by the COVID-19 pandemic, the city's economy continuously grew at a high rate, for example 7.72% a year on average in 2016 - 2019, higher than 7.22% in 2011-2015. The policy on additional income spending is executed publicly and transparently. This has helped improve the livelihoods of public employees, evoke their creative work spirit, and strengthen and enhance the work performance and quality of the government apparatus in all fields.

However, there are still some limitations in this process such as changing mechanisms on revenue policy, equitization, housing and land rearrangement of central agencies, and capital advance for centrally funded projects in the city. Some mechanisms have been in place but their outcomes have not been as good as expected. Policies aimed to attract experts, scientists and talents have not been applied on a large scale. There is no specific financial mechanism for the city to mobilize more resources to solve infrastructure challenges, address social and environmental issues, and improve the investment environment.

The Fourth Industrial Revolution (4IR) has blurred biological, physical and mechanical boundaries thanks to the Internet of Things (IoT) laws. Moreover, 4IR has also impacted cities and formed the concept of a “smart city” seen through the lens of 4IR with specific challenges: planning, buildings, connectivity, data, energy, administration and transportation.

Three criteria need to be met to integrate 4IR into cities. First, the concept of sustainability should go beyond the economic ecosystem. A sustainable city must be a good city for people to live an inclusive, economical, adaptive and sustainable life in three main aspects: accessible housing (combined with social housing program); inclusive public space and utilities; and a comprehensive transportation system (especially, massive rapid transportation system). Second, the practice of city planning is very important. However, city planning is a massive information product that requires accuracy and timely and frequent updates in order to turn information into a resource to promote positive synergized action of the whole society. Digital technology can easily build virtual networks combined with physical structures to enable the effective practice of urban planning information in a transparent and public manner for the entire population. Third, the success of smart cities depends on innovative businesses that meet 4IR challenges and are an integral part of the process.

Smart cities first need effective, creative and scientific management design strategies: a modern model of two-tier city government as well as public policies to foster and develop socioeconomic resources and promote welfare, good business and urban planning practices. Moreover, the connection of domestic, regional and international partners will determine the success of smart cities in the 4IR era.

In December 2022, the Politburo issued Resolution 31-NQ/TW on the direction and tasks of Ho Chi Minh City development to 2030, with a vision to 2045, and the Government promulgated Decision 642/QD-TTg 2022 on tasks of formulating Ho Chi Minh City Planning for the 2021-2030 period, with a vision to 2050. Currently, the Government is also preparing a new resolution on piloting outstanding mechanisms and policies on Ho Chi Minh City development which will be then submitted to the National Assembly. The new draft resolution centers on working out mechanisms and policies in eight areas such as investment management; budget and finance; urban management and environmental resources; priority industries and occupations to attract strategic investors; science, technology and innovation management; organization of the city's apparatus; organization of Thu Duc City apparatus; and law application.

Short-term and long-term solutions needed

To carry out the above orientations and contribute to the new draft resolution, in the current context that the economic growth rate of HCM City is very low (GRDP growth was estimated at 0.7% year on year); real estate market and financial market are facing many difficulties; bad debts at banks and bond maturity are tending to increase; more enterprises have been dissolved and continued to cut staff due to shortages in business orders and fund sources; consumer purchasing power has contracted; and input costs have looked up, short-term and long-term solutions are needed.

Short-term solutions:

The Government strengthens fiscal and monetary policies to support immediate demand stimulus such as tax and land rent extension, exemption and reduction. Banks and credit institutions have restructured repayment terms, maintained their debt classification groups, exempted and reduced interest and fees, and especially slashed interest rates to support a strong competitive market economy and the win-win principles. In addition, it is necessary to take measures to stimulate the purchasing power of the market as well as give unemployment grants to workers.

Medium and long-term solutions:

It is necessary to study the autonomous/self-governing urban government model (Autonomous status) with the active participation of people to develop an inexhaustible source of social capital for modern city governance; gradually build and apply the two-tier city model at the district level as the base for Ho Chi Minh City so as to ensure performance improvement of the city apparatus in such aspects as investment and budgetary financing as well as to minimize the administrative bureaucracy, which is time-consuming and insufficiently transparency about rights, interests, responsibility and accountability in city governance. In addition to building a new model, priority should be given to research and development of corresponding laws to ensure enforcement. This is also a key criterion for assessing the performance of legislators.

There is a need for strong pilot support policies in two breakthrough and pervasive priority industry sectors - Finance and Logistics, because Ho Chi Minh City is home to 54% of professional logistics service providers of the country and currently contributes 22.3% of the country's GDP, nearly 27% of the national budget, and attracts nearly 34% of FDI projects in the country. With this position and important geopolitical position, Ho Chi Minh City deserves to be an international financial and logistics center. Trade associations and businesses need to adopt innovations toward smart city development in these two fields so as to apply new technologies effectively and connect with global partners.

There is a need to define the 2050 Vision when Ho Chi Minh City develops on par with major cities in the world and becomes one of the important financial and logistics service centers of the Indo-Pacific region. On that basis, the Ho Chi Minh City planning for the 2021-2030 period, with a vision to 2050, is built to serve as the foundation for socio-economic development plans to concretize the city's strategic vision. When the planning is formulated, it is necessary to study and develop mechanisms and policies to promote and integrate resources for socioeconomic development. The model of five socioeconomic development resources (nature, human, product, finance and society) can be an effective reference in this process.

Along with the city's best efforts, the government's strong support policy for breakthrough development of a new city model, priority to key industries and special definition of the city's strategic vision with comprehensive planning will be the driving force and compass toward a smart Ho Chi Minh City in the first half of the 21st century so that the city is not only an economic locomotive of the country but also contributes to the realization of SDGs on smart city of the United Nations in the 4IR era.

Dr. Doan Duy Khuong

Source: Vietnam Business Forum