Accelerating HCM City's Smart Seaport and Financial Center Development

Ho Chi Minh City is Vietnam’s foremost economic and financial hub in the era of the fourth industrial revolution. Strategically positioned along the East Sea, it lies at the core of Northeast Asia, ASEAN, and the Indo-Pacific’s most dynamic economic region. This prime location underscores the city's potential to evolve into a smart seaport city and an international financial center.

Tan Cang-Cat Lai Port  - the largest and most modern container port in Vietnam

Seeing new opportunities that the country might grasp when it had both a good economic context and a good geopolitical position in the region, in December 2022, the Politburo issued Resolution 31-NQ/TW on HCM City development directions and tasks to 2030, with a vision to 2045, and the Government promulgated Decision 642/QD-TTg 2022 on HCM City planning in the 2021-2030 period, with a vision to 2050. The National Assembly issued Resolution 98/2023/QH15 on piloting specific mechanisms and policies on HCM City development. The new resolution focuses on building mechanisms and policies in six areas: Investment management; Budgetary finance; Urban and environmental resource management; Priority sectors and occupations to attract strategic investors; Scientific, technological and innovation management; and Apparatus of Ho Chi Minh City and Thu Duc City.

To effectively carry out the above orientations and the resolution as a whole, in the current context that Ho Chi Minh City's economic growth is very low (its GRDP was estimated to rise by 0.7% year on year); the real estate market and the financial market are facing a lot of difficulties; nonperforming loans at banks and pressures on bond maturity are tending to increase; enterprises are facing bankruptcy and downsizing and having  more difficult access to orders and capital sources; consumer purchasing power shrinks; and input costs look up, stronger short-term and long-term solutions are needed.

In the short term, it is necessary to effectively manage five resources of socioeconomic development. In managing natural resources and finance, it is necessary to effectively implement the newly amended Land Law and strengthen fiscal and monetary policies to support immediate stimulus such as extending and reducing taxes and land rents. Banks and credit institutions should restructure debt repayment terms, maintain debt classified groups, waive and reduce interest and fees, and particularly slash bank interest rates to develop a healthy competitive market economy and the win-win principle. In addition, measures are needed to boost market purchasing power as well as provide unemployment support for workers.

In the medium and long term, according to economists, Ho Chi Minh City needs to study the following three breakthrough strategies:

First, it is necessary to study the autonomous/self-governing status of municipal administration with the active participation of the people to develop infinite social capital for modern urban governance. In addition to digital application, it is important to gradually build and deploy the principle of decentralization to apply the 2-level city model in order to streamline and improve the performance of the apparatus in investment, budget finance and smart city governance to meet the rapidly growing demand of people and modern cities. Together with building new urban areas such as satellite cities or multi-centers combined with the TOD (Transit Oriented Development) city development model associated with large-scale public transport, it is necessary to prioritize law research, development and enforcement.

Second, logistics is the backbone of trade and economy as Ho Chi Minh City is home to 54% of professional logistics services providers in the country, currently contributes 22.3% of GDP, accounts for nearly 27% of the national budget and attracts nearly 34% of the country's FDI projects. Furthermore, with the formation of the Can Gio super seaport with nearly 10 km of wharfs and barge docks, capable of accommodating vessels of 250,000 DWT, Ho Chi Minh City deserves to be a domestic and international logistics center. Therefore, it is important to define the National Vision to 2050, along with Lach Huyen Port Hai Phong City and strategic port clusters in the central region like Da Nang and Cam Ranh. HCM City needs to develop and become one of the important logistics service centers and smart seaport cities in the Indo-Pacific region. On that basis, the HCM City Master Plan for the 2021-2030 period, with a vision to 2050, needs to be created to serve as a foundation for sustainable socioeconomic development plans.

Third, in particular, the banking and financial sector is always the lifeblood of the economy, even of global trade. The presence of the International Financial Center (IFC) model is always a powerful tool to concentrate domestic and international financial resources and promote national economic growth. Vietnam is currently an open and dynamically developing economy, with comprehensive strategic partnerships with seven leading economies in the world. It is impossible not to have strong trade links and strategic financial partnerships to serve as a centralized and sustainable financial foundation for the country's current large-scale projects.

In that process, it is vital to focus resources on planning development policies aimed at four basic areas:

One, further promoting free trade both domestically and internationally, with necessary focus on building a partnership strategy with large global IFCs such as the UK, the US and Asua.

Two, forming and strongly developing the market scale with diverse financial products and services. At the same time, it is essential to develop the country's financial technology (Fintech) to create an important foundation for sustainable economic development.

Three, building a training strategy for the banking and finance sector in accordance with international standards (especially at the university level) to enhance the quality of human capital to ensure IFC success.

Four, perfecting the e-government model to ensure a transparent business environment and creating long-term trust in the fair Vietnamese market economy for all domestic and international investors.

With the maximum effort of the city, strong support policies of the Vietnamese Government and the strategic vision of the city through sustainable and comprehensive planning will be the driving force and compass to move towards the international financial center of the country in the first half of the 21st century. At that time, HCM City will not only be the country's economic locomotive but also give a helping hand to achieve the United Nations’ millennium goals in the fourth industrial revolution era.

Dr. Doan Duy Khuong

Source: Vietnam Business Forum