Ho Chi Minh City rose from a battered and bruised Saigon to lead Vietnam towards economic development.
At the corner of Do Quang Dau and Bui Vien Streets in Ho Chi Minh City stands a very old seven-floor apartment block without an elevator, and right in front of it is a “quan oc huong via he” (a mobile sweet snail food stall on the sidewalk, with some tiny plastic chairs) full of foreigners downing VND10,000 ($0.5) glasses of beer throughout the night. Not many of them, if any, would know that 40 years ago, before Vietnam’s long-awaited reunification on April 30, 1975, the old apartment block was one of the most luxurious hotels in Saigon, known by some as the “Pearl of the Far East”, and along the street would be armed soldiers on patrol.
Over the 40 years since reunification Ho Chi Minh City has seen significant achievements in its process of modernization, making it - the city that never sleeps - of Vietnam, with countless skyscrapers and new urban areas. The political and social stability of the city has been maintained as a foundation for rapid economic growth and economic expansion. The city’s growth is consistently 1.6 to 1.7 times higher than the country’s average and it contributes 21 per cent of GDP and more than 30 per cent of the State budget.
With the economy developing in the right direction all social resources in the city can be brought into play efficiently. Every sector enjoys major improvements and the quality of life of local people stays on an upwards trajectory. The ratio of poor households, with an annual income of less than VND16 million ($800) per person, is less than 1 per cent. Mr. Phan Tien Dat, a member of Binh Chanh District’s Farmers Association, proudly said of his hometown that “Ho Chi Minh City’s economy develops each and every day, and wherever I go in the city I feel a vibrant economic atmosphere.”
The planning as well as planning management of the city has also gained many positive results, with its urban areas being expanded and urban infrastructure developing rapidly, especially in traffic and transport. Urban management is increasingly effective and efficient with the application of scientific and new information technology.
Regarding international integration, Ho Chi Minh City has been the driving force for the whole Southern Key Economic Zone. Mr. Doan Vo Khang Duy, Vice Chairman of the Ho Chi Minh City Young Businesspeople Association (YBA), expressed his pride to be a citizen of a city of people who don’t hesitate to reform to cope with global development. “Ho Chi Minh City is extremely energetic in this regard and possesses impressive economic development indicators,” he said. “I hope it can successfully maintain that.”
Nevertheless, in order to have what it has today the city had to go through various difficulties and challenges in the last 40 years.
Innovating to face challenges
Former Prime Minister Phan Van Khai will never forget his years of serving Ho Chi Minh City during the tough times after reunification, speaking at a scientific conference entitled “Ho Chi Minh City - 40 years of building, development and integration” on March 17th. The war had left the city almost ruined, with destroyed roads and many decaying buildings.
Ho Chi Minh City and the country as a whole fell into extremely tough socio-economic times with the CPI increasing sharply over the course of a few years, at 15.3 per cent in 1978, 30.9 per cent in 1979 and a peak of 42 per cent in 1981. At the same time, natural calamities devastated the Mekong Delta’s food stocks. Citizens of Ho Chi Minh City at the time had to eat rice with wheat and cassava to cut down on living costs, former PM Khai recalled.
Facing such challenges, the city’s Party Committee issued Resolution No. 09 to escape from the old State subsidy system and establish economic laws for commodity production with expanding markets and improved efficiency. The city also sought new business and production models.
Conferences IX and X of the Ho Chi Minh City Executive Party Committee in the summers of 1979 and 1980 were the beginning of breakthroughs in using the initiative and creativity of every production unit in the city. “Those were two historic conferences,” former PM Khai told the gathering. “It was during this time we had witnessed the appearance of innovative business models with mass production, such as the Southern Washing Powder Company, the Saigon Tobacco Company, the Saigon Beer-Alcohol-Beverage Corporation (Sabeco Brewery), and Phong Phu Textiles, among others.”
Over some 30 years the city adopted 15 innovative models and economic setups that contributed to perfecting the general economic system. The Tan Thuan Export Processing Zone, for example, became a role model and has been replicated throughout the country. Remarkably, the Saigon Bank for Industry and Trade, a joint stock commercial bank, was established before the Corporate Law and Banking Ordinance of Vietnam were passed. Ho Chi Minh City was also the first in the country to equitize a State-owned enterprise, the Refrigeration Electrical Engineering Corporation (REE), in 1993. More recently, the exchanging land for infrastructure policy and the price stabilization policy, etc., have been initiated and implemented effectively by the city. “The city has made a very important contribution in piloting new mechanisms, new business models, and new policies,” said Mr. Tran Du Lich, Deputy Head of Ho Chi Minh City’s National Assembly Delegation.
The innovation and creativity of the city derive from real-life imperatives, when the regulations and policies of the State failed to keep pace with the development speed of the city. Resolutions on economic innovation allowed the city to “untie itself” from the constraints and record high rates of productivity, maintaining impressive economic growth for numerous years in succession. Before “doi moi” (renovation), the city’s average annual GDP growth for the period from 1976 to 1985 was about 2.7 per cent. In the 20 years from 1991 to 2010 it maintained double digit growth.
Since 2011 its economic growth has been approximately 10 per cent each year, or 1.6 to 1.7 times higher than the national average. The city has also achieved many positive results in curbing and controlling inflation as well as stabilizing its markets. Achievements over the last 40 years have confirmed the position and the role of the city within the country. In the current period, however, it remains a great challenge for Ho Chi Minh City to maintain the pace and compete on par with the other major cities in the ASEAN region.
In recent years Ho Chi Minh City has actively invested in building a solid strategy for developing scientific and technological infrastructure as a platform for other sectors to thrive.
To meet the needs of urban development, the city has proposed and implemented an exchanging land for infrastructure policy and consequently succeeded in creating the modern urban area of Phu My Hung from a formerly swampy area. Many arterial roads have been expanded with credit funds from enterprises in the form of concessions.
The city will continue to implement six breakthrough programs, including the Program of Improving the Quality of Human Resources, the Administrative Reform Program for a New Urban Administration Model, the Program of Supporting Economic Restructuring and Transformation of the City’s Economic Growth Pattern, the Program of Reducing Traffic Jams, the Program of Reducing Flooding, and the Program of Reducing Environmental Pollution. These programs are expected to foster the city’s industrialization and modernization at a much faster pace than the country’s average.
On that basis, Mr. Vuong Dinh Hue, Head of the Central Economic Committee, emphasized the two major issues for Ho Chi Minh City to work on. Firstly, he stressed that the competitiveness of the city is still weak and will face major challenges during the process of regional and global integration. Secondly, in the field of urban management, Mr. Hue believes that the greatest challenge is inconsistency between the current development level of socio-economic infrastructure and the necessary requirements for economic growth and improvements to quality of life. Resolving these two issues, he said, would see the city not only remain Vietnam’s economic locomotive but also be a regional center for industry, services, education and training and well as science and technology in Southeast Asia.
Local leaders know the job is far from done. Ms. Nguyen Thi Quyet Tam, Chair of the Ho Chi Minh City People’s Council, said that city leaders will never cease trying to identify shortcomings and limitations in order to adopt solutions to further improve the quality of life of the city’s people.