Industry and trade boost HCMC economic growth

08:29 | 23/03/2018 Economy- Society

(VEN) - The industry and trade sector of Ho Chi Minh City (HCMC) has attained consistently high growth, contributing greatly to the city’s fast and sustainable economic development.

industry and trade boost hcmc economic growth
Minister of Industry and Trade Tran Tuan Anh (first from left) shakes hands with HCMC People’s Committee Chairman Nguyen Thanh Phong in February 2018

Efficient solutions

In 2017, the city’s index of industrial production (IIP) increased 8.48 percent, while retail sales and service revenues soared 10.89 percent over 2016. The HCMC industry and trade sector reached a value added of VND356 trillion plus in 2017, representing 33.62 percent of the city’s annual gross regional domestic product (GRDP).

As of February, the city’s IIP grew 15.04 percent compared to the same time in 2017. Four key industries continued to grow thanks to the city’s efficient market expansion and technology and competitiveness improvement efforts. Specifically, the food, beverage and foodstuff processing industry grew 19.75 percent, while the chemical-pharmaceutical industry expanded 25.74 percent, the engineering industry soared 8.05 percent, and the electronics production industry increased 22.85 percent. The city’s retail sales and service revenues totaled more than VND87.71 trillion in the first two months of 2018, up 3.4 percent from the same time in 2017.

Director of the Ho Chi Minh City Department of Industry and Trade, Pham Thanh Kien, attributed the achievements to the city’s economic restructuring that resulted in the four key industries’ growth breakthrough and IIP growth – 1.83 times the whole industrial sector’s average. The developed modern trade infrastructure (an additional 18 supermarkets, three trade centers, and 218 convenience stores were opened in 2017) and the increasingly growing electronic commerce or e-commerce increased retail sales in the city.

HCMC has adopted various business promotion policies. Each project investing in industrial production and/or support industries can borrow capital of up to VND200 billion and benefit from a preferential interest rate period of seven years plus. The city also has policies facilitating businesses to maintain and expand their domestic market by connecting with foreign retailers in the city, and expand markets to neighboring provinces. HCMC will continue to maintain market stabilization and supply-demand connection solutions, and assist businesses in developing distribution networks.

industry and trade boost hcmc economic growth
Industry and trade have contributed significantly to HCMC economic growth

Maintaining high growth

Minister of Industry and Trade Tran Tuan Anh said at a recent meeting with HCMC leaders that the city industry and trade sector had accomplished its tasks, recorded important achievements and contributed to economic growth of the country in general, and the city in particular. The Ministry of Industry and Trade expects a higher growth for the city economy in general and the industry and trade sector in particular, Anh said. The ministry will assist and cooperate with HCMC, experimenting with specifically tailored policies approved by the national assembly, the minister said.

HCMC People’s Committee Chairman Nguyen Thanh Phong said HCMC experienced a high growth in different economic fields, including the industry and trade sector. The city will continue to invest in high-tech industries, attract quality investment capital, and discourage investment in labor-intensive industries, Phong said. The city might open an additional 1,000 hectares of industrial parks and industrial zones for small to medium-sized enterprises while developing startup centers, he added.

Phong said the city is highly interested in trade and service development. The market share of Co.opmart - the largest retailer in the city and Vietnam as a whole – has tended to shrink due to increasingly tough competition from foreign retailers in Vietnam. It is necessary to formulate policies enabling businesses such as Co.opmart to maintain market share and increase competitiveness in accordance with international competition laws, he said.

Pham Thanh Kien, Director of the Ho Chi Minh City Department of Industry and Trade, said the department would enhance trade promotion, especially in markets with which the city has trade exchange of more than US$1 billion, including China, Singapore, Chinese Taipei, Thailand and the Republic of Korea. The department will prioritize the implementation of policies that enable businesses to take advantage of free trade agreements (FTAs), build domestic support policies such as technical barriers, and develop support industries to minimize FTAs’ negative impacts.

HCMC should devise specific, efficient trade promotion solutions for key export sectors, and adopt policies to increase exports with a high added value that are the city’s strengths, such as electronics, computers, software, digital content products and services.

In 2018, HCMC will focus on experimenting with specifically tailored policies approved by the national assembly to improve competitiveness and economic growth quality. The city targets a GRDP growth of 8.3-8.5 percent, including a 7.9 percent growth in construction and industry and an eight percent service growth, in 2018. The city also targets budget revenues of VND376.78 trillion (including VND256.21 trillion from domestic sources, VND12.57 trillion from crude oil businesses, and VND108 trillion from import and export activities) in 2018. HCMC will be continuing to improve its investment environment and encouraging startups and business development and innovation.

Thanh Ngoc