Specific mechanisms, policies needed to drive HCM City’s growth

Its gross regional domestic product (GRDP) grew just 0.7% in the first quarter of the year, much lower than the national average. The city’s economy will continue to face many unpredictable difficulties and challenges in the remaining quarters of the year, they said.

Delegates discuss measures to boost HCM City’s economic development at a seminar in HCM City on May 16

Speaking at the seminar ‘Removing obstacles to drive HCM City’s economic development' held in HCM City on May 16, Assoc. Prof. Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, said HCM City shouldered the country’s economy, and only when the locomotive grows strongly can it 'pull the whole train up'.

Despite its economic growth slowing down, the city still has abundant internal resources. So creating new breakthroughs for the city is needed to boost its development, he said.

"We need to identify and address long-term problems to enable HCM City to regain its position and growth," he said.

“The city has to turn itself into an international integration centre, with breakthrough projects such as Can Gio transshipment port and an international financial centre to draw more international investors," he said.

Dr. Tran Du Lich, a member of the National Advisory Council for Financial and Monetary Policies, said macro policy that stimulates demand in the domestic market is needed to help the economy recover soon.

The Government should continue to reduce the value added tax to 5-6%. The current reduction of the VAT tax to 8% is not enough, he said.

Businesses need to run a series of discount campaigns to stimulate demand, including tourism. With exports facing difficulties, promoting consumption in the domestic market is a must, he said.

In addition, consumer credit should be accelerated to stimulate consumption demand, he added.

From a business perspective, Nguyen Anh Duc, general director of Saigon Co.op, said that retail businesses are facing many difficulties due to declining demand. Statistics of the Association of Vietnam Retailers showed that no retailer had positive growth in the first quarter of 2023.

To create conditions for the retail industry to develop as well as the economy to recover, there should be policies to directly support consumers, such as a 2% reduction in VAT.

Lich said the National Assembly is discussing a resolution to supersede Resolution No 54 on specific mechanisms and policies for the development of the city. If it is approved and immediately applied, it will give the city great autonomy and help solve institutional obstacles to facilitate growth.