From a street within a district to a city within a country, economic hubs vary in scale. They are business clusters formed around a region due to certain economic, technological, and social factors. Economic hubs are where economic activity is concentrated, often where business headquarters settle. And they have economic influence beyond the hub itself.
In Vietnam, Ho Chi Minh City is the chosen one and the best-performing economy entrusted to lead the country’s digital economy and the region’s economic hub.
From its strategic location to the abundance of the workforce, and the fact that the southern metropolis generated up to 23% of the GDP in 2021, all while being the center of 35% of all Foreign Direct Investment projects, but does Ho Chi Minh City have what it takes to become an economic hub?
The Politburo on Friday, chaired by Party General-Secretary Nguyễn Phú Trọng, reviewed the implementation of development goals in the 2010-2020 period and set new goals for 2030 with a vision to 2045 — the includes a resolution pointing HCMC as the leader in Vietnam’s journey towards a digital economy and economic growth in general.
HCMC is set to become a modern city by 2030, according to the said approved resolution — leading the country in digitalization and an economic, financial, trade, science and technology, and cultural hub of Southeast Asia this decade. “It will become an economic, financial, and service hub of Asia, a global destination and among major cities in the world,” the state media reported.
In addition, the city is also set to achieve rapid and sustainable economic development, improving productivity and international competitiveness while strengthening linkages for regional development. The resolution also comes with the condition that the city must accelerate the construction of infrastructure and improve the planning quality while ensuring sustainable development and adaptation to climate change.
Moreover, HCMC must also effectively mobilize and use all resources and tap the potentials and advantages for the city to develop quickly and sustainably while paying attention to culture, society, education and training, people's health, and quality of life.
The resolution is the effect of HCMC’s economic expansion, which hit 2.7 times from 2010 to 2020, and its growth in the regional domestic product that doubled in the same period.
At the same time, “the southern city continued to reform its growth model, with the development based on science and technology applications, and its economic structure shift was also on the right track as it focused on high-tech industry, services, and agriculture,” reads the report from the Vietnamese state media.
The city’s efforts towards ensuring social welfare, improving people’s quality of life, and the positive achievements in other fields, including science, technology, education and training, health, culture and sports, also contributed to the decision made at the Politburo.
However, Politburo also discussed the city’s vulnerabilities, including low competitiveness, slowed economic growth compared to the previous period, the investment environment remaining slow to improve, and the per capita income goal being unmet.
As for the suburban districts in the city, HCMC’s People’s Committee filed a request to halt the requests for upgrades into urban districts. The cause of concern is that the enhancements might lead land prices to skyrocket, eventually creating hurdles in collecting land to develop infrastructure in the future.
The People’s Committee instead suggested that these districts should work on the planning for now and will be considered if they meet the standards.
HCMC’s economic growth in 2022
As of October 2022, HCMC’s population hit 9.2 million people, with 52% in the workforce. The city is home to 22 districts, including the newly-declared city of Thu Duc, 16 urban districts, and five suburban districts.
In terms of economic potential, the southern business capital shows immense growth potential in four industries: mechanical and automation, electronic and IT, chemical products, and food processing.
In fact, during the first nine months of the year, HCMC contributed $14 million to the national budget.
As for infrastructure, the city is also booming and capable. Home to the world’s 22nd largest seaport Saigon Port, which recorded a throughput of 7.9 million teus in 2021 and a growth rate of about 1.3% compared to the previous year and the country’s busiest and biggest airport Tan Son Nhat International Airport. Its first and second terminals have the overall capacity to process 25 million people a year.
Thanks to these infrastructures, the city generated $4.3 billion in revenue from import and export industries.
According to the municipal People’s Committee, HCMC’s initial GRDP target this year was 6-6.5%, but as of early November, the GRDP expanded to 9.4%. The city’s GRDP grew 9.9% in the first ten months of the year compared to the same period last year.
GRDP measures the economic performance of a region or city. It includes goods and services produced by all households and establishments in the area or, in other words, the aggregate gross value added (GVA) of all regional resident producer units.
The growth rate shows if the economy grows faster, slower, or declines compared to the previous year.
Phan Văn Mãi, chairman of the People’s Committee, said high growth rates of industrial production, trade and services, and State budget collection in the January-October period reflected strong economic activities.