HCMC INSTITUTE FOR ECONOMIC RESEARCH HO CHI MINH CITY ECONOMIC OVERVIEW AND POTENTIAL FOR DEVELOPMENT Du Phuoc Tan (M.Sc.) Head of External Cooperation Department of IER 20 June 2007 ROLE OF HO CHI MINH CITY IN THE COUNTRY HCMC is an Economic, Scientific, Educational and Cultural Hub The Largest and Most Dynamic Economic Centre of the Country ROLE OF HO CHI MINH CITY IN THE COUNTRY Population in Ho Chi Minh City 6.42 million persons in 2006 (whole country 84 million persons) + Accounting for only 7.6% population and over 6% of labor force in the country, HCMC accounts for: + 21-22% of national GDP + 30% of national industrial output value + 25.1% of national value of goods and services + 36.7% of national export turnover + 21.0% of total investment. ROLE OF HO CHI MINH CITY IN THE SOUTHERN FOCAL ECONOMIC ZONE (SFEZ) + HCMC accounted for over 80% value added of service of the whole region (in 2005); + 55.3% export turnover of the whole region; 65.4% import turnover of the whole region; + 46.9% value added of industrial value of the whole region BÌNH (This is a dynamic region) SOME DEVELOPMENT TARGETS – GDP GROWTH RATE (%) Area: 2,095 km2 Population: Of which: GDP: 6.4 million 1.85 million (30%) 12.0 billion USD Migrants GDP growth rate: 12.2% per year GDP per capita in 2005: 1,970 USD Unemployment rate: 5.82 % FDI inflow in 2006: 2.28 billion USD Export: 13.7 billion USD More than 76 Universities & Colleges with more than 380,000 students SOME DEVELOPMENT TARGETS – GDP GROWTH RATE (%) GDP Growth Rate - HCMC and Vietnam 16.0 GDP Growth Rate 14.0 12.0 10.0 8.0 HCMC 6.0 Vietnam 4.0 2.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year GDP growth rate during 1996-2005: HCMC: 10.5% VN: 7.2% GDP share of HCMC to the country keeps increasing SOME DEVELOPMENT TARGETS – GDP STRUCTURE (%) GDP Structure (%) Agriculture 1.2% Service 51.1% Industry and construction 47.7% INVESTMENT CAPITAL MOBILIZED – INVESTMENT CAPITAL STRUCTURE (%) Proportion of remaining budget for HCMC: 26% and only responding to 25-30% investment of the city. HCMC mobilized many investment sources: HIFU (HCMC Investment Fund for Urban Development) Urban Bond issued BT (land area exchanged to build infrastructure) Extra-fees (water, electricity) Equitization Structure of investment capital (2001-2006): + State = 33,3% (Whole country 57,6%) + Private = 48,3% (Whole country 26%) + FDI = 18,4% (Whole country 16,4%) Foreign direct investment - capital Foreign Direct Investment (Million USD) 2500 2287 2000 1500 1000 500 907 482 577 776 963 224 0 2000 2002 2004 2005 2006 1 2001 2 2002 3 4 5 6 7 Year Source: HCMC Statistical Office Foreign direct investment - Ranked In 2006 Country Hong Kong Taiwan Singapore South Korea Japan USA. B.V. Island Source: HCMC Statistical Office Projects 148 402 207 416 242 134 87 Capital (million $) 3,387 1,873 1,575 1,298 1,147 670 630 EXPORT Million USD 13,695 14,000 12,471 12,000 9,816 10,000 7,349 8,000 5,900 6,246 6,390 2000 2001 2002 6,000 4,000 2,000 0 Source: HCMC Statistical Office 2003 2004 2005 2006 POTENTIAL FOR DEVELOPMENT Vietnam accesses to WTO Incentives for reform of laws and regulations (Investment Environment) Public administration reform (transparency and publicity improvement) Technical and social infrastructure investment (supported by government to enterprises) Export market expansion (150 WTO members accounting for over 95% total trade turnover in the worlds) POTENTIAL FOR DEVELOPMENT HCMC main development targets to the year 2010 City GDP growth rate (2006-2010): 12% per year. For economic sector: Agriculture: 5.0% Industry and construction: 12.0% Service: 12.0% For economic structure: Agriculture sector (0.9%), Industry and construction (48.7%) Service (50.4%). POTENTIAL FOR DEVELOPMENT HCMC main development targets to the year 2010 Population: 7.5 million (*) GDP growth rate: 12.2% per year GDP per capita in 2010: 3,000 USD Unemployment rate: <5.0 % Skilled labors: 60% Public transport (Bus): 10% demand Housing area: 14 m2/person For health care: 10 doctors/10,000 pers Completing educational compulsory of senior secondary school to the year 2008. POTENTIAL FOR DEVELOPMENT 9 groups of service development 1. Financial, banking and insurance 2. Trade 3. Transportation and logistics 4. Telecommunications 5. Real estate 6. Consultant, scientific & technological research 7. Tourist 8. Healthcare 9. Education and training POTENTIAL FOR DEVELOPMENT Solutions for risks reduction 1. Infrastructure Development 2. Education and Training system Reform 3. Public administration reform (Addressing bureaucracy) In general, the stable politics and government consistency of reform are good environment to invest to HCMC Thank you for your attention