HCMC INSTITUTE FOR ECONOMIC RESEARCHHCMC INSTITUTE FOR ECONOMIC RESEARCH

HO CHI MINH CITY ECONOMIC OVERVIEW HO CHI MINH CITY ECONOMIC OVERVIEW

AND POTENTIAL FOR DEVELOPMENTAND 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 COUNTRYROLE 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 CountryThe Largest and Most Dynamic Economic Centre of the Country

ROLE OF HO CHI MINH CITY IN THE COUNTRYROLE OF HO CHI MINH CITY IN THE COUNTRY

Population in Ho Chi Minh City Population in Ho Chi Minh City 6.426.42 millionmillion personspersons in 2006 (whole country 84 million in 2006 (whole country 84 million persons)persons)

+ Accounting for only + Accounting for only 77.6.6% % population and over population and over 6% of labor force in the country, HCMC accounts 6% of labor force in the country, HCMC accounts for: for: + + 221-221-22% % of national GDP of national GDP + 30+ 30% % of national industrial output value of national industrial output value + + 2525..1% 1% of national value of goods and services of national value of goods and services + + 3636..7% 7% of national export turnover of national export turnover + + 2121.0.0% % of total investmentof total investment. .

ROLE OF HO CHI MINH CITY IN THE ROLE OF HO CHI MINH CITY IN THE SOUTHERN FOCAL ECONOMIC ZONE SOUTHERN FOCAL ECONOMIC ZONE (SFEZ)(SFEZ)

BÌNH

++ HCMC accounted for HCMC accounted for over over 80% value added80% value added of of serviceservice of the whole of the whole region (in 2005)region (in 2005); ; ++ 55.3% 55.3% export turnover export turnover of the whole regionof the whole region; ; 65.4% 65.4% import turnover of import turnover of the whole regionthe whole region; ; + + 46.9% value added of 46.9% value added of industrial value of industrial value of the the whole regionwhole region

(This is a dynamic region)

SOME DEVELOPMENT TARGETS – SOME DEVELOPMENT TARGETS – GDP GROWTH RATE (%)GDP GROWTH RATE (%)

Area:Area: 2,095 km22,095 km2 Population:Population: 6.4 million 6.4 million

Of which:Of which: Migrants Migrants 1.85 million (30%)1.85 million (30%) GDP:GDP: 12.0 billion USD12.0 billion USD GDP growth rate:GDP growth rate: 12.2% per year12.2% per year GDP per capita in 2005:GDP per capita in 2005: 1,970 USD1,970 USD Unemployment rate: Unemployment rate: 5.82 %5.82 % FDI inflow in 2006:FDI inflow in 2006: 2.28 billion USD2.28 billion USD Export:Export: 13.7 billion USD13.7 billion USD More than 76 Universities & Colleges with more than 380,000 More than 76 Universities & Colleges with more than 380,000

studentsstudents

SOME DEVELOPMENT TARGETS –SOME DEVELOPMENT TARGETS – GDP GROWTH RATE (%)GDP GROWTH RATE (%)

GDP growth rate during 1996-2005:GDP growth rate during 1996-2005: HCMC: 10.5%HCMC: 10.5% VN: 7.2% VN: 7.2%

GDP share of HCMC to the country keeps increasingGDP share of HCMC to the country keeps increasing

GDP Growth Rate - HCMC and Vietnam

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

GD

P G

row

th R

ate

HCMC

Vietnam

SOME DEVELOPMENT TARGETS – SOME DEVELOPMENT TARGETS – GDP STRUCTURE (%)GDP STRUCTURE (%)

GDP Structure (%)

Service51.1%

Agriculture1.2%

Industry and construction

47.7%

INVESTMENT CAPITAL MOBILIZED – INVESTMENT CAPITAL MOBILIZED – INVESTMENTINVESTMENT CAPITAL STRUCTURE (%)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 - capitalForeign direct investment - capital

224

907

482 577776

963

2287

0

500

1000

1500

2000

2500

1 2 3 4 5 6 7

Year

Foreign Direct Investment (Million USD)

2000 2001 2002 2002 2004 2005 2006

Source: HCMC Statistical Office

Foreign direct investment - RankedForeign direct investment - Ranked

In 2006In 2006

CountryCountry Projects Projects CapitalCapital(million (million

$)$)

Hong KongHong Kong 148148 3,3873,387

TaiwanTaiwan 402 402 1,8731,873

SingaporeSingapore 207207 1,5751,575

SouSouth Koreath Korea 416416 1,2981,298

JapanJapan 242242 1,1471,147

USA.USA. 134 134 670 670

B.V. IslandB.V. Island 87 87 630 630

Source: HCMC Statistical Office

EXPORT EXPORT

5,900 6,246 6,3907,349

9,816

12,471

13,695

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Million USD

2000 2001 2002 2003 2004 2005 2006

Source: HCMC Statistical Office

POTENTIAL FOR DEVELOPMENT POTENTIAL FOR DEVELOPMENT Vietnam accesses to WTOVietnam 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 DEVELOPMENTPOTENTIAL FOR DEVELOPMENT HCMC main development targets to the year 2010HCMC main development targets to the year 2010

City GDP growth rate (2006-2010): City GDP growth rate (2006-2010): 12% per year12% per year.. For economic sector:For economic sector:

Agriculture:Agriculture: 5.0% 5.0% Industry and construction:Industry and construction: 12.0% 12.0% Service:Service: 12.0% 12.0%

For economic structure:For economic structure: Agriculture sector (0.9%), Agriculture sector (0.9%), Industry and construction (48.7%) Industry and construction (48.7%) Service (50.4%). Service (50.4%).

POTENTIAL FOR DEVELOPMENTPOTENTIAL FOR DEVELOPMENT HCMC main development targets to the year 2010HCMC main development targets to the year 2010

Population:Population: 7.5 million 7.5 million (*)(*)

GDP growth rate:GDP growth rate: 12.2% per year12.2% per year

GDP per capita in 2010:GDP per capita in 2010: 3,000 USD3,000 USD

Unemployment rate: Unemployment rate: <5.0 %<5.0 %

Skilled labors: Skilled labors: 60%60%

Public transport (Bus):Public transport (Bus): 10% demand10% demand

Housing area:Housing area: 14 m2/person14 m2/person

For health care: For health care: 10 doctors/10,000 pers 10 doctors/10,000 pers

Completing educational compulsory of senior secondary school to the Completing educational compulsory of senior secondary school to the

year 2008. year 2008.

POTENTIAL FOR DEVELOPMENTPOTENTIAL FOR DEVELOPMENT 9 groups of service development 9 groups of service development

1.1. Financial, banking and insuranceFinancial, banking and insurance

2.2. Trade Trade

3.3. Transportation and logisticsTransportation and logistics

4.4. TelecommunicationsTelecommunications

5.5. Real estateReal estate

6.6. Consultant, scientific & technological researchConsultant, scientific & technological research

7.7. TouristTourist

8.8. HealthcareHealthcare

9.9. Education and trainingEducation and training

POTENTIAL FOR DEVELOPMENTPOTENTIAL FOR DEVELOPMENT Solutions for risks reduction 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 In general, the stable politics and government consistency of reform are good environment to invest to HCMC of reform are good environment to invest to HCMC

Thank you for your attentionThank you for your attention