Crying for more
Undeniably HCMC is the nation’s leading economic center but its traffic infrastructure is still in poorer-than-expected shape. City authorities have been relentlessly lobbying for a special financing and administrative mechanism so as to have more funds for development but their effort has yet to pay off. Worse still, the central Government even wants the city as the biggest contributor to the State budget to contribute more, sparking anxiety among city leaders, experts and National Assembly deputies representing the city.
At the National Assembly (NA) session last week, the Government presented a proposal for cutting the ratios of budget revenues which can be retained by big cities and provinces such as Hanoi, HCMC, Danang and Binh Duong in the 2017-2020 period. Among a dozen cities and provinces that share budget revenues with the central Government, HCMC is the biggest contributor but from 2017 the proportion of shared revenue for the city will be revised down to 18% from the current 23% while it will need huge amounts of finances to develop infrastructure to fuel growth.
Explaining the proposal, Prime Minister Nguyen Xuan Phuc said the cities and provinces that are sharing budget revenues with the central Government should help his Government shoulder the increasingly heavy fiscal burden. They should call for the private sector to participate in their projects, instead of using State money, he said.
The State budget has become overstretched by the soaring budget deficit and public debt. According to World Bank projections, the country’s accumulated public debt is forecast to rise to 63.8% of gross domestic product (GDP) at the end of this year, and 64.7% in 2018. The National Assembly has capped public debt at 65% of GDP.
The revenue sharing reduction proposal has kept HCMC leaders and experts on edge as the city is in dire need of capital for big-ticket infrastructure projects. In September, heavy downpours coupled with flood tides submerged many streets in the city under water. Traffic congestion remains a headache while hospitals, schools and Tan Son Nhat airport have been struggling with chronic overload.
NA deputy Nguyen Thi Quyet Tam, chairwoman of the HCMC People’s Council, said this would be an unfair reduction. The city, she said, currently needs more than VND500 trillion (US$22.3 billion) to develop its infrastructure. The city is making ends meet, so the lowering of shared revenue would hit the city’s development and infrastructure projects, which would in turn affect the southeastern region and the country as a whole.
Hundreds of thousands of non-resident students attend universities in the city a year, and huge numbers of workers from other cities and provinces migrate to the city to search for jobs in the city, putting huge pressure on the city’s infrastructure system.
“This abrupt cut would give the city little time to prepare. The Government and the NA need to give it a second thought,” Tam says.
Director of the municipal Department of Transport Bui Xuan Cuong shared the same concern, saying that even with 23%, the city will still find it insufficient because traffic network development plans would require enormous sums of money. The city’s current budget can meet a slight 30% of what is actually needed.
Dinh La Thang, Party secretary of HCMC, said on the local news site Vnexpress that a flood control project in the city, for example, costs around VND97 trillion (US$4.35 billion). The city does not know where to find money for the project while flooding has become more frequent because of heavy rains and flood tides.
The country is looking to obtain GDP growth of 6.3-6.5% while the 2017 growth target for the city is a staggering 8-8.5%. To meet that goal, the city will have to pour much money into investment projects. “We’re not crying about our problems but we must make true and accurate assessments before lawmakers,” Thang added.
Ngo Duy Hieu, vice head of the Hanoi delegation of NA deputies, said Hanoi and HCMC are the two economic locomotives of Vietnam, so they both need significant sums of cash for public investment. “I think more investment capital should be channeled into places which generate revenues, instead of being distributed evenly to all.”
The HCMC delegation of NA deputies has submitted all necessary documents to the relevant agencies seeking a review of the percentage of revenue the city could retain.
“HCMC has been doing all what it can for the benefit of the country. We’ve tried our best to curb spending and boost revenue. We insist the proportion of budget revenue for the city should be cut by two percentage points, instead of five, from 23% to 21%,” says deputy Tran Hoang Ngan on the sidelines of the ongoing NA session in Hanoi.