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Saturday,  Sep 23,2017,00:14 (GMT+7)

The slowing locomotive

Son Nguyen
Friday,  Sep 8,2017,16:26 (GMT+7)
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The slowing locomotive

Son Nguyen

The locomotive is still on the track, but it has switched to economical mode to save on fuel, which is the reason behind its deceleration. The metaphor fits well for HCMC, which has always been likened to a locomotive tasked with pulling the national economy along. However, a good railway is not there to ensure that the train will not jump the track, and sufficient fuel is not supplied for it to maintain or accelerate the velocity.

The central Government has just met with top leaders of HCMC in Hanoi to look for solutions to rev up development in the country’s economic hub. Numerous issues were tabled at the meeting on Wednesday, but breakthrough policies are still like the light at the end of the tunnel, as can be seen in local media.

In fact, for years on end, HCMC leaders have sought a special mechanism, especially in terms of higher financial allocation, a more liberal institutional corridor, and a greater voice on issues typical of the city, with an aim to stay on its high growth path. However, such proposals for the most part have not been endorsed by central agencies.

Nguyen Thien Nhan, secretary of the HCMC Party Committee, stressed at the meeting with the Government that policies for HCMC over the past 30 years are just the same as those for other parts of the nation, though the city is the biggest contributor to the national economy, Thanh Nien reports.

Needless to say, the city’s economy far excels over all other localities in the country.

In 20 years from 1996 to 2016, the city’s economic size expanded by 21.3 times compared to the national average of 16.6 times, according to Tuoi Tre. The economic density of the city measured by gross domestic product per square kilometer in 2016 amounted to VND463 billion, or dozens of times higher than the national average of only VND13.6 billion, the paper cites Secretary Nguyen Thien Nhan at the meeting. Tax payments in the city per square kilometer last year hit VND146 billion, or nearly 44 times higher than the national figure.

However, speaking at the meeting, Nhan complained that in a number of areas, the city’s strength has slowed compared with other cities and provinces, or even trailed behind some localities, due to the lack of suitable policies and the shortage of funds for development, according to Thanh Nien.

As the city’s economic density is 30-40 times higher than other localities, the demand for capital construction must be much higher as a matter of course, if the city is to maintain its growth tempo. “The demands for water supply, waste treatment, healthcare, and education should be many times higher than other localities,” Nhan is quoted in Tuoi Tre.

However, capital allocation for the city has remained modest over the years, making it impossible to adequately invest in infrastructure.

“In HCMC,” says the city’s Party chief, “the road length averages out at 1.98 kilometer per square kilometer, while the standard should be between 10 and 13.3 kilometers of road per square kilometer.” Therefore, without a special mechanism, and given the average tempo of road development in the past two years, “it will take the city between 167 and 230 years to achieve the road standard,” Nhan is quoted in Tuoi Tre as saying.

According to Nhan, a paradox that has existed for long years is that no matter how much money the city economy has generated, the budget allocation has been restricted.

This year, as the total tax revenue contributed by the city to the central State budget is estimated at VND287.5 trillion, or VND53.5 trillion higher than last year, the budget allocation for the city is VND63.2 trillion, shrinking by nearly VND6.7 trillion against 2016.

Top leaders of the Government at the meeting admitted to many bottlenecks that hinder the sustainable development of the city.

Deputy Prime Minister Vuong Dinh Hue noted the infrastructure system in HCMC has become overburdened, which drags the city’s economic growth on one hand, and adversely affects the people’s livelihood on the other, according to Sai Gon Giai Phong. As such, special policies should be designed for HCMC, otherwise, its economic growth will slow, Deputy PM Hue asserts.

Meanwhile, Prime Minister Nguyen Xuan Phuc also anticipates difficulties for HCMC if a special mechanism is not given. “If favorable conditions are not created, (the development in) HCMC can come to a standstill,” the Government leader is quoted in Tuoi Tre.

PM Phuc stressed the key mandates for HCMC towards the national economy, saying it is the biggest economic center of the country, and the locomotive of the southern focal economic zone, especially in terms of private sector development, entrepreneurship, renovation, and budget contribution.

In fact, the Government has earlier issued a decree creating a new mechanism for HCMC’s development, but experts say such a mechanism is still far from expectation.

Decree 48/2017 issued by the Government in May and taking effect this June provides some more liberal policies for the city, but at the same time also imposes certain restrictions, according to Lao Dong.

The budget allocation for the city, for example, will be in accordance with the State Budget Law. The bonus for the city as a percentage of the extra sum on top of the budget revenue target has been reduced compared to previous regulations, according to Tuoi Tre.

As the decree is not seen a strong boon, the city government is seeking further incentives from central authorities, according to Lao Dong.

“The city government wants new incentives exceeding those provided for in Decree 48. The city proposes issuance of a resolution by the National Assembly to have special incentives,” says Vo Van Hoan, manager of the HCMC’s People’s Committee Office, in Lao Dong.

At the above meeting, top Government leaders approved of the petitions by HCMC, especially stronger delegation of power to the city. Specifically, the city government in performing certain State management duties within its precincts will have the same power as ministries, such as approving and licensing some important projects, or amending certain zoning plans, according to Thanh Nien.

Other petitions, such as higher budget allocation and collection of new fees not specified in current laws or regulations, will be considered by central agencies.

But, the locomotive is slowing and can come to a standstill, if special conditions are not in place soon. Says Prime Minister Nguyen Xuan Phuc in Tuoi Tre, “If there are no new directions, new innovations, new favorable conditions, it is possible that the city will come to a standstill.”

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