The "Three-Horsepower" Engine for Ho Chi Minh City

Tran Huu Hiep

Investment & Finance - 04/03/2025 06:33

(SGI) - Ho Chi Minh City (HCMC) requires new resources in finance, human capital, technology, information, infrastructure, and institutions to develop sustainably towards a green economy, smart urbanization, and innovation.

As Vietnam's leading economic hub, HCMC contributes more than 20% of the national GDP and approximately 27% of the total state budget revenue. With a population exceeding 10 million and a strategic location as the country's largest transport and trade hub, the city plays a crucial role in driving development and connecting key economic regions. In this new era, HCMC faces both opportunities and challenges in mobilizing and utilizing resources for sustainable growth.

The First Horsepower: Human Capital

Human capital is expected to be the primary driver of growth. HCMC has a labor force of approximately 4.84 million people, with labor productivity 1.7 times higher than the national average. However, the city still faces challenges in workforce quality, particularly in practical skills, foreign language proficiency, and international integration capabilities.

Despite its advantages, HCMC's high-quality workforce remains limited in quantity, structure, qualifications, practical skills, soft skills, and foreign language proficiency compared to other ASEAN and Asian countries. Therefore, the city must prioritize vocational education, talent attraction, and workforce development. Establishing high-quality training centers, collaborating with universities and enterprises to provide demand-driven training, is crucial. Additionally, city authorities need attractive policies to retain talent and attract foreign experts, ensuring a well-rounded human resource pool to drive development.

Investment in education and training should focus on digital literacy, AI, data analytics, and emerging technologies to prepare the workforce for the fourth industrial revolution. The role of universities and research institutions should be expanded to bridge the gap between academia and industry, ensuring that graduates possess the skills required by the modern economy. Furthermore, lifelong learning initiatives should be promoted to enable continuous skill development, allowing workers to adapt to rapidly evolving job market demands.

The Second Horsepower: Financial Resources

HCMC contributes over a quarter of the national budget annually. In 2024, the city's estimated state budget revenue is VND 508.553 trillion, reaching 105.32% of the planned target, representing a 13.3% increase compared to 2023. On average, HCMC residents contribute nearly VND 1.4 trillion per working day to the national budget.

A significant financial boost is anticipated from the establishment of an International Financial Center (IFC) in HCMC. However, realizing this vision requires a long-term strategy, administrative reforms, and a transparent financial system to attract investment and build trust.

Land-based financial resources must also be optimized. Harnessing land finance is crucial for securing development capital. HCMC has the opportunity to maximize this resource through market mechanisms, planning tools, restructuring, and streamlining administrative operations for greater efficiency.

Urban development projects must be well-planned, prioritizing green spaces and minimizing environmental impact. Building a smart city with integrated technology in urban management will enable more efficient land use and development planning.

Nevertheless, HCMC faces legal, planning, real estate market, and land mismanagement challenges. Enhancing the quality of land-use planning, improving market efficiency, and strengthening legal frameworks are necessary for optimal financial exploitation. Implementing strong oversight mechanisms is essential to prevent corruption and land waste, ensuring responsible governance and sustainable development.

Expanding financial resources also requires fostering a robust startup ecosystem, encouraging venture capital investment, and promoting small and medium enterprises (SMEs). The city should implement tax incentives, financial aid programs, and incubation hubs to support entrepreneurs and foster innovation. Additionally, public-private partnerships (PPPs) can play a crucial role in funding large-scale infrastructure projects, further enhancing economic growth and urban development.

The Third Horsepower

In the age of the knowledge economy and digital transformation, information has become a critical factor in competitiveness and sustainable development. HCMC must advance e-government initiatives, increase transparency, and improve public services to support businesses and residents. Establishing big data centers, advancing artificial intelligence (AI), blockchain, and financial technology (fintech) will enable the city to maintain its competitive edge and sustain long-term growth.

Regional connectivity also plays a crucial role in mobilizing and utilizing new resources. HCMC must strengthen cooperation with the Southeast region, the Mekong Delta, and other areas to fully leverage competitive advantages and support economic and infrastructure development. Enhancing transport connectivity through expressways, seaport upgrades, and airport expansions will bolster the city's competitiveness. Additionally, partnerships in tourism, logistics, and high-tech industries will generate substantial regional economic benefits.

The digital economy is poised to be a major contributor to HCMC’s growth. Encouraging startups and technology enterprises, supporting digital transformation in businesses, and expanding e-commerce platforms will help accelerate economic diversification. Digital infrastructure, such as 5G networks and smart city solutions, must be developed to facilitate seamless connectivity and innovation-driven economic activities.

Furthermore, sustainability should be integrated into digital transformation efforts. Green technology, clean energy, and sustainable urban planning should be prioritized to align economic growth with environmental protection. Renewable energy projects, smart grid systems, and eco-friendly transportation should be encouraged to reduce carbon footprints and enhance urban resilience.

In this new era, HCMC faces both significant opportunities and challenges in maintaining its role as Vietnam’s economic and social center. Mobilizing and optimizing new resources requires innovative management, strategic policymaking, and adaptive development models. By implementing strategic solutions across economic, environmental, social, and regional collaboration dimensions, HCMC can continue asserting itself as Vietnam's leading economic engine and a key player in the region.

Moving forward, HCMC must embrace a holistic approach that integrates economic development, social welfare, and environmental sustainability. By fostering innovation, strengthening financial mechanisms, and leveraging digital transformation, the city can build a more resilient and inclusive economy. The interplay between human capital, financial resources, and technological advancement will be crucial in determining HCMC’s trajectory as a global city of the future.

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