Ho Chi Minh City: Discuss solutions to restore economic growth

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The sharp decline in total retail sales and service revenue greatly affected the economic growth of Ho Chi Minh City in the first quarter of 2020. Photo: Nguyen Hue

Economic growth fell deeply

Chairman of HCM CITY People's Committee Nguyen Thanh Phong said HCM City has well controlled the Covid-19 pandemic, there were only 11 cases being treated out of 55 infected cases, of which nine people were still positive.

According to Phong, in the first quarter of 2020, the pandemic has greatly affected the city’s economic growth. The economic growth rate was only 0.42 percent compared to the same period in 2019, making it the lowest growth rate since 1986.

“The slower economic growth of HCM City will have a great impact on the overall growth of the country. Therefore, the city will focus all resources and solutions for its economic recovery and development. The most important thing is that the entire political system, businesses and people of the city must unite and make more efforts to accomplish the dual goal of fighting the pandemic and restoring and developing the economy”, said Chairman of HCM City People's Committee.

Commenting on the HCM City’s economic situation in the first months of this year, Dr. Tran Hoang Ngan, Director of the HCM City Development Research Institute, said the economy of HCM City had fallen sharply compared to the national average in the first quarter due to the fact that the city's service and construction factors account for a large proportion (22 percent and 22.8 percent) of the city’s economic structure.

“According to the scenario set out by the Institute of Economic Research of Ho Chi Minh City, in the context of gradually reducing negative factors of the pandemic as well as the impact of domestic and global macroeconomics, the city's economic growth in 2020 will fluctuate from 3 to 4%. If the world’s economic growth does not fall into recession, it may reach about 5%. However, some big countries such as the US, the EU, and China have fallen into recession, so achieving HCM City’s economic growth of 5% is unfeasible,” said Ngan.

Solutions to recover growth?

According to Ngan, HCM City’s economy in 2020 will definitely decline. However, how can the economy of the city develop faster and more sustainably by 2021? This is an opportunity for the city to restructure the economy towards high technology, efficient green urbanism and reduce labour intensive.

To do that, any policy solutions must ensure they well control the pandemic situation in the country. Fighting the pandemic is important, but solutions need to be adjusted appropriately to achieve the dual goal, which is economic recovery and social security.

Macroeconomic and domestic market stability has become more important to the economic recovery of Vietnam and HCM City. Therefore, the Government's macroeconomic stability policies are very important in implementing the fiscal solution packages to stimulate the economy and implement social security. Along with that are the city's solution packages to better exploit the potential of the domestic market, including HCM City market. In the city's economic structure, large-scale industries with high levels of influence from outside markets need solutions to improve and create new products to better exploit the market potential. Since then, the role of total growth in all sectors has been pushed back. At the same time, it is necessary to monitor the recovery process and the promotion of support policies in countries with major economies which are also the city’s major economic partners.

Additionally, removing constraints on policies and mechanisms to support the city in fulfilling its role as an economic, financial and commercial centre of the country, in which the removal of bottlenecks affecting circulation of the city's economic resources is very important.

For each specific field, according to Prof. Dr. Nguyen Thi Canh, Ho Chi Minh City University of Economics and Law, the decline of service trade from the beginning of the year was due to the great impact from the reduction of the travel service industry, leading to the decline of other services.Therefore, urgent solutions are needed to restore industries that can motivate other industries to develop. Specifically, the travel industry needs to classify domestic and international tourism to diversify tourism forms and apply appropriate medical measures to prevent the pandemic. Departments and agencies must strengthen tourism, trade and investment promotion activities to attract tourists. In addition, it is necessary to set criteria to support and implement policies for travel enterprises so they can access policies to restore their businesses.

Confirming the industrial sector will be able to recover faster than the service sector thanks to meeting the market demand, Nguyen Trong Hoai, Ho Chi Minh City University of Economics, said besides strengthening capacity to access and communicate emergency aid packages and limit rate of bankruptcy enterprises, it was necessary to gradually open five key export and import markets of industrial products. Besides, it was necessary to connect supply chains in domestic enterprises, and domestic enterprises with FDI enterprises in industrial zones.At the same time, linking the city’s enterprises with enterprises in the southern key provinces, especially for foodstuffs, if export and import of businesses in foreign markets can’t open up in August, or even till the end of this year.