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Will HCM City become a special economic zone?

Before HCM City’s Party Secretary Dinh La Thang stated the idea of turning HCM City into a special economic zone like Shanghai, the city authorities asked for the central government’s permission to build this model 20 years ago.

The map of the area that is expected to be the southern special economic zone of Ho Chi Minh City.

At that time, HCM City was proposed as one of three places in Vietnam where the special economic zone would be formed. Dr. Tran Du Lich, director of the HCM City Institute of Development Studies at that time, was assigned to develop this project.

However, according to Lich, Chu Lai in the central province of Quang Nam was chosen to pilot this model, not HCM City. However, this model was not as successful as this model in other countries because of the lack of a strong mechanism.

In 2007, the Politburo allowed HCM City to study the model of urban administration as experts argued that with the similar government mechanism like other provinces, HCM City could not develop strongly.

Under the urban administration project, HCM City will develop in the form of “urban complex” or “cities inside city”.
In addition to 13 existing urban districts (districts of 1, 3, 4, 5, 6, 8, 10, 11, Binh Thanh, Phu Nhuan, Go Vap, Tan Binh, Tan Phu) and three suburban districts, HCM City will establish four new cities, including the East City comprising of the districts of 2, 9 and Thu Duc, with the Thu Thiem new urban area as the center.

The new city will have the primary function of developing high-end service industry and high-tech industries. The three other cities are: South City, North City and West City.

In late 2013, the HCM City People's Council approved the project to implement the urban government with the two-level form instead of the three-level form.

And most recently, according to the master plan on socio-economic development of Ho Chi Minh City by 2020, vision to 2025 approved by the Prime Minister, the local government in 2014 instructed the city’s working group to build a scheme to establish the special economic zone of HCM City.

Former Chairman Le Hoang Quan emphasized this is a major policy, especially important for the future development of the city. It is expected to be the new model contributing to the development of modern infrastructure and economic operations association with the seaport system and ecotourism.

This project will be submitted to relevant agencies in the city and to the central government for approval.
The area where the special economic zone cover is located in the south, including Districts7, Nha Be, Can Gio and part of Binh Chanh Districts with a total area of 890 km2, with a population of 685,270 people. This zone is believed to be in line with the seaward development strategy.

This area was selected because it is located in a strategic position in economic development, with important implications for the promotion of the city’s role as a logistics center, creating development motivation for the southeast region, the Mekong Delta and the whole country.

Moreover, this is a difficult area of the city where the poverty rate is higher than HCM City’s average and the unused land area is large.

The formation and development of the special economic zone in these districts is expected to help create jobs and income for locals, to efficiently use the land, contributing to cope with climate change, develop tourism and conservation of the Can Gio mangrove forests and historic and architectural sites in the area.

From this basis, the HCM City Institute of Development Studies completed the scheme on establishment of a special economic zone in HCM City and submitted it to the HCM City People's Committee. From October to December 2015, the HCM City People’s Committee met with experts for four times to discuss the establishment of the special economic zone.

The HCM City Institute of Development Studies said that there were mixed opinions on the need for formation of a special economic zone in the city. However, the city needs a substantive breakthrough on the mechanisms; establishment of a special economic zone may be the right tool to meet this requirement.

Regarding the funding for this project, HCM City can issue local government bonds, call for ODA, preferential credits, or attract capital in the forms of BOT, BT, BTO and other forms prescribed by law.

However, the HCM City Institute of Development Studies also indicated risks, difficulties and challenges in the construction of a special economic zone in the city.

This is a low-lying area so investment cost will be enormous. The average altitude of Hiep Phuoc - Nha Be is 0,4-1m with a lot of canals and ditches so it will be a challenge to seek enough capital as the state budget is limited.

The model of special economic zone will need a long time (at least 10 years) to take effect, according to the HCM City Institute of Development Studies.

The institute also designed special policies for the special economic zone, including tax incentive policies, special administrative policies and special management policy. However, the project has not yet been approved.

According to the HCM City People’s Committee, this model is expected to make a breakthrough in institutions, as well as motivate the development of HCM City. However, the specific legal framework for this model has yet to shape, so to implement this project, it requires the determination and consensus of the political system in the city as well as the support from the central government.

Speaking to the media as the Deputy Party Secretary of Ho Chi Minh City, Mr. Vo Van Thuong, who is now Head of the Central Committee of Public Relations and Information, said that the study of the special economic zone is not the policy of the municipal Party Standing Committee.

HCM City at night


Tran Anh Tuan, acting director of the HCM City Institute of Development Studies, also said the special economic zone project is paused to await the new policy.

HCM City Party Secretary Dinh La Thang said it is not important how we call it the special economic zone or the urban government. It is important to build a special mechanism to turn HCM City into the number one city in the region.

Roadmap for the project to establish the special economic zone in HCM City is expected to undergo four stages. The first phase (2014-2015) is building the outline, with the approval of the HCM City Party Committee, the HCM City People's Council and the approval in principle of the central Government.

The second phase (2016-2018) is to build the project, make large-scale and comprehensive surveys of the factors shaping the special economic zone, meet with investors at home and abroad, form the institutional framework, and seek strategic investors.

The third phase (2018-2025) is to complete the institutional framework, shape the management apparatus, and invest and develop infrastructure.

The fourth phase (2025-2035) is in-depth investment, infrastructure completion and confirmation of the status of a special economic zone

Tran Cham



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