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Ho Chi Minh City requests special mechanism as budget too small for growth

Allowing Ho Chi Minh City to be administered under a special mechanism is a call leaders of Vietnam’s economic hub have made consistently, yet has remained unanswered for years.

Ho Chi Minh City by night
Tuoi Tre

A proposal was made at a meeting between the municipal administration and the National Assembly Committee for Finance and Budget on Tuesday.

As Vietnam’s leading economy, Ho Chi Minh City is only allowed to keep 23 percent of its budget revenue under the current mechanism, with the remaining added to state coffers. The rate is significantly higher for Hanoi, at 43 percent, though the capital contributes a much smaller portion to the national budget.

Ho Chi Minh City leaders have repeatedly called for a new, special financial and administrative mechanism to replace the current one that has been hindering the metropolis from developing to its potential.

At Tuesday’s meeting, the city’s administration suggested it be allowed to retain part of the export-import tax revenue; levy surcharge tax on some specific businesses; and keep all of the money generated from the privatization of state-owned firms operating in the city.
Dinh Van Nha, deputy chairman of the National Assembly Committee for Finance and Budget, appeared displeased upon hearing those proposals.

Nha said the proposals for a “special mechanism” have been made in an overlapping and inconsistent way.

“So, what is your demand that the government can meet now?” he asked. “You want to keep the current 23 percent of retained revenue or higher?”

Nguyen Huu Quang, a member of the finance and budget committee, said the Chinese city of Shenzhen had achieved development success thanks to developing its own mechanism, rather than “asking for money from the state budget or asking to keep its own budget revenue.”

“Consequently, in order to succeed, Ho Chi Minh City should avoid asking for money from the state, nor request to retain its budget collection,” Quang said.

Phan Thi Thang, director of the city’s finance department, disagreed, saying Ho Chi Minh City has never asked for money from state coffers.

“We only need a mechanism, but it has not been very easy either,” she said.
Tran Du Lich, deputy head of Ho Chi Minh City’s lawmaking delegation, said the city’s administration is not asking to have any special mechanism, but “normal mechanisms any other normal metropolises around the world enjoy.”

“We need the rights of self-determination and self-responsibility,” he said.
Dinh La Thang, secretary of the municipal Party Committee, said that Ho Chi Minh City does not seek to keep more of its budget revenue, referring to the statement by the finance and budget committee member Quang.

“As the current cake is too small [for the city’s development], we need a special mechanism to increase the size of the cake,” Thang said.

“Then we will be able to earn more and contribute more to the state coffers.”
The city’s Party chief said the Chinese cities of Shenzhen and Shanghai are all authorized to issue their own mechanism and policies, and Ho Chi Minh City will “persistently propose being given similar authorization.”

“We are collaborating with state agencies and experts to create a mechanism that will result in shoes that fit Ho Chi Minh City’s feet,” he concluded.

Tuoi Tre News

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