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About HCM City > Posts > HCM City – The nation’s economic hub 
Economic HubSunday, 03/06/2005, 10:43

HCM City – The nation’s economic hub 

Accounting for 0.6% of Vietnam’s total land area and 6.6% of the total population, HCM City is part of the Southern Focal Economic Zone (SFEZ), which comprises the city, Dong Nai, Ba Ria-Vung Tau, Binh Duong, Long An, Tay Ninh and Binh Phuoc provinces.
Ho Chi Minh City

HCM City:  The nation�s economic hub 

Accounting for 0.6% of Vietnam�s total land area and 6.6% of the total population, HCM City is part of the Southern Focal Economic Zone (SFEZ), which comprises the city, Dong Nai, Ba Ria-Vung Tau, Binh Duong, Long An, Tay Ninh and Binh Phuoc provinces.

 HCM City is the country�s largest economic hub. As the most economically dynamic city in Vietnam, HCM City has always reported high levels of economic activity, constantly leading in terms of economic growth. With its gross domestic product (GDP) growth rate in 2004 reaching 11.6%, above the year�s target of 11.5%, the city registered the highest growth rate since 1998. The service sector increased 11.1%, construction and industry rose 15.1%, and contributed to 6% of the overall growth rate.

 The city�s high economic growth makes it an important contributor to the country�s GDP. Its GDP accounts for nearly one-third of Vietnam�s total, and its GDP value in 2004 was more than VND131.5 trillion, as compared with the national GDP value of VND362.1 trillion. The State sector was the key player, making up 42.4% of the GDP, followed by the non-State sector with 38.9% and the foreign investment sector with 18.7%.

 Considered the nucleus of the SFEZ and the heart of the southern region, HCM City makes up 66.1% of the SFEZ�s GDP and 30% of the southern region�s.

 HCM City in comparison with the whole country (%) 

 

2001

2002

2003

2004

1. Natural area

0.6

0.6

0.6

0.6

2. Population

6.7

6.8

7.0

7.0

3. Gross Domestic Product

17.6

18.0

18.4

18.5

4. Total industrial output

29.4

29.6

29.4

28.8

5. Foreign Investment projects

34.8

29.6

33.7

34.5

    Total registered capital (US$ million)

11.2

20.2

20.0

20.7

6. Retailed goods and service revenue

25.8

26.2

25.1

24.3

7. Export turnover

40.0

38.1

36.7

37.7

8. Import value

24.4

21.0

19.0

17.9

(Source of HCM City Statistics Bureau)

In 2004, HCM City�s industrial production was more than VND102 trillion. The State sector accounted for the largest share with 37.5%, followed by the foreign investment sector with 35.3%. Major industrial products are garments, footwear, electricity, automobiles, electronics, food, mechanical products, motorcycles, plastics, rubber tires and computers.

 Under the strategy for industrial development to 2010 and the vision for 2020, HCM City is expected to become an industrial city by 2015 and play the role as an economic driver of the southern focal economic zone and the whole country. Its share of the national GDP should make up 29.1% and national industrial production 29.1%. The GDP growth in 2006-2010 should reach 11.7% and the industrial growth rate an average 10%.

Key industries to receive priority for development are mechanical engineering, electronics, information technology and chemical.

 By 2020, the total land area for industrial development will be 14,900ha, including 7,000ha for industrial parks and export processing zones. The investment for industrial development in the city from 2001 to 2020 is estimated at US$37.6 billion or 35-44% of the total investment capital. 

 Since the Law on Foreign Investment in Vietnam was promulgated, HCM City has become one of Vietnam�s most powerful magnets for foreign direct investment (FDI). Nearly one-third of the total number of FDI projects in Vietnam arrived in HCM City. By the end of 2004, the city had 1,621 valid FDI projects with total capital of US$12.2 billion, as compared with the total of 5,204 projects with a combined capital of US$46 billion in Vietnam. Most projects are in industry with 1,032 projects (64.9%) totaling US$5.2 billion (42.7%), and property with 307 projects (18.1%) totaling US$2.32 billion (19.1%) and the rest in trade and hospitality.

 In terms of the number of projects, the top investor was Taiwan, with 347 projects, followed by South Korea with 278 projects and Japan with 163 projects. In terms of capital, Hong Kong was the top investor with US$2.27 billion, followed by Taiwan with US$2.26 billion and Singapore with US$1.52 billion.

 A large proportion of the country�s tax revenue comes from HCM City. In 2004, tax collected in HCM City was VND48.97 trillion as against the total of VND171 trillion in Vietnam.

 Regarding trade, HCM City is one of the country�s major import-export centers. Import and export revenue of the city makes up an increasingly larger part of that of the entire country. HCM City remains the country�s hub of import-export activities as throughput at seaports here in 2004 increased 11% to 25 million tons, or nearly one-third of  the total 73 million tons nationwide. 

 In 2004, the city�s exports increased 33.6% on 2003 to US$9.816 million, or more than one-third of the total of US$26 billion in Vietnam. The domestic sector made up US$7,789.8 million and the foreign investment sector US$2,026.2 million.

 HCM City is home to a large network of markets and supermarkets. More modern, well-located marketplaces will be built in line with the city�s urban zoning plan.

 Thanks to its position as the center of the southern region, HCM City enjoys a strong growth in tourism. The city is home to 5,811 hotel rooms of between three and five stars and 3,722 rooms of one and two stars, and many resorts, recreation parks and historical sites. Since 1990, tourism revenue of the City has made up 28%-35% of that of the country. In 2004, despite the impact of SARS and bird flu, the city�s tourism performed well, with revenue growing 37% year-on-year to VND10.8 trillion. The city received 2.5 million domestic tourists, up 60% on 2003, and 1.58 million international visitors, up 21%.

 To boost tourism growth, the city government will double the budget for tourism promotion in 2005 to VND10 billion. It expects to receive 1.8 million international tourists and 3 million domestic tourists in 2005.

 HCM City is also the largest banking and financial hub in Vietnam, heading the country regarding the number of banks and revenue earned from financial and credit services. Earnings of HCM City�s banks make up one-third of those in Vietnam. In 2004, commercial banks in the city did good business, with pre-tax profit totaling VND2.56 trillion, an increase of 59% on 2003. The banks mobilized a total of VND147.5 trillion, up 29.4% on 2003, and lent VND136 trillion, up 34.8%. 

 In the future, the city will boost the development of key economic fields and become the first to focus on such fields as mechanical engineering, bio-technology, information technology, banking and finance, and hi-tech. HCM City will also remain the country�s import-export hub and that of tourism thanks to its developed ports. Construction of transport arteries such as the Trans-Asia Highway, East-West Highway and the belt roads will facilitate the city�s economic growth.

 In the process of development and integration, HCM City always plays the role of an economic, financial, commercial and service hub of the country, the nucleus of the SFEZ and the driving force for industrialization, modernization and economic development for the entire country and for the southern region in particular.

 HCM City�s GDP growth (%)

2000   

 9

2001  

 9.5

2002    

10.2

2003    

11.2

2004    

11.6

(Source of HCM City Statistics Bureau)

HCM City�s economic targets for 2005

GDP growth   

12%

Per capital income        US$2,000

Export growth  

17%

Investment   

VND53 trillion

Budget revenue   

VND54.355 trillion

Expenditure  

VND12.253 trillion

Employment  

Jobs for 230,000

International tourists  

1.8 million

(Source of HCM City People's Committee)


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