In the first quarter of the first year of the five-year plan (2006-2010), Ho Chi Minh City’s economic growth rate hit 9.5 per cent. This rate is lower than the same period of 2005 but higher than the first quarter of 2004. Obviously, this growth rate is unequal and instable. Many solutions to surmount this have been introduced but the results are not really satisfactory.
The city used to put forward solutions to accelerate economic structure transformation. In fact, conditions to carry out these solutions are insufficient and asynchronous. For example, the city wanted to develop and raise the proportion of trade and service sector in the economy but it lacked capital for this purpose. These drawbacks have limited the potential and advantages of the country’s largest hub. In order to stimulate consumption and increase purchasing power, many enterprises and commercial centres have taken part in the “sale month” campaign but the sales volume was unsatisfactory as they lacked typical promotional products as well as promotional types. In addition, very few kinds of product were directly discounted. The service and retail revenues were estimated at VND29,536 billion (US$1.85 billion) in the first quarter of this year, a year-on-year increase of 18 per cent but lower than last year’s first quarter growth of 19.6 per cent. Total export revenues were forecast to reach US$3.24 billion in the three-month period, an on-year increase of 13.9 per cent but lower than the same period last year’s growth of 16.5 per cent.
In industrial production, the city specified three key industrial sectors, namely mechanics, electric-electronics and biotech. As in the case of the trade and service sectors, the investment capital for these three spearhead industries are not sufficient for the development and the transformation of the industrial structure. As a result, the city’s industry cannot escape a labour-intensive industry with low added value. For example, the garment, textile and footwear industries need a large volume of labour but they account for 30 per cent of the total turnover. In addition, workers in these industries have low knowledge levels and are not Saigonese. And if there is a big shift in the industrial structure, these workers will be heavily affected.
This year, the leather and footwear sector has been strongly hurt by the EU’s antidumping case. Only timber processing and stationery production industries have seen strong growth although they have small proportions in the city’s economy. The city’s total industrial output value reached VND61,153 billion (US$3.82 billion) in the first quarter of this year, up 11.4 per cent on year (last first quarter’s growth of 12.7 per cent.)
Another difficulty is the human resource for the restructure. The number of well-trained and experienced workers is insufficient. Each year, enterprises in export processing zones and industrial zones need dozens of thousands of workers with fourth level expertise or above and thousands of university graduates but the actual volume is much lower. Thus, imbalanced human resources remain a difficult issue for the restructure.
To realise the target of 12 per cent economic growth this year, the city needs proper solutions to remove difficulties to improve the economic situation. In the second quarter, the Ho Chi Minh City People’s Committee will put forward synchronous measures to focus on developing the four industries of mechanics, electronics-informatics, chemical and food processing, carrying out 11 tourism projects, and carrying on projects to develop the real estate market.
Vietnamese
