The HCM City Statistics Office has reported positive indicators for April. The total goods and service retail turnover was estimated to increase by 12.2 percent over the month before and 6.2 percent over April 2022. The growth rate would be 5 percent in the first four months of 2023 compared with the same period last year.

The industrial production index (IIP) in April 2023 increased by 3 percent over March and 8.1 percent over April 2022.

However, reports about business registration in the first four months of the year showed that the city’s enterprises are facing difficulties in capital mobilization. 

From January 1 to April 20, the city granted 14,700 licenses to businesses with registered capital of VND144.5 trillion, up 9.6 percent in number of licenses, but down 24.8 percent in capital compared with the same period last year.

The total foreign direct investment (FDI) in the city in the first four months of the year was $979.6 million, down 23.4 percent compared with the same period last year.

In the update on the socio-economic situation in April and the first four months of the year, HCM City authorities pointed out that industry and trade showed signs of improvement, while tourism and passenger transportation grew well. 

However, capital for newly established enterprises dropped, domestic purchasing power recovered slowly, export markets narrowed, and foreign investment in the locality decreased.

HCM City plans to obtain a GRDP growth rate of 7.5-8 percent this year. Analysts warned that in current conditions, the high target is unattainable. 

However, the municipal authorities are not thinking of adjusting the growth rate target, but focusing instead on solutions to obtain growth rates from 7.5 percent, thus creating momentum for growth for the next few years.

The HCM City Institute for Development Studies (HIDS) has predicted a 3.27 percent growth rate only for the second quarter. 

Meanwhile, the predicted highest possible growth rate for the third quarter is 16.52 percent and the lowest is 16.16 percent. 

As for the fourth quarter, the figures would be between 10.13 percent and 12.14 percent. 

As such, the GDP growth rate of the year would be 7.5 percent, thanks to high growth rates in the remaining quarters of the year.

Policies need reconsideration

Experts said in order to reach the goal, HCM City will take full advantage of macroeconomic conditions which have been improving in the second quarter; speed up disbursement of public investment and gather strength on infrastructure development; remove bottlenecks in administrative procedures for projects, especially real estate projects; and stimulate domestic consumer demand and boost exports. 

According to the HCM City Business Association’s deputy chair Nguyen Phuoc Hung, the business community is optimistic about business operations, believing it will thrive in the last months of the year. 

Enterprises are restructuring and trying to cut costs to overcome the current difficult period.

Hung said that since the economy is very open, the city’s GRDP (gross regional domestic product) is impacted by recessionary effects. Many business fields have seen indexes decline unexpectedly. 

HCM City has been trying to solve problems. Its leaders have requested departments to quickly resolve enterprises’ questions instead of shelving the problems.

Chu Thanh Tuan from RMIT Vietnam said that HCM City needs to determine socio-economic development goals in the short, medium and long terms based on national and international criteria. At the same time, local leaders need to re-assess current policies and mechanisms. Any policies and mechanisms that are ineffective or difficult to be implemented must be eliminated to help the city regain its growth momentum.

In the long term, the city should support domestic enterprises develop products and services with high added values that can compete in the international market; attract foreign investors who have prestige, experience and commitments to invest in hi-tech fields.

Tran Chung