HCMC miraculously posts positive growth in first six months

Amid several difficulties due to the Covid-19 pandemic and decreasing oil price that have caused many countries to fall into a crisis, the fact that Ho Chi Minh City still managed to post positive economic growth in the first six months of this year is a miracle, said Mr. Huynh Van Hung, Director of the Department of Statistics of HCMC, at a press conference to announce the city’s socio-economic data in the first six months of this year.
At the press conference, other departments also proposed many solutions to help the city’s economy to overcome the crisis and develop after the pandemic.

The Covid-19 pandemic has made a worldwide impact, causing many countries and cities to suffer negative growth. Ho Chi Minh City was not an exception as activities to attract foreign investment sharply decreased, many indicators on tourism, investment, and import and export also sharply reduced in the past six months. Total retail sales of consumer goods and services reached VND614.6 trillion, down 3.7 percent compared to the same period last year, of which the accommodation and catering industry decreased by nearly half; travel decreased by more than 71 percent; freight and passenger transportation, loading and unloading, and freight transport agency services were estimated at above VND116.95 trillion, down 2 percent over the same period, of these, freight transport increased by 1.5 percent, and passenger transport decreased by 51, 7 percent; international visitors to Ho Chi Minh City in the first six months only reached 1.3 million people, decreasing by nearly 70 percent; the index of industrial production also dropped by more than 3 percent over the same period last year.

As a result, the total state budget revenue in the first six months was estimated at more than VND163.17 trillion, down nearly 15 percent over the same period while the total local budget expenditure was more than VND29.67 trillion, an increase of more than 22 percent compared to the same period.

Although the Covid-19 pandemic affected service industries, the situation of Vietnam's export remained optimistic. The total export turnover of enterprises in the past six months via Ho Chi Minh City port, including crude oil, was estimated at nearly US$19.09 billion, up 5.5 percent over the same period last year.

The export turnover increased because exports of foreign direct investment (FDI) enterprises soared robustly, leading to an increase in export turnover of the city. Specifically, while the state-owned economic sector exported only $1.2 billion, down 23.3 percent and exports of the non-state economic sector reached about $5.24 billion, down 6.4 percent, that of the FDI sector reached up to $12.64 billion, up 15.7 percent.

Other industries also recorded positive indexes, such as forestry and fishery with an increase of 3.11 percent, industry, and construction with an increase of 1.88 percent, service sector with an increase of 0.67 percent, taxes on products minus subsidies on products with an increase of 1.04 percent, so the economy was revived. This has resulted in overall positive growth for HCMC in the past six months.

Specifically, the gross regional domestic product (GRDP) was estimated at VND651.6 trillion at the current price. At the comparative price in 2010, it reached VND465.94 trillion, an increase of 1.02 percent compared to the same period last year.

Economic recovery post-Covid-19

To support enterprises to overcome the Covid-19 pandemic and achieve the growth targets that Ho Chi Minh City has determined not to adjust, the representatives of Ho Chi Minh City departments and industries analyzed weaknesses and strengths and sought solutions for economic recovery.

According to the Director of the Statistics Office, the highlight amid the Covid-19 pandemic was that exports still went up compared to the same period, up 5.5 percent. Of which, the groups with good growth were components, electronic products, agricultural products, and vegetables, because orders were made before the pandemic. It could be a blessing in disguise because some factories in China stopped working, so orders were transferred to Vietnam, arriving at the Ho Chi Minh City Hi-tech Park to be specific.

Another commodity that also had the opportunity to thrive in the pandemic was the garment industry. The representative of the Department of Industry and Trade said that textiles and garments accounted for more than 12 percent, and footwear accounted for more than 14 percent of the total exports to the EU. During the pandemic, enterprises still posted growth thanks to old orders, despite the fact that more than 45 percent of enterprises were affected by the pandemic.

The Department of Industry and Trade also forecasted that after the pandemic, enterprises will receive orders and reopen, they might face a risk of a labor shortage. Therefore, the representative of the Development Research Institute said that from now to the end of this year, many support solutions from the State are needed for industries to stabilize again.

Specifically, to maintain the socio-economic growth index until the end of this year, the city needs to focus on removing difficulties for enterprises, strongly improving the business investment environment, simplifying administrative procedures and public services, and having appropriate policies to strongly develop the private economy.

Besides, it is necessary to focus on measures and tasks on developing a digital economy, increasing the export of software and digital content, and information technology applications. Moreover, it is necessary to have solutions to attract, select, and absorb FDI and ODA capital; support enterprises to promote trade and sell key products to foreign countries; focus on connecting industries and Southern key economic regions; invite investment in projects under the Smart Urban Scheme; finally, create favorable conditions for business equality between all economic sectors in the land lease and loan access for enterprises.

According to the report by the HCMC Statistics Office, in the first six months of this year, there were more than 17,700 newly registered enterprises, with a total registered capital of VND223.4 trillion. In which, 9 key service industries account for 70 percent with nearly 12,600 enterprises with a registered capital of nearly VND160 trillion.

In the first six months, the whole city had 533 newly registered FDI projects with a total capital of nearly $300 million; 93 times of projects adjusted capital for additional capital of nearly $200 million; more than 2,200 times of capital contribution and purchase of shares with a total amount of $1.52 billion. Thus, the total FDI capital poured into the city in the last six months was about $2 billion.

By Han Ni – Translated by Bao Nghi

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