Gov’t seeks to extend autonomy pilot for HCMC

In a report to the National Assembly (NA) on Tuesday, the government said the pilot period to apply the special mechanism for the southern metropolis should be extended until the end of next year instead of ending this year.

In November 2017, Vietnam’s economic hub HCMC was granted extra autonomous decision-making power to help it develop to its full potential as per Resolution 54 passed by the NA, the national legislative body.

Under the resolution, which entered effect from January 2018 to end-2022, the city could raise and add additional fees and charges to regulate resident behavior and increase budget revenue, make changes to its tax collection policy, raise the income of cadres and civil servants, and decide on land-use changes for farmland.

The government said HCMC has yet to make full use of special policies on finance management to increase its budget revenue, including earnings from equitization of state-owned firms and auctioning the central government’s public properties in the city.

City chairman Phan Van Mai told a meeting with municipal legislators in July that the special mechanism has yet to show its full potential because the city still had to ask for permission from ministries on several issues, with the latter telling the city to follow general regulations instead of letting it use the special mechanism.

For example, in 2019, the government approved a list of 38 state firms to be equitized by the end of 2020, but the city could not implement the plan because the Ministry of Natural Resources and Environment is yet to issue land-use guidance for the equitization process.

Tran Hoang Ngan, director of the HCMC Institute of Development and Research, said in May that the city might not even have used half the mechanisms granted by the resolution, partly because of the Covid-19 pandemic.

Now in its proposal, the government said the extension of the pilot scheme will allow HCMC to have more time to apply the resolution and make a more standard assessment of the special mechanism to see what policies should be kept and what needs to be changed.

What it gains

The government pointed out that the special mechanism had left positive impacts on HCMC’s economy, with its gross regional domestic product growing by 7.72% per year on average in the 2016-2019 period compared to 7.22% each year in the five years prior.

In 2020 and 2021, the city recorded economic growth rates at 1.39% and minus 6.78% respectively due to the pandemic impacts.

Thanks to the mechanism, the city no longer had to wait for the central government’s permission to approve investment projects that serve national defense and security, and those in industrial parks, hi-tech parks, and export-processing zones.

The city’s legislative unit had decided the investment method for five such projects during the pilot period, taking out VND12.954 trillion ($541.6 million) from the state budget.

The city had also raised salaries for civil servants, spending an extra VND2.81 trillion paying them in 2018, VND7.63 trillion in 2019, VND4.26 trillion in 2020, and VND6.81 trillion in 2021.