HCMC autonomy yet to deliver expected revenue gains

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

Under the resolution, the city can raise and add additional fees and charges to regulate its residents’ behaviors and increase its budget revenue.

The city used its autonomy to raise the income of cadres and civil servants by 1.8 times, arguing that their productivity was 2.7 times the national average. Given the city’s high population of 13 million including migrants, the amount of daily work to be done was much higher.

Then, starting July last year, the city abolished all district and ward legislative bodies, allowing it to shorten the time needed to complete several administrative procedures.

The process of approving plans and implementing the annual salary fund of state-owned companies was reduced from 22 to 10 days while the process of appraising and approving the environmental impact of investment projects was cut to 42 days from 50 days.

The special mechanism also empowers the city to decide the land-use change for farmland of more than 10 hectares, allowing investors and related parties to avoid having to wait for around six months to get the prime minister’s approval.

As a result, between 2018 and 2020, the city approved 32 projects in which a total of 1,850 hectares of farmland were taken for other purposes, compared to just 21 projects in the previous two years.

Revenue shortcomings

However, besides these results, the city has not been able to take advantage of the remaining provisions in the resolution on financial management to increase its revenue.

Resolution 54 allows the city to enjoy all revenues from equitization and divestment of state-owned firms, instead of having to share it with the central government.

Until now, the city has only been able to obtain revenue from the divestment of state-owned enterprises, not from their equitization process.

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.

HCMC has also not received any money from the policy that allows it to get half the revenues earned from auctioning the central government’s public properties in the city.

Until now, the sale of just two centrally-managed houses and land in the city has been approved, but a deal has not been reached for neither of them.

For its tax collection policy, the city has developed two pilot schemes: one to increase the collection of environmental protection tax through gasoline prices; and another to increase the special consumption tax on beer.

However, the city decided not to submit either scheme to the central government because the increase in tax would directly affect people and businesses.

Tran Hoang Ngan, director of the HCMC Institute of Development and Research, said the city still has many things to do. It might not even have used half the mechanisms granted by the resolution, he said.

“The city has not been able to take full advantage of the resolution because of the Covid-19 pandemic. It needs two more years to make a more standard assessment,” he said.

Ngan said the problems that have not been resolved, like earnings from the equitization of state-owned companies or public property auction proceeds, are mostly “due to the complicated legal procedures that apply across the country, not just in HCMC.”

Therefore, the city should make proposals to the NA and have such obstacles removed, he added.

City Party chief Nguyen Van Nen said the city will prepare a proposal on overcoming obstacles when using the special mechanisms granted by Resolution 54.

To this end, it will hold a conference this month with leaders of agencies, experts.

It is expected that the city’s administration will submit on May 25 a proposal on making adjustments to the resolution to the Standing Committee of the city’s Party Committee.

It is expected that by the end of this year, a proposal with draft adjustments to the resolution will be submitted to the parliament for consideration.