HCM City’s Phu My Bridge - the biggest cable-suspension bridge over the Sai Gon River (Source: VNA)The government decree, which takes effect next month, gives priority toinvestment in infrastructure development in order to maintain the city’s statusas the country’s economic hub.
Under thedecree, the city will be eligible to receive advance payments from the stateand lending sources to hold auctions of land-use rights, after which the city willrefund the state and repay the loans.
TheGovernment has also prioritised Official Development Assistance (ODA) funds andpreferential capital sources for projects related to urban infrastructure andthe environment.
Inaddition, HCM City will be allowed to mobilise investment from public-privatepartnerships (PPP) and other public-private funding models.
The city needs a 500 trillion VND (23.5 billionUSD) to invest in urban infrastructure between now and 2021, and a similaramount for the next five-year period, according to the HCM City Finance andInvestment Company (HFIC).
Becauseof the enormous need for capital, the city has no choice but to take advantageof new incentives to generate investment from private sources, according to experts.
They noted that many local residents keep theirmoney outside banks or in the form of gold or foreign currency, particularly USdollars.
Goldreserves kept at home are estimated at 400-500 tonnes, equivalent to 17-21billion USD, according to the Vietnam Gold Business Association.
In termsof foreign exchange, the annual rate of remittance growth now averages 16 percent. At this rate, by 2020, remittances could reach more than 28 billion USD.
Ninetypercent of remittances are used for savings, investment in gold, real estate,or business production.
Theremaining 10 percent of remittances, or around 9.7 billion USD, are assumed tobe kept at home by residents.
Economists said the large amount of foreign currency held by residents is fargreater than official data.
If such resources were properly exploited,policymakers would be more able to address the lack of capital for urbaninfrastructure, they said.
Economists have also said that the city should beallowed to expand the collection base via a number of special revenue sourcesbased on specific conditions.
In addition, tax revenue could be expanded by newtax rates set by the city, in accordance with national law.
Experts have also said the government could giveHCM City a bonus if its tax collections exceeded expectations.
The city plays an important role in providing anumber of complex services on a large scale, much higher than in other areas inthe country.
Thus, economists believe the city should have moreautonomy to regulate expenditures and spending in accordance with its needs,with priority given to new construction and renovation and infrastructuredevelopment.-VNA
VNA
