HCM City needs freedom to grow

Tuesday, Nov 21, 2017 10:00

The Thu Thiem Peninsula in District 2 in HCM City. — VNA/VNS Photo Thanh Vu

Deputies told the National Assembly on Monday that HCM City should have more autonomy in urban planning, building infrastructure, investment and the management of revenue for public servants’ payroll. They said this was the key for the southern city to continue to grow in the future.

HCM City is Viet Nam’s largest commercial and industrial hub. It is also the economic spearhead for the entire Mekong Delta region.

Despite continuous and rapid economic development since the beginning of the Renewal Process (Doi Moi), the city has shown signs of sluggish growth in recent years.

There have been numerous issues, namely frequent traffic jams, pollution, over-population and difficulties in attracting investment and skilled labour.

Deputy Nguyen Thi Mai Hoa stressed the importance of having special mechanisms in place for the city. She cited numerous occasions in the past when new policies were introduced first and tested in HCM City, such as the establishment of a central industrial complex and joint-stock commercial banks before being implemented on a nation-wide scale.

“Allowing the city special mechanisms is giving it a mission objective to test-run new management methods and policies. It will also provide the city with a much needed legal framework to continue on its growth path,” she said.

Minister of Finance Dinh Tien Dung voiced his support for the proposal.

“In 2015, its growth was only 9 per cent compared to 10.7 per cent in 2010. HCM City is keeping just 18 per cent of its total revenue, which it will use to cover its expenses and re-investment. It’s clear that the city’s growth is losing traction,” Dung said.

While the majority of NA deputies showed their support, many concerns were raised over certain aspects of the proposal, namely a new tax code for property owners and land-use adjustment.

Deputies said implementing new taxes or raising existing ones may have a negative impact on the city’s residents and businesses. They sais this could render the special mechanisms counter-productive.

The finance minister reassured deputies, saying that NA’s approval was only the first step of the process. Careful planning, implementation of pilot programmes and exhaustive study of their impacts and results would be required further down the road before a concrete and final version of the city’s new policies could be decided.

Both the city’s mayor Nguyen Thanh Phong and his deputy Tran Vinh Tuyen attended the session as guest of the assembly.

Bank bankruptcy approved

The National Assembly voted on an amended version of the country’s Law on Credit Institutions yesterday.

With an overwhelming majority (88.8 per cent), the NA passed the bill, which was amended to provide guideline for the restructure of banks and financial institutions, special control mechanisms, rehabilitation as well merge and acquisition activities.

The highlight of the new bill is that future ailing banks will be allowed to go bankrupt while several banks: CB Bank, Ocean Bank and GP Bank, purchased at zero value by the State Bank of Viet Nam (SBV) and DongA Bank, which was put under special control by the SBV will continue to be restructured under previously approved plan.

In a previous discussion with NA deputies, SBV Governor Le Minh Hung said whether ailing banks are allowed to go bankrupt or not SBV’s highest priority was to safeguard the country’s financial system, the people’s trust and lawful rights of depositors.

Many deputies had voiced their concerns against policies of buying out ailing banks with State’s budget, which is ultimately taxpayers’ money, citing numerous shortcomings and uncertainties within the country’s current banking regulations.

A report by NA’s economics committee also advised against buy-out policy.

“In some cases, the situations of financial institutions are beyond saving. Rescuing them will be completely against market economy principles and burden the State with even more risks and liabilities,” said the committee’s chairman Vu Hong Thanh.

High bad debt ratio and a series of embezzlement and mismanagement scandals hit the country’s banking sector in recent years threatened its financial system’s stability and prompted the Government to perform an overhaul on banking regulations.

In a report by the SBV made public in April, the ratio of non-performing loans could amount to 8.86 per cent including bad debts managed by the Viet Nam Asset Management Company and debts which potentially turned into non-performing due to a shortage of mechanisms in handling bad debts and mortgaged assets.

With the outstanding loans totalling VND5.5 quadrillion (US$241 billion) as of the end of 2016, bad debts could amount to VND487 trillion.

NA deputies also discussed a draft version of the country’s Law on Surveying and Mapping with minister of natural resource and environment Tran Hong Ha. — VNS

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