Article 4: Investment and Infrastructure: Foundations for Growth

Current Investment Landscape and Major Challenges

Following the COVID-19 pandemic, total social investment capital in Ho Chi Minh City has yet to rebound strongly. Domestic enterprises, which account for the largest share of investment, are struggling due to unattractive profit margins and limited access to credit.

According to the 2024 report, investment capital from the state sector increased by only 4.1%, while that from the private and foreign direct investment (FDI) sectors rose by 7.1% and 10.7%, respectively. These figures suggest a partial recovery but at a slower pace compared to pre-pandemic levels.

Another challenge is the rise in non-performing loans, leading banks to tighten lending conditions. This makes it difficult for small and medium-sized enterprises (SMEs) the backbone of the economy to access capital. Additionally, FDI flows are sluggish as investors proceed cautiously amid global uncertainties and fierce regional competition.

Infrastructure Bottlenecks and Urgent Needs

Ho Chi Minh City is grappling with severe infrastructure overload, including transportation, housing, urban utilities, and public services. This not only hampers economic growth but also diminishes residents’ quality of life, affecting the City’s ability to attract skilled labor and investment.

Moreover, digital infrastructure remains underdeveloped, falling short of the requirements for digital transformation and a high-tech economy. A lack of synchronization in information and communication infrastructure makes it challenging for businesses to adopt new technologies, thereby reducing their competitiveness.

Development Strategies and Unlocking Solutions

To tackle these challenges, Ho Chi Minh City must implement comprehensive and robust strategies to boost investment and upgrade infrastructure.

Enhancing Capital Access: The City should support businesses in accessing capital more effectively by expanding preferential credit funds or providing credit guarantees. Administrative reforms to reduce time and costs for investment procedures are also essential.

Prioritizing Key Infrastructure Projects: Completing major transportation projects such as the Metro and Ring Road must be a top priority. These projects will not only improve connectivity but also drive economic development in surrounding areas.

Attracting Foreign Investment in Strategic Sectors: Ho Chi Minh City should focus on attracting FDI in clean energy, high technology, and smart infrastructure. Establishing a transparent legal framework and professional investment support systems will enhance the City’s appeal to international investors.

Conclusion

Investment and infrastructure are critical to maintaining Ho Chi Minh City’s role as Vietnam’s economic leader. However, to fully unlock their potential, the City needs breakthrough solutions, including administrative reforms, financial support, and significant investments in key infrastructure projects.

By addressing current bottlenecks, Ho Chi Minh City can improve its business environment and quality of life while building a solid foundation for sustainable development in the new era.

By Van Tam