A dynamic economic centre
Economic development is one of the key tasks of the capital city of Hanoi. Over the past time, the city has actively implemented many solutions to mobilise resources to invest in infrastructure construction, improve the business environment, and turn the capital into a dynamic economic centre with a fast growth rate, and contribute significantly to the national budget.
Located in the centre of the Northern Delta with favourable natural conditions, transportation and abundant human resources, Hanoi is not only a national political-administrative centre and a large cultural and scientific centre. It has also plays a role as one of the two largest economic locomotives of the country, and the driving force for development of the Capital Region, the northern key economic region and the Red River Delta.
Director of the municipal Department of Planning and Investment Nguyen Manh Quyen said to perform its role, the city has stepped up economic restructuring associated with growth model reform to improve its economy’s quality, effectiveness and competitiveness.
The economic structure has been shifted towards modernisation in line with the orientation in the process of industrialisation and modernisation of the country, by increasing the proportion of service - trade, industry - construction sectors, and reducing the proportion of agriculture in the gross regional domestic product (GRDP), with a focus on developing tourism into a key economic sector.
Notably, Hanoi has chosen tourism to develop into a key sector, Quyen said, adding that it has worked to reform tourism promotion over the last three years, including carrying out a strategic cooperation programme with CNN and attracting more private investment to develop tourism infrastructure and products.
As a result, tourism has recorded the fastest growth rate among the local economic sectors, with its revenue rising some 12.1 percent each year.
Hanoi has also focused on developing processing, manufacturing and high-tech industrial products with high added value. Facing the requirements of administrative reform, building an e-government and a smart city, since 2016, the city has promoted the development of the information technology industry by building concentrated IT zones and developing software products, digital content, and IT services. So far, the city has established four concentrated IT zones with more than 11,200 enterprises operating in this field, an increase of 51% compared to 2015, reached a total revenue of US$10.1 billion, and created jobs for 185,000 workers.
Besides, in the last two years, Hanoi has started to develop the cultural industry - a new economic industry to exploit advantages of unique heritages, monuments, craft villages and festivals of the city with an aim to create cultural and creative spaces.
In 2018, the value added of Hanoi's arts and entertainment sector reached about US$196.5 million, exports of handicrafts reached US$192 million. Though the economic value brought about is not yet high, it is considered a promising new direction and an important foundation for Hanoi to qualify to join the “Creative Cities” network around the world.
Mobilising resources for development
Chairman of the Hanoi People’s Committee Nguyen Duc Chung said that with the goal of building and developing Hanoi into a modern city with the average GRDP growth reaching from 8.5 to 9% per year, the average income per capita from US$6,700-6,800 a year, the city needs a total social investment of VND2.5-2.6 quadrillion for the 2016 - 2020 period. Of which, 20% is sourced from the state budget used for framework technical infrastructure projects and projects for socio-economic development, whist the remaining 80% of investment capital should be mobilised from domestic and foreign investors.
Over the last three years, the capital has built support mechanisms and policies to encourage the private sector’s participation in boosting local development. It has also worked hard to improve its investment climate to become a safe, friendly and effective destination for investors.
By applying information technology, Hanoi has made progress in building e-government to cut the time and costs needed for handling business-related public services. Up until now, public services directly related to enterprises such as business registration, tax declaration, payment, customs, social insurance, etc which can be implemented online.
The city has also instructed departments and agencies to simplify administrative procedures, thus the time needed to deal with administrative procedures for business registration has been reduced by 30 percent, for investment 60 percent, and for planning 30 – 50 percent, according to Chung.
The improved investment climate has been applauded by the business community. In 2018, the Provincial Competitiveness Index of Hanoi leapt 15 places to ninth position among the country’s 63 provinces and cities.
According to a representative from Vietnam Grand Prix Company, the enterprise was established in November 2018 to invest in building and organising Formula 1 racing. The process of establishing this enterprise and clearing the ground was conducted very urgently by the authorities of Hanoi and Nam Tu Liem District. In March, 2019, the company received clean ground for construction in order to promptly organise the first racing in early April 2020.
This favourable environment has helped raise the number of enterprises established in the city since 2016 to almost 93,000 with a combined capital of 280.1 trillion VND, 1.17 times higher than the capital registered between 2011 and 2015.
Total social investment capital has grown steadily over the years, an average increase of over 10% per year, reaching more than VND340 billion in 2018. In particular, the proportion of state investment capital decreased gradually, in 2017 accounted for 39.3% of total investment capital; investment from the domestic private sector increased accordingly, reaching 51.1%.
Additionally, Vietnamese firms have poured 621 trillion VND into the city, which has also attracted 20.28 billion USD in foreign direct investment (FDI) since 2016, rising over three-fold from 2011 – 2015 and making Hanoi the best performer in FDI attraction nationwide.
Prominent among the off-budget investment projects is the Smart City project on an area of 272 hectares with a total investment of over US$4.1 billion of the consortium of BRG Group (Vietnam) and Sumitomo Group (Japan); Vingroup Group's project to build Ring Road 2 worth VND9.5 trillion.
Rapid economic growth, abundant investment resources have positively affected the lives of Hanoi people both physically and spiritually. Chairman Chung noted Hanoi posted average annual economic growth of 7.2 percent between 2016 and 2018. The size of its economy has also expanded, with GRDP hitting 920.27 trillion VND (39.6 billion USD) last year, and the average income per capita reached VND117.2 million, equivalent to US$ 5,134.
As a result, many social welfare works have been invested in, contributing to improving the quality of the life of the people. Up until now, 100% of health stations at communal and ward levels have been invested to meet national standards of health. The number of schools meeting national standards and the number of communes meeting new-styled rural criteria exceeded the set targets, finishing two years early than the goal set for the whole term.
Hanoi has also played its role in leading the development of northern provinces and cities, including those in the northern key economic region and the Red River Delta, he said.
It has actively coordinated with other localities in building and implementing socio-economic development plans and boosting their connectivity in multiple spheres, especially trade and tourism.
65 years after the Capital's Liberation Day, Hanoi's economy has experienced a comprehensive development, but there are still some limitations such as the knowledge economy and high-tech applications have not yet developed strongly. The quality of growth and some indicators of provincial competitiveness are still low, economic restructuring is still slow compared to requirements.
At a conference in 2018, Hanoi and other northern localities, along with domestic and foreign investors, signed 24 memoranda of understanding on cooperation with estimated total investment of 70 trillion VND (over 3 billion USD) to together resolve the major issues facing the region.
According to Hanoi authorities from now to 2025, the city will mobilise resources to develop the economic space in the expanded Hanoi area, with a focus on completing three satellite urban areas of Hoa Lac, Soc Son and Phu Xuyen, as well as investing in new industrial parks and complexes as planned, attracting more investment and putting the Hoa Lac High-Tech Park into full operation.
Along with that, the city will also focus on developing in depth on modernising economic sectors with a growth model based on innovation, improving competitiveness and added value of the economy; and further promoting its position as an economic locomotive of the country, creating a driving force for the development of the northern key economic region and the Red River Delta.
