Hanoi cements role as Vietnam’s economic hub during past 20 years
Hanoi is the highlight of globally recognized Vietnam’s success story in FDI attraction.
The 20th anniversary of UNESCO’s recognition “City for Peace” held last week in Hanoi was a significant milestone in the capital’s development story. Since then, the city has come a long way forward, especially in economic development, and continues to cement its role as Vietnam’s economic hub. GRDP per capita doubles national average
In the 2008 – 2017 period, Hanoi’s GRDP expanded 7.41% annually, while the economic growth in 2018 has been nearly double that of 10 years ago.
This resulted in a GRDP per capita of US$5,134, triple the figure recorded in 2008 and nearly double that of the country of US$2,540.
The role of Hanoi's economy. Unit: %.
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Chairman of the Hanoi People’s Committee Nguyen Duc Chung in a conference last month said Hanoi continues to be the driving force for Vietnam’s northern economic region and its weight in the national economy is growing.
Putting into perspective, Hanoi contributes 51.1% for total GRDP of the northern economic region and 16.46% of Vietnam’s GDP; 54.1% and 19.05% in terms of state budget revenue collection; 20.3% and 5.68% of exports, respectively although the city only accounts for 21.2% and 1% in area, 41.7% and 8.38% in population, respectively.
According to Chung, the city’s growth model has been shifted towards greater productivity and efficiency, while the contribution of total factor productivity (TFP), which is determined by how efficiently and intensely the inputs are utilized in production, has been improved compared to previous periods.
In the 2016 – 2018 period, TFP contribution into Hanoi’s GRDP reached 51.9%, higher than that in the previous period at 31.2%, while that of capital and labor was 44.6% and 3.6%, respectively.
Hanoi targets GRDP growth rate of 7.5% in 2019 and 2020, leading to the GRDP growth in the 2016 – 2020 period of 7.33% - 7.41% respectively, which is in line with the city’s five-year development plan.
Top destination for FDI
For the first time since the launch of the provincial competitiveness (PCI) index report in 2005, Hanoi has been named among the top 10 rankings nationwide in the report for 2018, claiming the 9th rank out of 63 provinces and cities with a score of 65.40.
“The result showed strong efforts from Hanoi to realize its potential as one of Vietnam’s economic hubs and also in ASEAN in the future,” said Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI).
Nguyen Doan Toan, vice chairman of the Hanoi People’s Committee, said “the recognition would serve as motivation for Hanoi to enhance governance capability for greater business and investment environments.”
Hanoi's FDI inflow over the last five years. Unit: Billion USD.
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This has been the largest amount of FDI recorded in Hanoi after the country's 30 years of reform and global integration, cementing the capital city as an ideal investment destination in Vietnam, said Tran Ngoc Nam, deputy director of the municipal Department of Planning and Investment.
Not looking back since then, Hanoi continued to attracted the largest portion of FDI nationwide during the six-month period of 2019, posting US$5.3 billion, accumulating a total of US$41.2 billion in registered capital so far, of which US$20.5 billion has been disbursed or 49.7% of the total.
According to vice mayor Nguyen Doan Toan, FDI is an important source of capital for social investment, accounting for 10 - 15% on average of total investment and contributing to the city's high GRDP growth over the past years.
At the same time, it is the FDI sector that has created stronger competition pressure on each sector, motivating domestic enterprises to innovate technologically as well as enhancing the economy's competitiveness.
Favorable business environment a priority
In the 2019 – 2020 period, Hanoi would focus on encouraging FDI investment in urban infrastructure development, high added value services, trade and education, aiming to build a government of service which supports businesses in every step, Toan added.
Chairman of the Hanoi People’s Committee Nguyen Duc Chung said Hanoi has been proactive in searching for credible investors with high quality FDI projects.
Hanoi will continue to establish a favorable investment and business environment so that enterprises and investors can successfully carry out their business and production plans, Chung affirmed.
For such achievements, Deputy Prime Minister Vuong Dinh Hue said Hanoi is the highlight of globally recognized Vietnam’s success story in FDI attraction.
The next decade, however, would pose more challenges for Vietnam in general and Hanoi in particular in attracting FDI, requiring a new mindset in FDI attraction, Hue stated.
The deputy PM said Hanoi should consider investors as partners for mutual benefit, in which the city must ensure a favorable environment for investors to commit long-term business in the city.
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