Hanoi has implemented coordinated strategies to overcome the adverse global economic conditions and prevailing domestic obstacles, ensuring its continued role as the driving force behind the country's growth.

Production at a garment company in Hanoi. Photo: Minh Anh/The Hanoi Times

In the initial eight months of 2023, Hanoi witnessed the establishment of 21,100 new enterprises with a registered capital of VND208.8 trillion (US$8.6 billion), marking a 7% increase in enterprise numbers but a 6% decrease in registered capital compared to the same period in 2022.

Additionally, 6.300 businesses resumed operations, showing a 17% decline. These statistics indicate that the startup landscape has not significantly improved.

Hanoi's industrial production, a crucial driver of economic growth, continues to grapple with challenges caused by the global economic downturn. Key industrial products have declined due to a lack of export orders, slow domestic market consumption, and soaring input costs pressuring production.

Overall, the industrial production index for the first eight months of 2023 has only seen a modest 2.4% increase compared to the same period in 2022.

Furthermore, Hanoi's export turnover in the same eight-month period amounted to $10.8 billion, reflecting a 4.6% drop compared to 2022. This included $6.1 billion from the domestic economic sector, down by 0.7%, and $4.7 billion from the foreign direct investment (FDI) sector, a 9.4% decrease.

Mac Quoc Anh, Vice Chairman of the Hanoi Association of Small and Medium Enterprises, said numerous businesses are currently grappling with challenges such as workforce reductions, production scale reductions, and even closures due to financial losses.

“To make matters worse, depleted business resources have left them ineligible for bank loans,” said Anh.

Nevertheless, there are positive aspects of Hanoi's economic landscape, particularly in the realm of FDI attraction, which shines as a beacon of hope.

In the first eight months of 2023, Hanoi lured in $2.34 billion in FDI, securing a prominent position among the nation's leaders in this regard. Additionally, Hanoi welcomed over three million tourists during this period, a remarkable increase of 2.2 times compared to the same period in 2022.

The city's total state budget revenue for the first eight months of 2023 is estimated to reach VND282 trillion ($11.7 billion), equivalent to 79.9% of the annual target and showing a substantial 21.9% surge compared to the same period in 2022. Out of this, domestic revenue amounts to VND264.3 trillion ($11 billion), hitting 81.6% of the target and growing by 24.7%.

Drastic measures in place

Hanoi is striving to achieve a higher economic growth rate in 2023 at 7% compared to the national average. To attain this objective amidst the sluggish economic recovery, the city has implemented a comprehensive set of solutions, drawing synergy from various parties and factors.

Notably, the Hanoi People's Committee has established a dedicated working group tasked with addressing obstacles and providing support to businesses, investors, and investment projects within the city. This group is responsible for overseeing and resolving challenges faced by enterprises and investors within its purview. It also guides the streamlining of project investment procedures, enforces policies and measures to bolster enterprise support, and conducts inspections to identify and tackle issues.

Regarding industrial production, the city has set a target to increase industrial-added value by approximately 75%. The municipal Department of Industry and Trade has been assigned to assist businesses in expanding their presence in traditional markets, exploring new markets, fostering connections between production and business enterprises to stimulate domestic market consumption, and facilitating collaborations between domestic and foreign businesses to secure partnerships and orders.

Furthermore, Hanoi is supporting businesses in their digital transformation efforts, promoting the establishment of smart factory models, and encouraging environmentally friendly production practices.

Various departments and branches have also been directed to facilitate businesses' access to credit with favorable terms and reasonable interest rates. They are also tasked with reviewing and resolving issues related to value-added tax refunds, reducing and extending certain taxes, fees, and land rents, as authorized by relevant authorities.

Acting Director of the Hanoi Department of Industry and Trade Tran Thi Phuong Lan said the department is gearing up to intensify its oversight and monitoring efforts across various departments and units to ensure the smooth progress, quality, and efficiency of their work.

Meanwhile, Dang Thi Huong, the Deputy Director of the Hanoi Business Support Center, emphasized the agency’s commitment to implementing numerous advisory programs, offering workforce training, and disseminating information to support the local business community.

Economic expert Nguyen Bich Lam called for Hanoi to focus on investments and the timely completion of pivotal projects. Furthermore, he advocated for stimulating consumer demand through activities such as consumer lending and promotional campaigns.

“It is important for the city to unleash potential opportunities for businesses and entrepreneurs to create employment opportunities and foster economic growth,” said Lam. 

He also highlighted the presence of various new favorable conditions, particularly in terms of infrastructure, which will enable Hanoi to leverage opportunities and strengthen its position as the nation's economic driving force.