Ho Chi Minh City: Red star rising

31 Oct 2015 by Clement Huang
When Vietnam officially joined the World Trade Organisation (WTO) in January 2007, the organisation’s then director-general, Pascal Lamy, was quoted as saying: “When people work hard, things happen – and Vietnam is a good example of that.” There is perhaps no better way of describing the Southeast Asian country, as it enjoys a continued rise in its GDP – now standing at US$186.2 billion, according to the World Bank. The international financial institution also reported that Vietnam’s poverty rate is decreasing, with the most recent figure (2012) showing 17.2 per cent of the country’s population living below the national poverty line. This was a decline of more than 3 per cent from the last recorded rate two years earlier. As the economic centre of Vietnam, Ho Chi Minh City (formerly Saigon) serves as the epicentre of development. Thanks to several successful economic reforms and infrastructural upgrades, the former capital of the Republic of Vietnam looks set to usher in a new era of financial growth and stability. Growth data, as announced by the Ho Chi Minh City (HCMC) People’s Committee in 2014, showed that GDP growth of Vietnam’s largest city reached 9.6 per cent last year, up 3.22 per cent from 2013. This positive trend extended to the city’s per capita income, which according to Thai Van Re, director of the Department of Planning and Investment, hit US$5,131 last year – a healthy increase on US$4,545 in 2013. So far, 2015 has been a robust year for HCMC as it celebrates the signing of the Trans-Pacific Partnership (TPP). Comprising 12 Pacific Rim countries, the TPP trade agreement is anchored by the US and seeks to streamline trade and investment within the group and promote economic growth and development. Chief among the guidelines afforded by the TPP is the lowering of imposed trade tariffs from which Vietnam as a whole and HCMC in particular stand to be among the biggest winners. With manufacturing continuing to be a prominent sector in HCMC’s economy, reduced tariffs will serve to lower overall costs on companies and consumers alike. The US, for instance, currently imposes a 17 per cent duty on clothing imports – a fee likely to be reduced for TPP participating countries. The trade agreement also comes at a time when imports into HCMC are higher than ever. During the first four months of the year, imports to the city neared US$10.2 billion, a year-on-year spike of 15.5 per cent, according to a government report. This is a testament to the growing production demands of local enterprises, says Re. Infrastructure priority  New and improved infrastructure in HCMC is a priority for the local government as it looks to open up the economy and boost foreign interest. Tourism figures continue to impress and have led to significant improvements to Tan Son Nhat International Airport, Vietnam’s largest airport in terms of passengers handled. The domestic terminal, expanded last year, can now support up to 13 million passengers annually. Expansion work for the international terminal began this year, and upon completion will boost capacity to 13 million as well. But as I discovered during a recent trip to Ho Chi Minh, the existing infrastructure at Tan Son Nhat is showing its age. Automatic immigration clearance is practically unheard of, with both locals and foreigners forced to use the traditional immigration check lines. ASEAN passport holders, however, get  priority over other foreign travellers through several dedicated lines. Connections with the airport are basic, with the only choices being bus, taxi or hotel limousine service. Route 152 is the designated airport bus and  provides the most affordable means of getting to the city’s District 1 from the airport. Operating every 15 minutes, it costs 5,000 dong (US$0.2) for a ride to the city centre. For most business travellers, the taxi or hotel limousine service remains the most straightforward means, though. Taxis in HCMC are safe, with most cars being well maintained and air-conditioned. Fares are determined by the meter and a fare from the airport to the city will set patrons back about 120,000 dong (US$6), which includes a mandatory airport surcharge of 10,000 dong (US$0.5). Many of the frustrations with existing facilities may be relieved with the projected opening of the new Long Thanh International Airport in 2020, which is expected to serve up to 100 million passengers when it reaches capacity. While it is some 40km north-east of the city centre, the recently opened Ho Chi Minh City–Long Thanh–Dau Giay Expressway will link passengers to the city with a 45-minute drive. The expansion of Tan Son Nhat airport and the development of Long Thanh are timely for Vietnam Airlines as it seeks to create a new corporate identity and become a four-star airline. “We will continue to operate out of Tan Son Nhat International Airport but it is likely that we will move our operations to Long Thanh International Airport when it begins operations,” spokesman Truong Phuoc Giang says. The national carrier recently underwent a comprehensive brand overhaul, with improvements to both hard and soft products. Along with a new logo and aircraft livery, the airline redesigned cabin crew uniforms and introduced new concepts to its business class lounge and frequent flyer programme. Giang says the existing lounge at Tan Son Nhat International Airport is the next facility to be renovated, following the opening of its new lounge at Noi Bai International Airport in the national capital of Hanoi. Vietnam Airlines recently took delivery of its first A350-900 and B787-9 aircraft, which it operates out of both HCMC and Hanoi on flights to London and Paris. These will be expanded to Tokyo next year to meet high demand for flights between the two countries, Giang says. Stumbling blocks Despite an overall willingness to improve infrastructure in HCMC, there are project delivery problems. Last month, deputy prime minister Hoang Trung Hai revealed that a much anticipated urban train project would be delayed – a setback he attributed to several factors including slow land site clearance and lack of co-operation between ministries. First proposed in 2001, the HCMC Metro project will eventually operate six rapid-transit lines. Developed by the Management Authority for Urban Railways, the project is aimed at reducing traffic congestion in the city. The public transport network is also expected to offer greater connectivity for commuters throughout the city’s 19 urban districts. Work on the first line, between Ben Thanh and Suoi Tien, which would improve connections especially in the busy District 1 CBD area, began in August 2012. But it has fallen about two years behind schedule and is now slated for a 2020 launch. The second line, between Ben Thanh and Tham Luong, was already two years behind schedule when work started in January. It is now due to start operations in 2019, following several changes made to accommodate junctions for the other metro lines including Lines 1, 3b, 5 and 6. Compounding these challenges is an ever-present ambiguity on whether such infrastructural improvements will even see the light of day. As Nguyen Xuan Hao, marketing communication executive at the Park Hyatt Saigon jokes, delays and project cancellations are commonplace in HCMC. “We [locals] never pay attention to the opening dates that are highlighted on the news. The only thing we care about is whether the [project] is opened or not,” she says. The delays mean that commuting remains a significant challenge for the foreseeable future. There are roughly 5.8 million registered motorbikes alone in the city and these remain the most common way of moving around. Congestion on the streets is a daily hassle that most locals face during peak hours of 7:30am to 9am, 11am to 1pm, and 4:30pm to 7pm. As at the airport, taxis are the main transport choice although travellers that need to get around quickly can opt for motorbike taxis. While these are plentiful and cheap, be sure to agree on a price before you ride off. Short hops around town should cost no more than 40,000 dong (US$2). Foreign interest Competition is getting fiercer by the day, as more and more foreign companies take advantage of weakening economic barriers to establish their presence in the city. However, according to Park Hyatt Saigon’s director of sales & marketing Federica Brugnara, that may not be such a bad thing for the hotel. “This year alone, HCMC saw three new luxury hotels by international hotel groups open for business,” says Brugnara. “While the days when one property or company could claim a monopoly of  the industry are long gone, inbound travellers and investments have never been higher, which has led to an overall positive bottom line.” Growing foreign interest has also paved the way for the development of new projects and industries. A joint venture between Singapore’s Ascendas and Saigon Bund Capital Partners for instance will lead to the development of OneHub Saigon – an urban complex in the Saigon Hi-Tech Park some 15km from downtown HCMC. The US$130 million project will exist alongside tech giants such as Samsung, Intel and Air Liquide. Looking forward, HCMC stands to gain even more as Vietnam continues to integrate itself into the global economy. Infrastructural developments, along with stronger trade ties, should ensure a favourable outlook.
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