Ho Chi Minh City pivots to productivity-led growth

HO CHI MINH CITY: After 40 years of Doi Moi (Renewal), Ho Chi Minh City is entering a new phase of development, seeking to bring together capital, technology, people, infrastructure, and markets to raise productivity and strengthen competitiveness.

Before the national Doi Moi reforms were launched in 1986, the centrally planned economy left businesses with limited autonomy.

Between 1976 and 1985, the city experimented with a series of “fence-breaking” initiatives, including wage-price compensation, the three-part plan, and the Directors’ Club.

These efforts provided practical foundations for Doi Moi, which subsequently expanded trade, attracted investment, and created greater space for different economic sectors to develop.

The establishment of the Tan Thuan Export Processing Zone in 1991 marked a major step in opening up the economy, while the Sai Gon Hi-Tech Park, established in 2002, shifted the focus towards technology and higher value-added activities.

The city’s development has therefore evolved from removing constraints on production to mobilising investment and, increasingly, building technological and productive capabilities.

The transformation is particularly visible in the emergence of technology-focused economic hubs.

The Saigon Hi-Tech Park has generated more than US$203bil worth of high-tech products, including more than US$185bil in exports, and created nearly 54,000 jobs.

Nguyen Ky Phung, head of its management, said the park is no longer viewed simply as a place to lease industrial land, but as an ecosystem for global technology corporations, technology investment funds, and developers of core technologies.

This reflects a shift from quantity to quality, and from processing and assembly towards mastering core technologies and developing specialised technology value chains.

Quang Trung Software Park provides another example.

After 25 years, it has more than 120 digital technology enterprises with cumulative revenues of 138 trillion dong and exports of more than US$4.35bil.

These changes are beginning to show in the city’s productivity performance.

Total factor productivity, the measure of how efficiently an economy uses capital and labour to generate output, including the effects of technology, innovation, and better organisation, contributed about 59% to Ho Chi Minh City’s economic growth in 2025, according to the city Department of Science and Technology.

The figure is close to the city’s target of 60% for 2026 to 2030, suggesting that technology, innovation, and more efficient use of resources are already making a major contribution to growth.

Economist Tran Du Lich, former director of the Ho Chi Minh City Institute for Development Studies, said shifting the development model towards science, technology, innovation, and the digital economy was not only an inevitable trend but also a strategic choice for the city to maintain its leading role.

The focus of this process is not only on technology but, first and foremost, on policy thinking and institutions, he said.

Institutions must lead the way by creating room to test new models, helping the city shift from capital-driven growth towards growth based on knowledge and productivity, he said.

According to the Global Financial Centres Index 2026, Ho Chi Minh City ranked 84th out of 120 global financial centres, 11 places higher than the previous year and third in Asean.

The city is seeking to bring previously separate economic strengths together into a larger development system.

The merger of Bình Dung and Ba Ria-Vung Tau provinces into Ho Chi Minh City in July 2025 created a larger economic space integrating finance, high-tech industry, seaports, logistics, and innovation.

Scale alone will, however, create additional value only if these assets can be effectively connected.

The Politburo’s Resolution No 09, issued on May 19, 2026, on building and developing Ho Chi Minh City in the new era, establishes a development model based on science and technology, innovation, and digital transformation, while calling for institutional reform, greater decentralisation, and more effective mobilisation of resources.

The Law on Urban Development, which takes effect on Oct 1, 2026, is expected to provide further special mechanisms and strengthen decentralisation.

According to Vo Van Minh, chairman of the city People’s Council, the law will help eliminate bottlenecks and make more effective use of land, financial, investment, science and technology resources, contributing to the city’s long-term development.

Institutions are therefore taking on a broader role: not simply removing obstacles but also organising resources and creating room to test new models.

The Vietnam International Financial Centre in Ho Chi Minh City (VIFC-HCMC) and the Cai Mep Ha Free Trade Zone (FTZ) illustrate this approach.

Nguyen Huu Huan, deputy chairman of the VIFC-HCMC executive board, said the financial centre could develop from a cluster of financial institutions into market infrastructure meeting capital needs for metro lines, seaports, logistics, aviation, the FTZ, green transformation, and business activities.

“If this can be achieved within a sound risk management framework, VIFC-HCMC will not simply be a financial centre located in Ho Chi Minh City. It will become economic infrastructure for the city – infrastructure for capital flows.”

If the financial centre connects the city with capital flows, the FTZ can connect those flows with production, logistics, trade, and supply chains.

The underlying shift is therefore from having more resources to organising resources into a value-generating system.

Foreign investment remains an important source of capital. In the first eight months of 2026, the city attracted more than US$10.06bil in foreign direct investments, up 167.3% year-on-year.

Hoang Vu Thanh, director of the city Department of Finance, said: “The result shows the attractiveness of the city’s long-term investment environment, with foreign capital becoming increasingly visible in technology and science.” — Viet Nam News/ANN