Ho Chi Minh City, Vietnam's leading economic driver, has always been considered a "leader" in national development. With Resolution 98/2023/QH15 (Resolution 98) approved by the National Assembly on June 24, 2023, the city has been given a specific mechanism to promote socio-economic development, overcoming the usual legal constraints. However, after more than two years of implementation, many challenges have emerged, leading to the need for revisions and additions. In particular, in the context when the two provinces of Binh Duong, Ba Ria – Vung Tau were merged into Ho Chi Minh City to become a megacity, Resolution 98 was no longer relevant. Therefore, the Ministry of Finance has conducted a consultation on the Draft Resolution amending and supplementing Resolution 98 ("Draft").
Background and request for amendments to Resolution 98
Resolution 98 was issued in the context that Ho Chi Minh City is recovering from the COVID-19 pandemic. The resolution allows the city to pilot a number of specific mechanisms in areas such as budget management, land, public investment, talent attraction, and infrastructure development. Specifically, it empowers the People's Council and the People's Committee of Ho Chi Minh City to decide the income level for officials, adjust urban planning, and pilot the public-private partnership (PPP) model. The goal is to help the city achieve GDP growth higher than the national average, attract foreign investment (FDI), and solve bottlenecks in administrative procedures.
After two years, the results of the implementation of Resolution 98 were evaluated positively but did not meet expectations. According to the Report, Ho Chi Minh City has achieved an average GDP growth of 6.77% in the 2023-2024 period, higher than the national average (6.5%), but lower than the target of 8-9%. The city has attracted about 8,944 billion USD of FDI, accounting for 36.7% of the total capital of the country, and the disbursement of public investment reached 51,806 billion VND (equivalent to 2.07 billion USD).[1] However, many specific mechanisms have not been fully implemented due to legal problems, lack of detailed guidance, and the impact of global economic fluctuations such as inflation and recession in the US and Europe. It can be seen that the main difficulties of Ho Chi Minh City when applying Resolution 98 are:
Land and planning problems: Many large infrastructure projects such as metros and ring roads have been delayed due to complicated land acquisition procedures, although Resolution 98 has allowed more flexible planning adjustments.
Limitations in attracting investment: PPP and BT (build-transfer) models are not attractive to investors due to high risks and lack of protection mechanisms.
Budget and income of officials: Although it is allowed to increase the income of professional officials, the increase is not enough to compete with the private sector, leading to brain drain.
Impact from external factors: High inflation, fluctuations in the USD/VND exchange rate, and competition from cities such as Bangkok and Singapore make Ho Chi Minh City lose its advantage.
The draft is built on this assessment, in order to "expand and perfect" the specific mechanism, especially when Ho Chi Minh City has now expanded its development space with the merger of the two provinces of Binh Duong and Ba Ria Vung Tau. The draft amendment added 7 new articles, amended 12 articles, and abolished 3 articles compared to Resolution 98. The pilot period is extended to 2030 (instead of 2028), and the scope of application is extended to new areas such as transportation-oriented urban development (TOD), logistics, and the digital economy. The biggest difference is the shift from "pilot" to "pilot expansion", with an emphasis on international feasibility and competitiveness.
Outstanding new points in the Draft
The new draft not only corrects but also significantly expands, reflecting Ho Chi Minh City's desire for a new, proactive, flexible and internationally integrated development space. Along with that, there are lessons learned from the two years of implementation of Resolution 98 in practice. It is possible to mention here the new and outstanding main points of this Draft Adjustment.
Firstly, more flexible regulations in land management and planning
Land is the biggest bottleneck in Resolution 98, with many projects stalled due to the lengthy land acquisition process. The draft introduces an "emergency land acquisition" mechanism for national infrastructure projects, shortens the time from 12 months to 6 months, and allows compensation based on market prices instead of state prices. The revised draft resolution allows Ho Chi Minh City to adjust urban planning without waiting for approval from the Prime Minister, as long as it is in line with the national strategy.
The breakthrough difference is the addition of the TOD (Transit Oriented Development) model, which is added to the Draft. The TOD allows urban development around metro lines and urban railways, with tax incentives for investors. With special investment procedures, it will create favorable conditions for investors, promote economic, technological and trade development, and help shorten the implementation time of strategic projects. Compared to Resolution 98 which only focuses on general planning, the new Draft integrates TOD into 10 specific projects, such as the expansion of metro No. 1 and Ring Road 3, in order to reduce congestion and promote the green economy. This is expected to attract an additional $5-7 billion in investment from Japan, South Korea and Europe.
Second, increase the attraction of strategic investment and PPP
Resolution 98 piloted PPP but faced difficulties due to lack of risk insurance. The new draft adds a "PPP guarantee fund" from the city budget, protecting investors against policy fluctuations. According to the report of the Ministry of Finance, the PPP disbursement rate has only reached 40% in the past two years, so the Draft raises the level of public investment in PPP to 50% (from 30%), and allows the use of public land as a reciprocal asset.
The big difference is the expansion of the BT to BT mechanism combined with BOT (build-operate-transfer), applicable to logistics and seaport projects. The draft allows the city to grant fast-track investment permits for projects over $100 million, shortening the procedure from 90 days to 30 days. In addition, the Draft introduces incentives for green investment, such as exemption from import taxes on renewable energy equipment. This can be considered a step forward compared to Resolution 98 which only focuses on traditional investment.
Third, developing the digital economy and human resources
Resolution 98 rarely mentions the digital economy, but the new Draft dedicates Article 31 to this field. The city is allowed to pilot a "specific digital economic zone", with 0% tax incentives for technology startups for the first 4 years. The difference is the integration of AI into urban management, such as intelligent traffic monitoring systems, and cooperation with corporations such as Google and Microsoft.
In terms of human resources, the Draft supplements the mechanism for granting long-term visas (5 years) to foreign experts, and a training program of 10,000 high-tech engineers by 2030. Compared to Resolution 98, the Draft emphasizes "regional linkage", allowing Ho Chi Minh City to cooperate with Dong Nai to develop common human resources, reducing the burden on the city budget.
Fourth, innovation in areas such as the environment, health and social security
The new draft focuses on more sustainability, with Article 28 adding a strict but flexible environmental sanctioning mechanism, allowing the city to decide on its own fines of up to VND 5 billion for major violations. In healthcare, the difference is to allow the pilot of the public-private hospital model, attracting foreign investment in high-end healthcare.
Social security was also expanded, with the unemployment support fund from 2% of the budget, higher than the 1% in Resolution 98. This is to reduce inequality, especially after COVID-19, when the unemployment rate in the city once touched 10%.
The new draft is expected to bring GDP growth of 8-10% to Ho Chi Minh City from 2026, contributing to raising the national GDP to 7%. It is estimated that it will attract an additional $15 billion in FDI by 2030, creating jobs for 500,000 workers. The big difference is higher feasibility, with 80% of the terms having instructions for immediate implementation, reducing legal problems. However, challenges remain: the risk of abuse of power if central supervision is weak, and budget pressure if investment attraction does not meet expectations. In addition, it is necessary to closely coordinate with neighboring provinces to avoid "bleeding" resources.
The draft new specific mechanism for Ho Chi Minh City not only corrects but also significantly expands compared to Resolution 98, focusing on flexibility, sustainability and international competitiveness. From budget management to TOD and digital economy, these differences promise to bring the city in a new period and context to new heights. The draft is expected to be approved by the National Assembly at the last session of the 15th term, opening an era of breakthrough development so that Ho Chi Minh City is not only a "leader" but also a symbol of an innovative Vietnam.
Lawyer Nguyen Van Phuc
HM&P Law Firm
[1] https://www.moj.gov.vn/qt/tintuc/Pages/chi-dao-dieu-hanh.aspx?ItemID=5405, accessed on 01/11/2025.
