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Ho Chi Minh City: Vietnam's Economic Heart

Updated on August 9, 2010

Introduction

The fall of Saigon on April 30th, 1975 was considered a great defeat to democracy and capitalism by the western world, at the time.  The unification of Vietnam under a socialist government and the renaming of Saigon to Ho Chi Minh City suggested little chance of burgeoning economic progress in the foreseeable future, at least within the context of a centrally planned economy.  This all changed in 1986 when the Doi Moi (meaning “renewal”) policy was enacted by the Vietnamese government—the private sector could now play a role in commodity production.  The Doi Moi policy is considered to be similar to the free-market economic reforms of China in the late 1970’s and early 1980’s.  Doi Moi started Vietnam’s transition from a wholly centrally planned economy to a controlled form of capitalism.  Ho Chi Minh City, as Vietnam’s historical cultural and economic capital, assumed its role as breadwinner immediately.

Location of Ho Chi Minh City (formerly Saigon)

Photo courtesy of google
Photo courtesy of google

Mass Urban Immigration

Ho Chi Minh City is becoming a mega-city. There is the city itself, which has nineteen urban districts and five suburban districts. The city has a population of 6.1 million people (UN Population Division), although the actual population could be closer to eight million people (Douglass, Jones, 185, demographia). Ho Chi Minh City’s population size should approach thirteen million people by 2030 (demographia). The surrounding nine to eleven provinces are considered a part of the (de facto) Ho Chi Minh metropolitan area. Between ten and twenty-two million people live within this metropolitan area, depending on varying sources and what provinces are included in those estimates. High levels of migrant movement to Ho Chi Minh City from other areas of Vietnam can make definitive population estimates difficult at best.

Migration from other areas of the country have served as the impetus to Ho Chi Minh City’s growth, but centrally planned transportation infrastructure was the catalyst, “Since Doi Moi, increased modern transportation and communication have put major cities, notably Ho Chi Minh City, in a position of high population interaction with other regions” says Douglass, Jones (196). In 1999 at least 20% of people residing in the urban core zone of Ho Chi Minh City were migrants—71% of which came from outside the city, while 29% came from the inner or outer zone of the city (Douglass, Jones, 199). Douglass claims “this reflects the concentration of market activities and services in the city’s core area” (199). Reviewing migrant vs. non-migrant statistics were dizzying for Ho Chi Minh City, but some correlations were realized when reading Douglass’ article: Migrants generally had less education than non-migrants, migrants relied on the services and manufacturing sectors for employment in the core, and greatly relied on the manufacturing sector within the inner and outer zones of the city—where export processing and heavy manufacturing is developing. It is important to note this land-use change in the outer zone of Ho Chi Minh City, as the outer zone is mostly agriculture, for now.

Ho Chi Minh City Media

Ho Chi Minh City's urban spawl is extensive and expansive.
Ho Chi Minh City's urban spawl is extensive and expansive.
Ho Chi Minh City's economy primarily depends on the services sector, and to a lesser extent industry.
Ho Chi Minh City's economy primarily depends on the services sector, and to a lesser extent industry.

Doi Moi and Recent Economic Ventures

Doi Moi opened economic doors for the Vietnamese population to small and medium sized privately owned enterprises and cooperatives. In 1997 there were more than 3,000 family-owned plastic manufacturers located just within districts 5, 6 and 11 of Ho Chi Minh City, plus tens of thousands of small factories just in the core area (Douglass, Jones, 192). From 1990 to 1998, Ho Chi Minh City experienced a 12% increase in economic growth, per year—the average for Vietnam as a whole was 7% per year during this time frame (Douglass, Jones, 192). In 2002, Ho Chi Minh City’s GDP was $1,524 USD, while Vietnam as a whole was $415 USD (Douglass, Jones, 185). 19% of national GDP was generated by Ho Chi Minh City alone; the metro area attracted a staggering 74% of all foreign investment into the country (Douglass, Jones, 185).

The amount of land in Ho Chi Minh City designated for recreational use is around 0.4 square meters per capita—in contrast, 20 to 40 meters per capita is roughly the western standard (Douglass, Jones, 207). This incredibly low number of recreational land-use allocation per individual hints to poor planning. An unthinkable population density of 18,841 people per square kilometer exists for the core area of the city, while overall Ho Chi Minh City has a population density of 2,218 per square kilometer (as of 1999) (Douglass, Jones, 195). I’ve only realized this insane level of density before when studying Tokyo.

In recent years outside contractors have come to Ho Chi Minh City to develop high-density middle class housing & mixed-use projects. This seems to be a response to poor long term urban planning together with an increasingly powerful middle class consumer economy. These developers are from the United States, Korea, Japan, Malaysia, Taiwan, Indonesia and other countries. Some projects such as Saigon South (Phu My Hung) are especially ambitious,

with a master plan accommodating one million residents. Mega projects such as Saigon South are larger than the core of Ho Chi Minh City itself and offer health services, boutique stores, malls, fast food restaurants, golf courses and a gated community lifestyle, among others. The Thu Thiem project east of the city will eventually host 130,000 people on 6 square kilometers, and will also be gated (Douglass, Huang, 2). Alarming urbanization seems to be the trend among developing mega cities, especially with the appeal of mega-projects that attract medium to high wealth individuals from around the globe, although most residents of these grandiose projects in Ho Chi Minh City seem to originate from Vietnam itself. “With all these projects, Ho Chi Minh City is steadily becoming a donut of mega-projects…” (Douglass, Huang, 3). I feel that the extravagant allure of these projects intrinsically proliferate consumerism in a vulnerable economy, such as Ho Chi Minh City’s—which can be economically (and politically) dangerous, especially at the rate this city is urbanizing.

Martin Gainsborough makes an interesting distinction about Vietnam’s Economy (he did his research in Ho Chi Minh City) “… Companies described as being ‘private’ often have state institutions among their shareholders while ‘state’ companies can in fact be found operating rather ‘privately’ ”. This observation (which is not surprising for a developing country with a mixed economy) signifies a correlation with noticeable economic corruption and thus reduces economic transparency.

Conclusion

Ho Chi Minh City rose from the ashes after three consecutive wars and is becoming a global city, increasingly interacting with the world at an exponential pace.  It is a prime example

of a city that is embracing globalization, for better or worse.  The city demands an increasingly globalized place in this world, but what will that mean for the small and medium size private enterprises and cooperatives that Doi Moi has encouraged?  Will the Ho Chi Minh City become a Shenzen or Guangdong?  It is uncertain.

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    • profile image

      Howard Schneider 

      5 years ago from Parsippany, New Jersey

      Excellent Hub detailing the economic rise of Ho Chi Minh City. The innovation and the energy of the people have been activated. Hopefully they can avoid the excesses and inequality of pure capitalism. Great job, Direxmd.

    • profile image

      cynthia 

      5 years ago

      i think the city is doing great,i like the spirit,..join us at unn.edu.ng,or portal.unn.ng

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