“If the institutional testing framework is not built, Thu Duc City will be very difficult to break through because it is impossible to build a ‘nest’ for sparrows, but the ambition is to attract eagles,” said Dr. Vu Thanh Tu Anh.“Specific mechanism” is a phrase reminded by leaders of Ho Chi Minh City for 2 months since Thu Duc City officially came into operation. This is seen as a solution to remove a series of bottlenecks for a new city to really break through. Chairman of Thu Duc City People’s Committee also affirmed that building a specific mechanism is the central goal of the first phase of the new city. However, the proposal of decentralization and authorization that the Thu Duc city government reported to Ho Chi Minh City on March 27 has not convinced many departments and branches. Ho Chi Minh City People’s Committee Chairman Nguyen Thanh Phong commented on the proposal with specific targets but has not determined economic structure and development model. While Thu Duc City is determining the direction for a specific mechanism to propose to the Central Government, Dr. Vu Thanh Tu Anh, Director of the Fulbright School of Public Policy and Management, said that Thu Duc City needs a “test framework. Institutions”. If you do not do this, Thu Duc City is very difficult to break through because it is not possible to build a “nest” for sparrows, but the ambition to attract eagles.
Zing has an interview with Dr. Vu Thanh Tu Anh, analyzing more carefully about the specific mechanisms that Thu Duc city needs.
– To realize a series of breakthrough goals, the Ho Chi Minh City government repeatedly affirmed that it will decentralize and decentralize as much as possible to Thu Duc City. In your opinion, with the city model in the city, how should HCMC decentralize and decentralize to Thu Duc city?
– Talking about decentralization, we have to step back to understand why decentralization and decentralization bring any benefits.
In the public finance theory of the relationship between levels of government, a fundamental principle of governance is that whichever level is closer to the people, that level should be the decision-maker. From the central level to the local level, the distance is so far that the central government cannot understand what the people of Ho Chi Minh City or Thu Duc City think. Therefore, from the central to the provincial level, the city must be decentralized.
Meanwhile, the “distance” from Ho Chi Minh City to Thu Duc City is very close, so the advantage of information is negligible when decentralizing. We have to understand that before deciding how to decentralize. However, if decentralization without careful consideration, it is only superficial.
The most important thing is that when wearing new clothes, with a hierarchy and a new model, will Thu Duc City really become a new “being” or still just an old organism wearing a new coat? This is a key issue of Thu Duc City.
Even if Ho Chi Minh City has the utmost decentralization and decentralization for Thu Duc, in the current Vietnamese context, the space and scope of decentralization for Thu Duc will still be limited on all three important aspects: Human financial, financial, and political.
It is necessary to ask questions such as: Who is the person in charge of decisions? How will fiscal authority be divided between the central government and Ho Chi Minh City and between HCMC and Thu Duc City? Does Thu Duc’s authority to mobilize and spend budget is different or must comply with the general framework of the State?
From these questions, we can see the fact that the decentralization problem for Thu Duc City is the negotiation between Ho Chi Minh City and the Central Government, and the decision is centrally located.
– With such a decentralized and decentralized scope and scope, according to you, what specific mechanism does Thu Duc city need to have a driving force to make breakthroughs in economic development?
– The most important solution is that the Central Committee agrees for Thu Duc to make an institutional testing framework (policy sandbox) – which is a kind of experiment on a new policy, and this framework is only within Thu Duc City, not applied for the rest of HCMC.
In the planning of Thu Duc City, there are many different types of functional centers such as financial centers, science – technology, sports – culture, logistics port clusters … each field will have its own policy tests. Here, I talk deeply about the financial center.
For example, what is the prerequisite for Thu Thiem to become an international financial center?
The first is the liberalization of capital accounts and the freely convertible currency to facilitate capital inflows in and out. If bringing money in easy and difficult, then why should investors come here without going to Singapore or Hong Kong or even Shanghai (China) – places that have been liberalizing capital accounts.
Second, if the exchange rate mechanism is rigid, it will not create the flexibility in monetary policy.
The third is the regulations on foreign workers. For example, what percentage of the workforce is up to a foreigner at most? If it is an international company, this number will be many times larger than the current regulations, especially in the initial stage.
Then the administrative procedures related to recruitment, extension of labor visa contracts, no double taxation … Up to now, the Vietnamese law for these issues has many limitations.
Fourth is about income tax and financial transaction tax. What if I want to compete with Singapore and tax twice as much as Singapore? After we come back, but the incentive policy is not equal to the previous ones, how can we attract investors?
The fifth is the testing mechanism for the development of Startups (startups) and Fintech (financial technology). This framework of institutions and policies relates to data centers and cybersecurity so that businesses can leverage secure international cloud computing systems and services to develop AI (artificial intelligence) and Big Data (big data).
The aforementioned mechanisms are completely outside the jurisdiction of Ho Chi Minh City. The most important conditions depend on the central government. That is the authority of the Ministry of Finance, the Ministry of Planning and Investment, the State Bank, the Ministry of Labor, Invalids and Social Affairs and other ministries.
The best Thu Duc City can hope for is the central government allowing the city to become an institutional testing framework. Without the support of the ministries to jointly submit the reforms to the Prime Minister and then to the National Assembly, it is difficult to hope that Thu Duc City can make a breakthrough.
With this “institutional testing framework”, once investors see the potential, the city will not have to spend billions of dollars to build infrastructure. Investors will be willing to take advantage of the mechanism and potential of an emerging market like Vietnam. Thus, we do not have to ask for any money, but just create a mechanism. And this mechanism is, again, central.
In short, if the Central Government considers Thu Duc City as a national pilot model, then there can be a new mechanism, but if it is just a new city of Ho Chi Minh City like any other city There are not many chances of success.
– Is there a limit to this institutional testing framework?
It is true that this test framework cannot be indefinite. It is important to find a suitable configuration and to balance the benefits and risks. What is suitable? To determine it takes 2 steps.
The first step is to collect input from the market. This data could come from a frank, open dialogue with potential investors. From there, draw the terms that will attract large investors, or as we often describe it as “clearing the eagle”.
Former Pudong (Shanghai) policymakers also say “phoenix pole” – that is, building a new “nest” for phoenix to live in. Obviously the “nest” for the sparrow no eagle wants to come.
Meanwhile, our approach today is still “I give to you, give you the mechanism, and whether that mechanism is suitable for you is not another matter”. Now, we have to do the opposite.
Thu Duc City has to contact foreign investors, major financial institutions, even hire consulting companies to help me understand the current conditions of Vietnam, the incentive packages must be like. Which? That is the first step – catching the pulse of the needs and emotions of the market.
The next step, we must go back to seeing what market conditions require, what can be done immediately, what needs a roadmap, what cannot be done due to mechanisms or security and political factors. Based on the data of both the supply side and the demand side, we can analyze where the two sides meet, thereby, determining the configuration and route of the framework. There are very open but there are those that have to be limited.
To do this requires public-private partnerships in terms of institutional framework development. In addition, we also need to refer to international experience.The test framework also needs to balance benefits and risks, but from the point of view of testing, there may be errors and risks, objectives is the best risk management to achieve the highest expected benefit.
Unfortunately, the prevailing management view in Vietnam today is that although it is allowed to experiment, “risks are not allowed”, and when unfortunately there is a risk, who makes that person responsible. With this mechanism, no civil servant or management agency dares to “commit”, or when assigned the responsibility, do it in moderation or even push for others.
– Recently, the Ho Chi Minh City People’s Council passed a resolution on the budget for Thu Duc City. Accordingly, Thu Duc City is kept 18% of the total budget revenue, the rest is paid to the Central and Ho Chi Minh City does not keep any money. Is this a specific mechanism that HCMC gives to Thu Duc City?
– It is the highest mechanism that Ho Chi Minh City can do for Thu Duc City. Ho Chi Minh City does not need the budget of Thu Duc City, but needs the spread from the success of Thu Duc City.
The development goal of a city is not just a budget, but much broader than that. That Thu Duc City can create vitality and vitality for Ho Chi Minh City. If keeping 50% of the budget and the city does not develop, it will not do anything.
From the vitality of Thu Duc, it will create the spread of technology, finance, management, skills … that is, it will make the rest of Ho Chi Minh City change flesh. That’s the important thing.
Another important impact is that the success and spread of Thu Duc create new high-level job opportunities and help increase the living standards of the people. And finally the image of Ho Chi Minh City as it becomes the leading place of Southeast Asia and Asia. That is what Ho Chi Minh City should be aiming for.
However, apart from 18% of the budget, it is necessary to give Thu Duc City a mechanism to mobilize other financial resources. With only 18% of the budget, it is impossible to hope to become a breakthrough, pillar or driving force of Ho Chi Minh City.
It should be noted that this policy testing framework is a controlled experiment, within the framework of Thu Duc City and has a time, maybe 3-5 years. At the end of the trial period, it is necessary to evaluate which policies should be continued or extended, and which policies should be eliminated.
– In the process of operating an unprecedented model, with many specific mechanisms such as Thu Duc City, the authorities of Ho Chi Minh City and Thu Duc City, what should be done to ensure the monitoring process, not creating space for participation. Corrupt?
– The important thing is that the Thu Duc City People’s Council must operate effectively.
For example, the proportion of full-time representatives of the People’s Council is not only at the current level of 20-30%, but at least 50% or even 100%, the better. Because when he was in charge, he focused on his work, that really created the control mechanism for the public agency.
This also means that Thu Duc City needs a specific monitoring mechanism. And this oversight is within the city’s capabilities, not asking the Central Government, which of course needs Congress to turn on the “green light.” If only monitoring in the current form will not take effect and even cause conflicts of interest, so corruption cannot be controlled. Secondly, Thu Duc City must have a competitive bidding mechanism or transparent and public appraisal of investment projects, there should be an independent investment appraisal council for key projects.
This is the place that is expected to have many large investment projects. To avoid car traces falling during the construction of Thu Thiem new urban area, it is necessary to have an independent and transparent appraisal council. This approach will help reduce a lot of costs later, even create a harmony with the interests of the people, especially when compensation and site clearance. If only the State as at present, when a conflict occurs, there will be a lack of objective voice of the third party to settle the interests of the parties.
This appraisal board will operate on the budget of the city. But the government must ensure it does not interfere with the council’s decisions, and the council must ensure openness, transparency, and accountability.
Third, Thu Duc city must have an economic court system, or an effective economic arbitration system. For example, now, what law do two disputing foreign investors use?
Or what law does a local government sue by a foreign company?
If using Vietnamese law, it is not certain that foreign investors have come. But with the arbitration mechanism, they can use the laws of other countries. Thus, the conflict will not be pushed up to a too serious issue such as bringing to court, but can be handled more softly, still ensuring the rule of law, transparency and efficiency. I think this is an extremely important requirement, especially regarding intellectual property and financial disputes – extremely complicated things.
It can be seen that the specific mechanism for Thu Duc city depends quite a lot on the decisions of the Central Government. But the important thing is that Ho Chi Minh City has to “save itself” with its dynamism and creativity, and it will be very difficult to just rely on the central government. Fortunately, there is plenty of room for the city to self-improve and reform.
For example, the story of the construction planning of Thu Thiem new urban area was approved in 1996, which is only a few years after Pudong in Shanghai. If anyone ever went to Thu Thiem and Pho Dong in the 1990s and now for a comparison, it is a godsend.
That fact shows that what Ho Chi Minh City needs at the central level is a strong pilot mechanism, after which the city just does its job well, the results will naturally be good, not dependent on resource pulls. Center.
– Thank you Sir.
Source: ndh.vn – Translated by fintel.vn