Hanoi and Ho Chi Minh City: Potential in Vietnam’s Future Sustainable Cities

Vietnam has set goals for sustainable and innovative growth for both Hanoi and Ho Chi Minh City, making them great cities to invest in.check

Ho Chi Minh City (HCMC) and Hanoi, which generate a combined 40% of Vietnam’s GDP, are both set to become sustainable cities. As part of the Vietnamese government’s plan to make them the first two smart cities in the country, multibillion-dollar projects are underway.

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  • Smart city implementation for Ho Chi Minh City started in 2017 and is now in its second phase. The Ho Chi Minh City People’s Committee and Korea’s Lotte Group came together to start a nearly two-billion-dollar eco-smart city in Thu Thiem New Urban Area.
  • Hanoi’s goal for 2030 is to become a green, smart, and modern city with quick and sustainable growth throughout the next decade. Nhat Tan-Noi Bai is being developed into an advanced and sustainable area with over four billion dollars from Vietnam’s BRG Group and Japan’s Sumitomo Corporation.

Vietnam’s Melting Pot: Ho Chi Minh City

Ho Chi Minh City hosts a population of 9 million (over 9% of the national population) and is the biggest city in Vietnam. It is in the center of the HCMC Metropolitan Area, home to over 20 million people. The city is experiencing rapid population growth and economic expansion. Since the city serves as Vietnam’s financial and economic center, it continues to draw immigrants from neighboring provinces and countries.

HCMC accounts for 23% of Vietnam’s GDP and 20% of foreign direct investment. Moreover, the city has witnessed a jump in private businesses due to the country’s transition from a socialist to an open market economy.

Challenges for HCMC’s Development: Infrastructure

Ho Chi Minh City (HCMC) is currently dealing with several problems brought on by severe overpopulation and the consequent land usage issues (the two most significant of which are inadequate mobility and flooding). These issues are proving to have detrimental effects on the prosperity and economic progress of the city.

  • Public Transportation: Currently, only 4% of city locals use buses, making public transportation underutilized. Instead, they rely heavily on motorbikes for their day-to-day transportation, as bikes can be parked easily anywhere in the city and are convenient for door-to-door services.
  • Floods: HCMC is heavily impacted by climate change. The city’s 45% area is less than 1 meter above sea level. Significant parts of the city are exposed to flooding, causing damage to key infrastructure regularly. Canals and drains built in the French era to mitigate flooding need to be enlarged to meet the demand of the expanding population.
  • Database Management: The drains and canals database has not been updated frequently, and numerous documents have also been lost or damaged. This has led to significant gaps in the database’s information.

Ho Chi Minh City’s Future

As mentioned above, HCMC has completed the first phase of its smart city initiative (2017-2020) with a focus on four key aspects:

  • Quang Trung Software Park’s public database and data ecosystem in District 12
  • HCMC People’s Committee (District 1) as the center of operations for the smart city
  • Socio-economic predictive research center
  • HCMC Information Safety Center Operation JSC, formed as a public-private partnership

The second phase, lasting from 2021 to 2025, will receive VND 2.76 trillion in funding and includes international connectivity to the shared medical expertise of 12 countries.

Previously, a revised master plan to guide the city’s growth through 2025 was adopted by the People’s Committee of Ho Chi Minh City in 2010. The following are the highlights:

  • New transportation routes and future expansion options
  • Solutions for the expanding population that take into account historical and easily flooded areas
  • Promotion of economic development opportunities in satellite cities outside of the metropolitan center of HCMC
  • Emphasis on a dependable public transportation infrastructure that enables an effective commuting network

Historic Bustling Capital City: Hanoi

As Vietnam’s capital, Hanoi holds a significant geographic and political position. The city’s industrialization and modernization have accelerated and matured going into the 21st century. Moreover, the city has made remarkable progress in economic development and urban infrastructure. However, the city also faces various significant environmental issues.

From 1960 to 2013, Hanoi experienced rapid development in multiple socio-economic indicators:

  • Newly built-up areas of residential housing increased by 99.48%
  • Industrial establishments increased by 97.75%
  • Electricity per capita increased by 93.75%

Challenges for Hanoi’s Development: Pollution

According to a recent poll, the capital city of Vietnam is one of the least environmentally friendly cities in the world. Hanoi, ranked 98th in the 2018 Sustainable Cities Index, performed poorly compared to its Southeast Asian counterparts, Kuala Lumpur (67th), Bangkok (80th), and Singapore (4th). As of 2022 rankings, however, Hanoi has moved up 13 places.

Hanoi’s poor performance was attributed to worsening air quality and a lack of green space. Factors like ongoing construction projects, growing automobile and motorbike fleets, and heavy industry, including steel mills, cement plants, and coal-fired power plants around the capital city, have all contributed to the air pollution in Hanoi.

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The 7.7 million people living in the city own over 5 million motorcycles and 550,000 automobiles. Despite a 4.6% annual increase in private vehicles, the amount of land designated for transportation projects has only grown at a rate of 0.4%.

As a result, private vehicles make the largest contribution to the city’s poor air quality. According to a report released by the Green Innovation and Development Center (GreenID), the capital only had 38 days of clear air in 2021.

Hanoi’s Future

By 2030, Hanoi is expected to become a green, modern, and smart city. With a Gross Regional Domestic Product (GRDP) per capita of USD 36,000 by 2045, the city will likely achieve sustainable economic, cultural, and social development.

Hanoi’sushed for the creation of a smart city to address the following issues:

  • Rising population density
  • Contracting operational capacity in healthcare, education, and transportation
  • Shortcomings in the development of housing and urban areas
  • Energy security concerns
  • Environmental pollution
  • Enhance the quality of life for its residents, and
  • Instill more human values in the community.

Hanoi’s government has developed a roadmap for building a smart city consisting of three phases.

  1. Phase I (2018-2020): Under Phase I, the city focused on building the foundational elements of a smart city: infrastructure, databases, e-government, and integrated online public systems and services.
  2. Phase II (2020–2025): During the current phase, the government will be focused on finishing up its smart systems and developing a digital economy.
  3. Phase III (after 2025): By 2030, Hanoi will be transformed into a smart city with elements of a knowledge-based economy.

Key Takeaway

The government and private vendors are working together to successfully enable smart city technologies in Ho Chi Minh City and Hanoi. These are the first two of the 33 Vietnamese cities and provinces already implementing smart city programs to simplify city management processes and improve the quality of life in urban areas.

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Thanh (Tim) Ta

Tim Ta is the Head of the Business Consulting Department of Incorp Vietnam. He is a seasoned professional with more than 6 years of consulting experience in Vietnam for market entry, incorporation, and real estate investment.

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