Ho Chi Minh City has the lowest budget retention rate of all cities in the world, and this should change, its chairman says.
In the 2016-2020 five-year period, Vietnam’s largest city has been allowed to keep just 18 percent of its annual revenues and submit the rest to the national budget.
“This is the lowest ratio in the world,” municipal Chairman Nguyen Thanh Phong told the media on the sidelines of a city legislative council meeting last week.
With a 30 percent retention, Tokyo of Japan ranks just above HCMC, and the highest belongs to Oslo, the capital of Norway, at 60 percent, Phong said.
As the nation’s commercial hub and biggest moneymaker, the city is working on a detailed plan to ask for permission to raise the retention ratio to 24 percent in 2021-2025, and 33 percent in 2026-2030, the ratio the city was granted back in 2003.
This is needed for the city to ensure its stable development and continue to play its role as the nation’s economic locomotive, making the biggest contribution to the national budget, Phong said.
Including migrants, the megacity is currently home to 13 million people and is among the 20 percent of localities in Vietnam that can cover their own expenditures and contribute to the national coffers.
For decades now, it has been the country’s largest moneymaker and assigned the highest state budget collection target.
Last year, it earned more than VND378 trillion ($16.3 billion) in budget revenues, up 8.6 percent from 2017.
This year, it is expected to make VND412 trillion ($17.8 billion), roughly 27 percent of the national figure.
The latest estimation is 3.3 percent higher than the target.
Its target of VND400 trillion ($17.29 billion) for this year was 1.1 times higher than those of the remaining four federal municipalities, Hanoi, Hai Phong, Da Nang and Can Tho, put together, which is VND365.9 trillion.
The respective budget retention ratios for Hanoi, Hai Phong, Da Nang and Can Tho for the 2016-2020 period are far above that of HCMC, at 35, 78, 68, and 91.