HCM City, Shanghai and Jakarta compare experiences in municipal finance

Oct 9, 2006

HO CHI MINH CITY - “Ho Chi Minh City needs to find news ways to finance infrastructure development and service delivery to meet the needs of a growing urban economy,” said Mr Nguyen Huu Tin, Vice Chairman of the Ho Chi Minh City People’s Committee at the opening of an executive symposium on “Comparative Study of Municipal Finance in Ho Chi Minh, Shanghai and Jakarta” held today in Ho Chi Minh City.

The symposium presented new research on city finance conducted by Harvard University’s Kennedy School of Government. Experts from Viet Nam, China and Indonesia joined Harvard scholars to produce the report. 

Jay Rosengard of Harvard, the lead author of the study, said that comparing financing in the three cities produced useful suggestions for all three countries. “We were not looking for best or worse practices, but rather different experiences that might help us to understand the situation in each city better, and to provide ideas that could be adapted to the specific needs of each place,” he said.  

The symposium was organized by the Economics Research Institute of Ho Chi Minh City in collaboration with the Fulbright Economics Teaching Programme (FETP) and the United Nations Development Programme (UNDP). The FETP is a joint programme of Harvard University’s Kennedy School of Government and the University of Economics University, Ho Chi Minh City.

Rosengard stressed the need to link revenue collection in Ho Chi Minh City to comprehensive land use and transport strategies. “Rationalization and consolidation of current taxes and charges on land and buildings into a viable annual property tax would help create a more sustainable local revenue structure.”

Participants also discussed vehicle related charges like registration fees and road charges. Shanghai introduced auctions for new automobile license plates to raise revenues and limit the number of new cars on the city’s streets.

Dr Tran Du Lich, President of the Institute for Economics Research, said that the rights and responsibilities of local government should be spelled out more clearly, and monitoring strengthened. “Decentralization in this way can be extended to help cities meet rising demands for infrastructure and services,” he said.

“There are tremendous opportunities for the countries of East Asia to share experiences and lessons across a wide range of public policy issues, not least decentralization of government finance, authority and service delivery,” said Jonathan Pincus, UNDP’s Senior Country Economist. “Now that Viet Nam is poised to achieve middle income status, the country must accelerate that process of developing the institutions of a modern market economy. Designing decentralized structures that allow local authorities enough flexibility while also promoting national standards of fairness and equity is a major challenge.”

The research report, once finalized, will be published by the Institute of Economics Research and UNDP.

Dr Li Du, Associate Professor of Economics at Fudan University, Shanghai, said that in recent years personal income taxes and enterprise taxes have increased rapidly in China. However, the central government is retaining a larger share of these taxes.

The Indonesian delegates to the symposium were Mr Katjatmiko, a senior official of Indonesia’s Ministry of Finance, and Mr M. Yusuf Bachrudin of the Jakarta Regional Planning Board.

The research and symposium received financial support from the Department for International Development (DFID) of the United Kingdom, under the UNDP-DFID Strategic Partnership Initiative.

Contact informationMichael Coleman, Tel: (84-4) 942-1495 x161
email: michael.coleman@undp.org

or Nguyen Viet Lan, Tel: (84-4) 942-1495 x186 
email: nguyen.viet.lan@undp.org

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