If the city can funnel remittance into infrastructure projects, it can greatly boost its socio-economic development. - VNA Photo

HCM CITY - HCM City could issue bonds for overseas Vietnamese to buy to fund the city’s infrastructure projects, a conference on channeling remittance into infrastructure heard.

During the conference held by Sài Gòn Giải Phóng Newspaper on April 23, Tăng Hữu Phong, editor-in-chief of the paper, said that HCM City aims to become an economic, financial and service hub of Asia, but its infrastructure bottlenecks are hindering the city’s development.

The city has been making an effort to alleviate issues such as traffic jams, overloaded hospitals and old apartments, but the lack of funds and policies to mobilise funds for infrastructure investment remain big challenges. Bùi Xuân Cường, deputy chairman of HCM City People’s Committee, said that the city’s fund allocation from the central government and its own budget are not enough for the city’s planned infrastructure projects.

Representatives from the city’s departments and authorities highlighted their respective difficulties with funding for projects such as social housing, canal renovation and urban railway construction.

Cường said that HCM City sees remittance as a bountiful and consistent source of funds. Remittance into the city is higher than foreign direct investment, such as in 2023 when remittance reached US$9.46 billion, three times higher than FDI.

If the city can channel remittance into traffic infrastructure, education, healthcare and other areas, it will be a big boost for the city’s socio-economic development, he said.

Dr. Nguyễn Trí Hiếu, an economic expert at the conference, said that remittance into Việt Nam is mostly used for spending and investing into real estate, industry and agriculture.

There are around 5.5 million overseas Vietnamese around the world, with an average income of $20,000/year. 98 per cent of them are in 21 countries in North America, Europe, Southeast Asia, and Northeast Asia.

In 2023, remittance to Việt Nam reached around US$16 billion, he said, adding that there is potential for more remittance into the country.

He said that in the past, overseas Vietnamese would deposit dollars at banks in Việt Nam to get interest, but over the last couple of years, paid interest rates for dollar deposits have been at 0 per cent, so most of them have not been doing that.

HCM City should look into issuing bonds for overseas Vietnamese in countries with high populations of high-income Vietnamese. These funds could be used to sponsor important projects and contribute into the city’s development.

A pilot sale could be carried out with around $100 million worth of bonds to test the water, and a more detailed bond issuance roadmap could be created later.

This requires the city to be transparent, especially on which projects are directly supported by which bonds, how debts are repaid, and possible risks. For instance, when people buy bonds in the US, their banks clearly state where the debt repayment source comes from, such as businesses or collateral assets.

Credit ratings can also be utilised, as investors often rely on credit ratings to know whether a bond issuer can repay debt or not. Việt Nam can use domestic and international credit rating companies for this task.

Vũ Thị Huỳnh Mai, head of the HCM City Committee for Overseas Vietnamese, said that the committee is working on a "Remittance Policy in HCM City for 2023 - 2030" project, which aims to funnel remittance into infrastructure, production and businesses.

One of the project's key solutions is remittance bonds, while other solutions to attract remittance include strengthening dissemination and assistance to improve the skills of Vietnamese workers abroad.

In the first quarter of 2024, remittance into HCM City reached nearly $2.9 billion, a 35.4 per cent rise year-on-year, the highest amount seen in the first quarter over the last three years.

HCM City also vows to improve its investment climate and implement more investment channels for overseas Vietnamese to safely invest in. - VNS