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Old July 5th, 2009, 01:40 PM
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Default LED - Case Studies: Haiphong, Vietnam

This document analyzes the city of Haiphong, Vietnam, using the five step local economic development (LED) strategy approach. The Haiphong project has a LED strategy that aims to increase the city’s economic position, livability, bankability and manageability. This case study analysis is based on three strategic city development documents and is referenced below.
Step 1: Organizing the Effort by Developing a Management Team and Partnership Network
  • Cities that are successful in this visioning and strategic planning process share a common denominator: meaningful participation of neighborhood groups, NGOs, private sector, women’s groups and others;
  • City managers tap into public opinion and mobilize community support; neighborhood-scale improvements require community interaction;
  • Development assistance agencies need to coordinate assistance to support comprehensive urban development in Vietnam; and,
  • Assistance agencies support local governments to integrate various sectoral concerns of urban development.

Step 2: Doing the Local Economy Assessment; SWOT
  • The two cities of HCMC and Haiphong are economic powerhouses and produce 70 percent of the nation’s GDP; both regions are growing almost twice as rapidly as the nation as a whole.
  • Human resources include:
    • Strong inflow of migrants, particularly young women (parallels a decline in older male, city-born workers);
    • Region has the highest population density in the country;
    • Highest literacy rate; and,
    • Relatively high proportion of young workers.
    • Haiphong is an important industrial center; industrial employment peaked at just under 40 percent of the city’s industrial workforce.
  • Transportation:
    • In the 1990s, Haiphong’s port was the second largest cargo handler in Vietnam and is the largest port in the north. However, the port had severe problems with handling charges and capacity; and,
    • An airport exists but is underutilized.
    • Three universities to attract outside consumers.
    • 21 hospitals, healthcare centers and sanatoria, employing some 3,000 staff.
    • Tourist-areas of archeological and religious importance are located around the city and an area of great natural beauty is situated in the north eastern area of Huyten Thy Nguyen.

  • City departments are overstaffed and core functions are underserved. This hinders effective service delivery;
  • Governmental services are not geared towards the need of voters and taxpayers. They are supply-based and are not demand-driven;
  • Weak public administration: The city’s bureaucracies operate under obsolete regulations. Private sector investors often have to pay unauthorized fees and charges;
  • Infrastructure is underdeveloped by contemporary Asia standards: business and commercial activities that provide services to the city and its region are not fully developed;
  • City center has a mix of uses, such as industrial, port residential. City center does not operate at allocative efficiency (commercial and services are of higher value);
  • Haiphong’s financial sector is small for a city of its size;
  • Constraints of central planning, i.e. land allocation influenced by central planning controls;
  • Overcrowding and congestion;
  • Resource allocation and planning at the city level gives little weight to demand for small scale improvements;
  • Current labor force work excessive hours at very low rates of pay;
  • A lack of up-to-date information on tradable services within the country makes it difficult to speculate on future possible growth sectors.

  • Increase in export-led light manufacturing;
  • Relocation of manufacturing enterprises to the periphery of the urban area and beyond affects light labor ( and is ideally suited to rural conditions);
  • Haiphong has some of the largest concentrations of the poor, so a program on rural industrialization could have a considerable effect in terms of reducing poverty.

  • Heavy industry is subject to closure in competitive conditions;
  • Continued containerization of the port facilities makes for increased demand for space for container stacking and handling;
  • State Owned Enterprises (SOEs) are characterized by aging machinery and outdated technology and SOEs face increasing competition;
  • Environmental problems are small, but many and diffused; there are concerns regarding air quality of the Haiphong Cement plant and nearby glass factories. There are also potential problems with congestion and vehicular pollution;
  • There may be problems of developing on previous dump sites because of the uncertainty about previously dumped materials and substances.

Important Data:
  • The urban population in Vietnam will more than double 1990 levels to reach 45 percent by 2020;
  • Increase in urban residents of more than 30 million people;
  • In 1990s the shoe production expanded from half a million to 6.7 million; the shoe industry expanded from 1 percent of the city industry labor force in 1975 to nearly 20 percent in 1995.

Note: Haiphong’s city economy is affected by inner city sites and port or manufacturing sites. The manufacturing and container packing and unpacking facilities are in rural regions and industrialized towns and villages. This suggests Haiphong will become increasingly specialized in the provision of services to the Red River Delta and the corridor to Hanoi. Services ranging from legal to repair and maintenance will make the city a logistics and management center, initiating and mediating the relationships between distant suppliers and buyers of manufactured goods and of traded services between foreign and domestic markets (see Harris, p. 6).

Step 3: Creating the LED Strategy
Vision & Goals:
  • 1 Economic Development and Strengthening the Local Economy
    • Help advance national economic development, by employing cities as more efficient engines of economic growth;
    • Cities concentrate on areas of comparative advantage; cities build on their own strengths and play a stronger role in advancing national economic development;
    • Territorial specialization: the development of a Central Business District, areas of hotels, restaurants, shops, etc;
    • Cities compete to attract foreign investment.
  • Livable Cities or “Livability”
    • Urban development as a program of improvement for individual cities and towns to allow them to adjust to economic change while improving their own economic performance and improving living conditions in shelter, transportation, services and the environment;
    • “Small bricks” approach to development-focusing attention on neighborhood scale infrastructure;
    • Improve property transaction systems to help establish robust real estate markets;
    • Alleviate poverty through job creation and income generation;
    • Integrate environmental concerns into the strategic planning process for cities to safeguard sensitive coastal zones, national heritage sites, and culturally and environmentally sensitive areas;
    • Improve communications and infrastructure (especially power) and rural credit schemes; and,
    • Improve infrastructure (via urban upgrading) & promote policy reform in areas of property rights (titles, transfers, land use controls).
  • Finance or “Bankability”
    • Increase fairness, efficiency and sustainability; improve and increase financial sector;
    • Cities should rationalize tax bases and rely more on own-source revenues;
    • Provide financial and technical assistance for shelter and supporting community.
  • Government and Management
    • Fettered Autonomy: separation of powers within government.
    • Demand based governance: Local government must be demand-based and subject to wider participation and accountability:
    • The city should function with greater autonomy in interpreting the needs of citizens.
    • Deliver services and infrastructure to meet these needs.
    • Collect taxes and fees to finance them.
    • Carry out these functions in an open and transparent way.
    • Be held accountable for the results.
    • Administrative accountability and competitiveness:
    • Department heads to have a relationship to voters and taxpayers.
    • Act efficiently.
    • Take initiative to cut costs and deliver services.
    • Seek greater efficiency and improve productivity, shed extra staff.
    • Increase incentives and scope of action at local level;
    • Strengthen professional qualifications of rank and file city workers and modernize management and budgeting systems;
    • Decentralization of administration and finance (pre-condition for the development of Special Economic Zone);
    • Achieve greater equity and formula-driven transparency in intergovernmental revenue sharing.
  • Rural Development-Create a mutually beneficial economic relationship
    • Generate activity in adjacent regions to decrease levels of rural poverty;
    • Create a city that provides services to a much wider geographic region-service a major part of the rural North;
    • Make the urban-rural relationship mutually beneficial, through expanded service delivery, and not competitive;
    • Strengthen linkages to rural areas: Improve farm-to-market road access, increase management of multi-modal transit, and supply credit to small business;
    • “The Economic Development of Haiphong”: Villages demand on remittances and urban markets depend upon rural produce and manufactures-increase in rural productivity through the provision of large and growing markets for rural output; the city provides services for the country side-health, education, culture.
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Step 4: Implementing the LED Strategy
LED Program Options:
  • Encouraging Local Business Growth
    • Develop tradable services: tourism, banking, finance, culture and other branches and services to support growing exports;
    • Expand the current development strategy for the city to include ways to support small scale city-building.
  • Encouraging New Enterprise
    • Supporting the growth of light manufacturing industries which are exporting garments and shoes through the development of hard infrastructure (see below “small bricks”).
  • Investment in Hard Infrastructure
    • Understand what is involved in the development of intermodal transport system;
    • Understand how other cities have set about redeveloping former industrial and port areas, different methods of planning and administration and of financing such projects;
    • Development of three zones: one north of the Cam River; a second, to the east of the city near Dinh Vu; and the third south toward Cat Bi Airport:
    • Ambitious investment program to supply major pieces of infrastructure.
    • Estimates at more than $1 billion needed for large scale new towns and satellite cities, industrial parks, cross town transit connections, and the Binh bridge across the Cam river, and the special economic zone.
    • Technical assistance to create the institutional capacity to plan and implement a “small bricks” approach of small scale neighborhood improvements that will ultimately support export growth and smooth the way to a service-based economy:
    • Paving of neighborhood streets.
    • Completing road connections.
    • Improving water and drainage.
    • Upgrading downtown areas.
  • Investment in Soft Infrastructure
    • City should produce a statistical yearbook to inform the city authorities, the city inhabitants, potential foreign investors and aid agencies of vital data so that stake holders are well informed regarding the economic outlook of the city;
    • Technical assistance is needed on the expansion and development of a financial services sector;
    • Strategic plans for city development;
    • Participatory approaches in governance;
    • Speeding up development of property and real estate transactions;
    • Incorporating environmental dimensions into local and regional plans;
    • Increase financial and fiscal incentives to improve local government performance in finance;
    • Create a business council of local and regional figures, with international consultants, to develop an action plan to modernize the city as a business environment.
  • Area Targeting
    • Geographic focus of the urban development program for high marginal returns in the short run: 1.) deltas of Ho Chi Minh City and Haiphong; 2.) the central development triangle around Da Nang and selected intermediate cities and towns; and 3.) the Border with China.

Step 5: Reviewing the LED Strategy
  • Assistance from donor agencies would be contingent upon achieving progress in reforms.
  • Haiphong will need to upgrade its planning tools and data to have successful planning and regulatory controls.

  • Campbell, T. (1998). City Development Options for Haiphong: Charting a Path to the Year 2020, Draft Full Report, Urban Partnership, TWU, 30 July.
  • Campbell, T. et al. (1999). "A Tale of Two Cities in Vietnam: Towards a Strategy for Growth, Poverty and Environment in the Cities and Regions in Vietnam”. September.
  • Harris, N. (1998). "The Economic Development of Haiphong." June.
(Source: World Bank)
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hai phong

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