(Mr. Phung Xuan Minh, Chairman of the Board of Directors of Phat Thinh Group & Saigon Ratings).
August 24, 2026 marked a significant turning point in the process of perfecting the institutional framework for urban development when the 16th National Assembly officially passed the Law on Urban Development, with 465 out of 474 participating delegates voting in favor. The law comprises 5 chapters and 66 articles and will take effect on October 1, 2026. Notably, for Ho Chi Minh City, the law not only expands the scope of decentralization and delegation of power but also creates a legal basis for the city to proactively mobilize financial resources for investment and development in the medium and long term.
One of the notable new features is that the Ho Chi Minh City People’s Council has been granted additional authority related to issuing bonds and raising capital from domestic and international financial institutions. Specifically for the International Financial Center in Ho Chi Minh City, the Law allows the City People’s Council to regulate the issuance of municipal bonds and project bonds to raise capital for key projects. This could become a crucial link connecting the enormous infrastructure investment needs of a megacity like Ho Chi Minh City with domestic and international capital markets.
However, greater access to capital also means higher demands on fiscal discipline, debt management, project quality, financial transparency, and the credibility of the Ho Chi Minh City government. These factors will determine whether the new operating mechanism can truly translate into long-term capital at a reasonable cost for Ho Chi Minh City’s development.
URBAN DEVELOPMENT LAW: A STEP FORWARD INTOTERNOON FOR HO CHI MINH CITY
The National Assembly’s adoption of the Urban Development Law should be viewed within a broader policy process, rather than merely as the enactment of a single law. In recent years, a system of strategic orientations and specific mechanisms for Ho Chi Minh City has continuously been developed, from Resolution No. 31-NQ/TW, Resolution No. 98/2023/QH15, mechanisms concerning an international financial center, to Resolution No. 09-NQ/TW dated May 19, 2026, of the Politburo on building and developing Ho Chi Minh City in the new era.
Resolution 09 identifies Ho Chi Minh City as continuing to play the role of a leading growth engine, a development hub, and an important innovation hub for the whole country; it also requires promoting decentralization and delegation of power, and building synchronous, breakthrough, and outstanding mechanisms and policies. In the period 2026–2030, the city aims for a minimum GRDP growth of 10% per year; by 2030, the average GRDP per capita will be at least US$14,000, the digital economy will account for approximately 40% of GRDP, and about 200 km of urban railway will be completed.
At the local level, the Resolution of the First Congress of the Ho Chi Minh City Party Committee for the 2025-2030 term sets targets for average annual GRDP growth of 10-11%, average GRDP per capita of approximately US$14,000-15,000 by 2030, total social investment averaging 35-40% of GRDP, TFP contribution to growth reaching 60%, and the digital economy accounting for 30-40% of GRDP. These targets clearly indicate a need: Ho Chi Minh City requires a significantly larger scale of investment resources in the coming period.
In this context, the Urban Development Law creates an important institutional layer by shifting strongly from a “request-and-grant” model or piloting individual mechanisms to a broader framework of decentralization, with the motto defined by the law’s drafting body as “local authorities decide, local authorities act, and local authorities are responsible.”
A key point to note is the shift in the relationship between decision-making power and financial responsibility. As Ho Chi Minh City gains greater autonomy in investment, capital mobilization, planning, and the development of new economic spaces, it simultaneously bears greater responsibility for the efficient use of capital, debt repayment capacity, and the sustainability of public finance. This forms the basis for considering the new role of the municipal bond market within Ho Chi Minh City’s overall development strategy in this era of national progress.
Ho Chi Minh City needs a mechanism to mobilize capital commensurate with its new scale of development.
Following the administrative boundary reorganization, the new Ho Chi Minh City has an area of 6,772.59 km² and a population of over 14 million people, as stipulated in Resolution 202/2025/QH15. The city’s economic space now encompasses a central urban area, industry, seaports, logistics, finance, services, high technology, and marine economy.
According to figures presented at the First Congress of the Ho Chi Minh City Party Committee, the size of the city’s economy after consolidation is approximately 123 billion USD, equivalent to 23.5% of the national GDP; GRDP per capita is over 8,900 USD, about 1.7 times higher than the national average; the digital economy contributes over 25% of GRDP and budget revenue accounts for more than one-third of the total national revenue.
The large scale of the economy simultaneously entails a huge demand for infrastructure investment. In the medium and long term, Ho Chi Minh City is projected to require substantial capital resources to support the robust development of its urban rail network, ring roads and strategic transportation arteries, TODs (Transit-Oriented Development), seaports, logistics, digital transformation, energy infrastructure, wastewater treatment, environmental protection, flood control, high-tech zones, free trade zones, and an international financial center.
The target of approximately 200 km of urban railway by 2030, as stipulated in Resolution 09, alone demonstrates the significant demand for medium and long-term capital. If the entire investment needs rely primarily on annual budget revenue and traditional public investment, the potential for further development may be limited by the capacity and progress of budget revenue collection, the ability to balance capital, and the allocation cycle of public investment.
Therefore, a city with an increasingly large economy needs to develop a more multi-tiered urban finance model, including: the state budget, public investment, PPP investments, bank credit, domestic and international capital markets, and resources from exploiting the added value of land and infrastructure. Within this structure, bonds are particularly significant because they are a tool capable of converting long-term capital from investors into long-term investment resources for infrastructure.
Therefore, the Urban Development Law could bring about significant changes: Ho Chi Minh City will not only be a locality allocating budgets but will also gradually have the conditions to become a large-scale capital mobilization entity in the capital market.
BREAKTHROUGH: EXPANDING HO CHI MINH CITY’S AUTHORITY TO RAISE CAPITAL AND ISSUE BONDS
One of the most noteworthy aspects of the Urban Development Law for Ho Chi Minh City lies in its financial and investment mechanisms.
According to the published information on the Law, for the International Financial Center in Ho Chi Minh City, the City People’s Council is authorized to issue municipal bonds and project bonds at the Center to raise capital for key projects. At the same time, the Ho Chi Minh City People’s Council is granted additional authority to decide on the issuance of various types of bonds and borrowing from domestic and international financial institutions to raise capital for investment projects, while ensuring compliance with public debt safety indicators.
This is a point that needs special attention. The nature of this mechanism is not simply that “Ho Chi Minh City can borrow more.” More importantly, it opens up the possibility of diversifying the capital mobilization structure. Instead of relying too heavily on short-term capital or budgets accumulated annually, the City can gradually and proactively design instruments with maturities that are more compatible with the lifecycle of infrastructure projects.
An urban railway line, a logistics center, a wastewater treatment system, or a major transportation infrastructure project all have economic lifecycles spanning decades. In principle, using medium- and long-term capital to finance long-term assets creates a better maturity match.
At the same time, bond issuance can broaden the investor base beyond the banking system, including long-term investment institutions, insurance companies, investment funds, and in the long term, potentially even international institutional investors, depending on the legal structure and implementing guidelines.
However, it is important to emphasize that the right to issue bonds does not equate to unlimited capital raising capacity. The law has established the principle of ensuring public debt safety indicators. This shows that the use of bonds must still be considered within the overall context of national fiscal management, the ability to balance local budgets, and debt repayment capacity.
The key to success, therefore, lies not in how many bonds Ho Chi Minh City can issue, but in its ability to establish a disciplined, transparent urban capital mobilization market closely linked to project quality. If this is achieved, bonds could become one of the city’s strategic financial instruments in this new phase of development.
