HCMC seeks to retain surplus revenues to fund metro rail network

HCMC wants to retain the entire amount of money it could have in excess of its budget revenue targets in 2026-30 to fund its metro rail network.

This is one of five funding sources the southern metropolis plans to use, it said in a report recently sent to the Ministry of Finance.

It will need an estimated US$37.45 billion by 2035 to complete six metro routes spanning a total of 183 km.

The city said the funding required for the metro construction is substantial, meanwhile the budget allocation it receives under the current system is insufficient.

In Vietnam, public funds are allocated to localities from the state budget based on factors like population, economic development, and infrastructure needs. The Ministry of Finance oversees this process, ensuring less developed regions receive adequate support. Each locality gets a specific amount to fund public services such as infrastructure, education, and healthcare, with the aim of promoting balanced growth and reducing regional disparities.

Therefore, additional funding through other channels is needed.

It includes retention of all revenues that exceed projected annual targets.

Currently the city’s revenues are divided into three categories: revenues that are fully transferred to the central government, such as import-export taxes; those shared with the government, such as corporate income tax (79% to the central government and 21% to the city); and those that are entirely retained by the city, such as land-related revenues.

HCMC is seeking to keep the surpluses in the second category.

The government sets an annual revenue target for the city, but the city often exceeds it by a few percentage points. Currently the surpluses too are shared in a 79-21 ratio.

For years now HCMC has been topping the nation in terms of revenues and contributions to the central budget besides also often exceeding its targets.

For instance, in 2021 it had an overall revenue target of VND364.9 trillion (US$14.7 billion) but collected over VND381.53 trillion.

In 2022 the VND471.56 trillion it collected represented 121.99% of the target.

This year the target is VND482.85 trillion, and it had collected VND371.307 trillion in the first nine months, again remaining on course to go past the target.

Earlier this month city chairman Phan Van Mai urged the public to buy bonds to finance the metro network.

He said the city is authorized to issue « metro bonds » and expressed optimism people would buy them to support the project.

It plans to carefully assess land use along the metro routes and weigh the economic and social benefits to ensure lucrative returns for those who invest in the bonds, he said.

The metro master plan includes eight routes and three monorail lines covering approximately 220 kilometers.

Currently only metro line No.s 1 (Ben Thanh – Suoi Tien) and 2 (Ben Thanh – Tham Luong) spanning more than 30 kilometers are under construction, and they are funded by official development assistance loans.

Line No.1 is expected to begin operation later this year.

The remaining are still in the planning stages.

By Le Tuyet – VnExpress.net – October 14, 2024