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Symposium 2014

Proposal - Sustainable Urban Development for the Future: Example of Phu My Hung New City Center in Ho Chi Minh City, Vietnam

The Challenge

Projections say that by 2050, the world will have undergone the largest and fastest period of urban expansion in human history. The urban population is estimated to double, while at the same time, the ...

Projections say that by 2050, the world will have undergone the largest and fastest period of urban expansion in human history. The urban population is estimated to double, while at the same time, the total urban area is projected to triple. City dwellers in emerging and developing countries, and their resource-intensive lifestyles, are increasingly going to create challenges in supporting many aspects of daily life. More urban dwellers require more resources such as water, land, food, and energy. These increases in demand put pressure on natural ecosystems in supporting cities. In addition, climate change, rising sea levels, or extreme weather events pose additional threats to cities. Infrastructure failure, such as electricity grid disruptions, flooding, diseases, and large-scale pollution, are some of the potential consequences.

Harvard Business School estimated that “by 2050 the number of people living in cities will have nearly doubled, from 3.6 billion in 2011 to more than 6 billion.” What is the right solution? And what is a sustainable urban development model for the next “500 or more new cities” around the world?

“For centuries, urban settlements evolved slowly.” “But that era is over. Now as billions of people abandon subsistence farming for cities of the information age, the unprecedented scale and pace of urban development make it essential for the private sector to drive the coordinated creation and expansion of new cities.” The 11-page article in the July-August 2013 edition of Harvard Business Review explored various concepts and developments.

In the end, John Macomber of Harvard Business School selected Phu My Hung (also known as Saigon South) project of Ho Chi Minh City, Vietnam as a leading example. “The model of Phu My Hung, where thoughtful, long-term-oriented, private-sector actors help the world to create efficient water, power, and transit solutions, can-and must-be replicated.”

From Taiwan to Vietnam: “It Is Not Important What We Take Away, But It Is Important What We Leave Behind”

25 years ago when our company first went to Vietnam from Taiwan, Vietnam faced an inflation rate of 370%, high unemployment, and economic sanctions such as a US led trade embargo. How to assist Vietnam in its transformation from a mostly agrarian economy to a member of the world economic community where knowledge and innovation drive growth was central to our minds. We devised a set of three infrastructure projects to transplant the Taiwanese economic growth experience to Ho Chi Minh City, Vietnam.

Investing in Infrastructure to Jump Start Job Creation

Job creation was the initial focus to serve as a catalyst for growth. We introduced to Vietnam its first export oriented light industrial free-trade zone, Tan Thuan Export Processing Zone. From 1991, this joint venture with Ho Chi Minh City government has attracted 150 manufacturing companies from 15 countries and generated 65,000 jobs for the local economy. Over time companies coming to our zone transitioned from labor-intensive industries such as textiles, toys, food processing to precision machine parts, automotive parts, electronic components and medical devices. The knowledge and skill content of workers have increased significantly.

However as industrialization progressed, Vietnam soon faced electricity shortage in the mid to late 1990s. 500 power outages a month in Ho Chi Minh City was not uncommon. To address this issue, we invested in the first 100% foreign owned power company in Vietnam, Hiep Phuoc Power Company. Our plant came on line in 1997/1998, just in time to help stabilize the electricity grid. Lights no longer flickered as our plant was connected to the national grid. Stable supply of electricity enabled the economy to continue to industrialize and to generate more job opportunities. Vietnam flourished in the process and stepped on to the world stage with its accession to WTO in 1997 and signing of a Bilateral Trade Agreement with the United States in 2000.

Total export value from Tan Thuan reached US$ 2.1 billion in 2013. Net export value reached half a billion USD, significantly bolster foreign exchange reserve of State Bank of Vietnam. Latest entries to Tan Thuan included multinational and local companies in the fields of semiconductor testing, I/C design, data center, on-line gaming, an engineering center and biotech.

Education, Key to Knowledge Based Urban Development

The final project of the trio infrastructure ensemble was a southward urban expansion plan for Ho Chi Minh City. In this joint venture with the city government, we chose schools as the initial thrust to develop this new city center. The very first projects in Phu My Hung development were two schools: Saigon South People Founded School for Vietnamese nationals and Saigon South International School for children of foreign expatriates. Soon governments of Japan, South Korea and Taiwan set up their own consulate schools within Phu My Hung. In the nearby areas, Royal Melbourne Institute of Technology of Australia and Ton Duc Thang University of Vietnam then set up their campuses, as did Singapore International School, ABC International School and Renaissance International School. Most recently Canadian International School opened in Phu My Hung. We also set up the non-profit Lawrence S. Ting School for Vietnamese students and it became the first school in Vietnam to establish an innovative education partnership with Microsoft.

Virtuous Cycle to Help Creating a New Middle Class

From a piece of swamp land with no road access, no water nor electricity, the Phu My Hung development grew as residential neighborhoods, hospitals, shopping mall, trade and exhibition center, office towers were developed. Following the master plan, each new development addresses a new need within the urban fabric and reinforces previous ones. Today 50,000 people from 40 countries live in our city center area. Approximately 10,000 service sector jobs have been generated as 40 bank offices, hundreds of restaurants and shop fronts opened. Multinational such as Manulife and Unilever, and locally companies such as Vinamilk and FBNC cable television financial news channel also relocated their corporate headquarters to Phu My Hung. As more and more service sector jobs are created, local entrepreneurs started professional education schools for working adults in foreign languages, computing and other professional skills. A constant exchange of new ideas and concepts by people living and working in Phu My Hung is beginning to generate more innovation and growth. Nearby neighborhoods have also been transformed as we share our best practices with others. Most importantly, since local Vietnamese own nearly all residential units, a new middle class has emerged as they see the value of their housing stock appreciated over time.

Hearts and Minds of the People: Projecting Social Responsibility

We have operated under the motto of “it is not important what we take away, but it is important what we leave behind.” How to inspire our residents to do the same and contribute more to the society was a question that we began to work on in the last 10 years. The answer we found was frequent engagements and participation. 8 years ago we began with the first Lawrence S. Ting Memorial Charity Walk, a 4 km walk in memory of our company founder that raises money for the poor each year before Tet, the lunar New Year. 3,000 people came and joined the walk the first year, then 5,000 the next year, 8,000 the following year. The number of participants grew to 13,000 to 15,000 people in the last 5 years. We work with Canadian Consulate General to help host its annual Terry Fox Run for cancer in Phu My Hung. We partner with British Business Group and a British NGO to host BBGV Annual Charity Run and Saigon Cyclo Challenge respectively. We work with Ministry of Natural Resources and Environment for its Walk for Environment, with Samsung for its Hope Relay, and with the Ministry of Labor, Invalids and Social Affairs for its Charity Walk for the Disabled. Each year we help host a memorial concert for Vietnamese musician Trinh Cong Son. Our annual Children’s Day and Spring Flower Shows are typically attended by nearly 12,000 people and half of million people respectively. During these events we would often ask people to take a minute out their busy schedules and think if there is somewhere in the society that they can be helpful.

Creating a Sustainable, Knowledge-based New City Center

In the last 25 years, with job creation, education and infrastructure investments, we have, with the assistance and guidance of the government of Vietnam, build a new urban center as part of Ho Chi Minh City. We have increased the knowledge content of products produced in the area, increased the skill set of workers in both manufacturing and service sectors, fostered the growth of leading education institutions, and facilitated hard working Vietnamese nationals to create a better future for themselves and their families. The city center has transformed from a collection of inorganic buildings to a self-guiding sustainable organic community that will continue to grow and prosper. Our work thus far is rather limited in comparison to the infinite possibilities that our Vietnamese residents and partners will create and innovate as time goes on.

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