Vietnam�€™s capital Hanoi is proposing a master plan to develop the city and also plug the migration into the city, a plan which may have severe repercussions on the informal sector which enters the capital every year. The law is expected to be approved this month when Hanoi celebrates it 1000 years of existence. No other capital in Asia and arguably across the world has attempted such a law which would potentially deride the city of over half its population. 

The current population of Hanoi is 6 million and it is expected to cross 9 million by 2030. The law named the Draft Capital Law has been proposed as the city lacks the proper infrastructure to support the growing influx of migrants. If implemented, the law aims to tighten permanent residency regulations in the capital city by asking residency applicants to hold a legal job with a salary double the regulated minimum wage in order to gain official residency status. It also makes it mandatory for people to have legal accommodation in the capital or hold temporary residency continuously for at least five years. The current requirement is one year.

The monthly minimum wage in Hanoi�€™s urban districts is now USD53.08 and is the main attraction for workers as Hanoi, along with Ho Chi Minh City, attracts the most number of workers from rural Vietnam. These wages, however, will not be doubled anytime in the next few years and hence will lead to many people being evicted from the city, as per the clause set in the draft law. Minimum wage labourers account for around 10% of the city�€™s population and hence the implementation of this law could affect the livelihood of 600,000 people. This number will cross the one million mark as there are several people who earn a little above USD53 and much less than USD106.

Around 71% of the poor population of Hanoi resides in the outer suburbs, traveling into the city for work. If the law is enforced, these people will be forced to leave the city and the next few decades will see an increase in pressure on Ho Chi Minh, Vietnam�€™s most populous city.  The urban population of Vietnam will cross 46 million by 2030, up by 20 million in 2010. If the country�€™s capital itself becomes an unfavourable place for rural migrants to search for work, then the pressure on other smaller cities will increase. There are no definite plans to develop such cities to cope with migration demands in the next few years. The implications of such strict rules and evictions could easily lead to a huge rural-urban divide, as opportunities for rural works will be severely stunted and this may lead to class-based tensions and conflicts.

On the other hand, the law could result in the overall development of the capital which is under tremendous pressure due to the growing rural-urban migration. The city would witness necessary developmental investments and strengthening of urban infrastructure. The draft law will also initiate the development of areas around the city, which includes plans to build gardens and libraries. With the GDP growth rate of Hanoi expected to be approximately 8% between 2020 and 2030, this surge in investment into the city will enable the capital city to compete with some other major Asian capitals. 

The draft law, if implemented in its current format, will open a Pandora�€™s Box and set an unnecessary precedent for various South Asian capitals. There are many conflicting reports in the local Vietnamese press regarding its real structure and hence one cannot be sure of how the event will pan out. This, however, doesn�€™t decrease the gravity of the whole situation. Several of the South and South East countries are speeding up the ladder of development and this race often pushes the ruling powers to draft laws which look excellent on paper but are devastating when implemented. Though the intentions of a city like Hanoi are reasonable - any capital city would like to support a population which is manageable and not a burden, the law in its real format will see a huge part of the city population pushed outside the city. As I mentioned in my article last month, Asian countries are already facing a future where the class divide will increase further and such laws will only exacerbate this gap, thereby increasing the chance of class-based conflicts.