Building a Resilient Thu Duc: How Coordinated Investment Could Lift GVA 65 Percent by 2040

Flood resilience, innovation zones and better transport could raise Thu Duc’s GVA by about 65% over business as usual by 2040, with flood mitigation emerging as a major driver of broader productivity and investment. The study urges governments, development partners and investors to combine climate resilience with land reform, housing, public services and infrastructure to unlock inclusive, long-term urban growth.

Ho Chi Minh City's ambition to transform Thu Duc into a major centre for innovation, technology, finance and advanced manufacturing will depend on much more than flagship infrastructure projects. A World Bank Group study by its Urban, Disaster Risk Management, Resilience and Land Global Department, supported by the Swiss Confederation through the State Secretariat for Economic Affairs (SECO), finds that Thu Duc's estimated productivity is only around one-third of the Ho Chi Minh City average, while its residential amenities are roughly two-thirds of metropolitan levels. The findings suggest that flooding, connectivity gaps, land-development constraints and weaker urban services are collectively preventing the area from reaching its economic potential.

The study uses a Spatial Computable General Equilibrium model covering 116 geographic cells across Greater Ho Chi Minh City. It examines how businesses choose locations, where people live and work, how land is developed, and how transport and flood exposure influence productivity. Under a business-as-usual trajectory to 2040, Thu Duc is projected to have around 1.02 million residents, 530,000 jobs and gross value added (GVA) of about US$13.9 billion.

Flood Protection Could Become a Powerful Economic Growth Tool

One of the study's strongest messages is that flooding should not be treated only as a disaster-management problem. Persistent flood exposure can discourage businesses from investing, reduce the attractiveness of neighbourhoods and limit construction and urban density.

The analysis finds that a one-percentage-point increase in flood exposure is associated with around 2.6 percent lower manufacturing productivity and 1.1 percent lower local-services productivity. Residential amenities are also estimated to be around 0.9-1.1 percent lower.

The scale of Thu Duc's unrealised potential is significant. If its productivity and amenities were hypothetically brought to the Ho Chi Minh City average, the model estimates its GVA could reach US$74.7 billion by 2040, compared with US$13.9 billion under business as usual. Employment could reach around 2.16 million and population approximately 3.4 million. The study stresses that this is an analytical frontier, not a forecast or achievable policy target.

For governments, the numbers demonstrate why climate adaptation should be integrated into economic and urban-development planning rather than considered separately.

Innovation Zones Need Climate and Land Reforms to Deliver More

The study first models innovation zones occupying around 8 percent of Thu Duc's land and directly supporting approximately 120,000 jobs. This intervention raises GVA to US$18.7 billion, about 34 percent above business as usual, while employment increases to around 610,000.

However, the benefits remain relatively concentrated around the innovation zones. This suggests that technology parks and innovation districts can stimulate growth but may not be sufficient to transform the wider urban economy.

A much broader impact emerges when flood mitigation is added. Proposed drainage infrastructure, embankments and canal management would reduce the share of Thu Duc exposed to more than 30 centimetres of flooding in a one-in-20-year event from about 29.5 percent to 20.6 percent.

The model associates this improvement with productivity increases of around 21 percent in manufacturing, 16 percent in local services and 12 percent in business services. Residential amenities improve by approximately 10-13 percent.

Thu Duc's GVA consequently rises to US$22.3 billion, about 60 percent above business as usual. Employment reaches approximately 720,000 and population around 1.36 million. About 64 percent of the US$8.3 billion local output gain represents net new metropolitan production, while the remainder reflects activity moving from elsewhere.

Transport and Housing Will Decide Who Shares the Benefits

Adding improved transport connectivity pushes Thu Duc's GVA to approximately US$23 billion, 65 percent above business as usual. Employment reaches around 750,000, population rises to 1.46 million and daily commuter flows increase from about 850,000 under BAU to 1.19 million.

Transport produces relatively modest additional measured output beyond flood mitigation, but delivers wider benefits through shorter journeys, improved accessibility and a larger labour market.

Land policy is equally important. The flood-mitigation scenario requires about 12 percent additional floor space. If development is restricted, the economic gains weaken. Under the hypothetical frontier, constrained floor-space development could reduce Thu Duc's potential GVA from US$74.7 billion to US$63.8 billion—almost US$11 billion lower.

There is also an inclusion risk. High-skilled residents could see real per capita income around 3.3 percent above BAU under the cumulative scenario, while low-skilled residents experience a roughly 0.6 percent decline as higher land rents increase living costs. Affordable housing, accessible transport and inclusive land policies will therefore be important to prevent economic transformation from pricing vulnerable households out of growth areas.

A Coordinated Investment Strategy Offers the Strongest Path Forward

For policymakers, the central lesson is that innovation, flood resilience, transport and land development should be planned together. The combined realistic package raises Thu Duc's GVA by about 65 percent over business as usual, but still brings the area to only around 31 percent of the study's hypothetical US$74.7 billion frontier.

International development partners therefore have an opportunity to move beyond narrowly designed climate projects. Financing flood resilience alongside transport, land management, housing, utilities and public services could generate wider productivity and development benefits.

For private investors, opportunities could emerge in resilient real estate, manufacturing, logistics, technology, construction and urban services. But returns will depend on government action on flooding, infrastructure and land regulation.

The study ultimately shows that infrastructure can unlock major growth, but cannot transform Thu Duc alone. Long-term progress will also require better education, healthcare, utilities, public services, land governance and urban planning. For fast-growing and climate-vulnerable cities, the broader lesson is clear: resilience spending can become development investment when it is connected to a coordinated strategy for jobs, productivity and inclusive urban growth.