This area, in the making since 2017, would combine three of the southern metropolis’s eastern districts into one innovative hub. City authorities had said then that the plan would generate a bright future for both local residents and businesses. It would encompass the hi-tech park in District 9, the university precinct in Thu Duc District and the new urban area and financial center on the Thu Thiem Peninsula in District 2.

But the Construction Ministry has thrown a spanner into the works, saying there is no precedent in the country to establish "a city inside a city" by combining three districts.

Responding to an April letter from city authorities that asked for the ministry’s feedback on steps to implement this plan, it also said that there was no legal framework to establish such an area.

It noted that the resolution on preferential mechanisms and policies aimed specifically at developing HCMC, approved by the National Assembly in 2017, does not have any regulation on setting up a city inside a city.

The ministry also said that while HCMC has been planning on developing the innovative and highly interactive urban area in the eastern part, it has not made clear if there is a general urban plan for it and whether such a plan has been studied and approved.

Furthermore, in a master plan to develop the city until 2025 that the government approved in 2010, there is no mention of such an innovative urban area, the ministry noted.

Meanwhile in its latest move, the city had this week set up a steering committee with 22 members headed by Chairman Nguyen Thanh Phong to oversee building of the "innovative urban area."

As HCMC planned it, the "Eastern Town" would be spread over more than 22,000 hectares (54,300 acres) with a population of over 1.1 million.

The city expected that this innovative and highly interactive hub would thrive from already existing pillars – the hi-tech park where 13 groups are operating on an area of more than 1,000 hectares, the university precinct with 18 universities, and the Thu Thiem new urban area and financial center, which is being built on an area of 657 hectares.

Chairman Phong said earlier that the town would not only boost the city’s economy but also that of the southern key economic zone, which comprises HCMC and the localities of Dong Nai, Binh Duong, Ba-Ria Vung Tau, Binh Phuoc, Tay Ninh, Long An and Tien Giang. The zone acquired significance in the context of the nation becoming part of the Fourth Industrial Revolution, referred to commonly as Industry 4.0.

The new area was also expected to contribute to the establishment of value added chains based on high technology, modern technical and social infrastructure of international standards, and effective financial support for businesses.

It was to play a key role in linking scientific and technical research with commercial production to boost residents’ lifestyle to international standards.

At a 2018 meeting, the city's Party chief Nguyen Thien Nhan had said if the city fails to connect the three districts of 9, 2 and Thu Duc, it will be unable to turn startup ideas into reality, which would be a huge waste of public resources.

"This will be Vietnam's Silicon Valley," Le Van Thanh of the HCMC Institute for Development Studies had said at that meeting.

The "innovative urban area" was part of a plan to turn the country’s largest city into a smart city by 2020. Its ambition was to use scientific advances to resolve the problems the city faces, including rapid population growth, unsustainable economic growth, inadequate forecasting, planning and management, inadequate healthcare, education and public transportation, pollution, and inefficient public administration.

The city said it was studying the use of artificial intelligence to help achieve its goals including the establishment of the "city within the city."