They are living in makeshift houses along Ong Lon, Ong Be, Can Giuoc, Ben Nghe, Doi Canal, Xang, and Ruot Ngua canals.
More than 1,500 houses are located entirely over the water, with many water areas being severely polluted, the plan approved last week by city chairman Nguyen Van Duoc said.
Besides clearing those houses, 36.5 km of water will be dredged and embankments will be built together with the development of green spaces and public areas.
The entire work is expected to cost over VND105 trillion (US$4 billion), with the money coming from the state budget. But the city will generate a matching amount by auctioning the land reclaimed after the relocation and also building commercial housing for sale.
HCMC currently has 40,000 houses along canals, with District 8 having the highest concentration.
The city hopes to basically relocate all their occupants by 2030.
Since 1993 the city has relocated more than 44,300 families living along canals and cleared their dilapidated houses, renewing the urban landscape and creating a new look for many places along canals such as Nhieu Loc - Thi Nghe, Tau Hu - Ben Nghe and Tan Hoa - Lo Gom.