The draft resolution, prepared by the city's Department of Construction, would allow authorities to request utility providers to suspend electricity and water services in seven categories of violations.
The measure would apply to buildings constructed without permits, in breach of approved planning or building permits, or on illegally occupied land after owners have failed to comply with written orders to stop construction.
It would also cover projects that require fire safety approval but continue construction without the necessary certification, as well as buildings that fail to comply with approved fire protection designs despite orders to halt work.
Businesses such as karaoke venues and nightclubs that continue operating after being suspended for fire safety violations would also face utility cuts.
The proposal also covers businesses that fail to comply with environmental enforcement orders and buildings subject to emergency demolition orders.
Authorities said electricity and water supplies could only be suspended after organisations or individuals had ignored written orders to stop violations, suspend construction or operations, or implement remedial measures.
The Department of Construction said the proposal aims to strengthen enforcement amid rapid urbanisation following the city's merger with Binh Duong and Ba Ria-Vung Tau provinces.
The enlarged city now covers about 6,796 sq km and has a population of more than 14 million, making it Vietnam's largest local administrative unit.
Illegal construction, land encroachment and fire safety violations remain widespread in HCM City despite regular inspections, with some developers continuing work after receiving stop-work orders.
Meanwhile, existing sanctions, including demolition orders and requirements to restore sites or complete fire safety procedures, had not been sufficient to deter repeat violations.
