Several years of economic trouble, with a weak outlook for improvement,
have made life increasingly difficult for many Vietnamese, as VIR's Thanh Dat
reports.
In the piercing cold at sunset,
cho nguoi - the labourers market - next to Hanoi National University was in
full swing. Hundreds of people were squatting, standing or even lying on the
ground. As darkness approached everyone was still waiting and hoping for work.
Nguyen Van Hoi was among them.
The 35-year-old coiled himself for warmth inside a thin coat, waiting for
someone to choose him from the crowd. He wanted to earn some cash as he had
been unhired since the morning.
After arriving from northern Bac
Giang province to Hanoi two years ago, Hoi quit eating breakfasts. "I have
to save money. The price for a loaf has doubled from VND5,000 to VND10,000 ($0.24-0.48),
while my family's income depends on my hands," he said, showing rough,
calloused hands.
His sole labour tools include a
shovel and two bamboo baskets loaded on a rusty bike.
Standing next to him was Pham
Bich Van, a blue-collar worker from Hanoi's Bac Thang Long Industrial Park. The
28-year-old woman would catch a bus to come back to her "nest"
meagerly furnished with a wardrobe, a gas cooker and a wooden box containing
her belongings.
"I have to catch buses to
save money," said Van who earns VND2.5 million ($120.1) monthly. "My
familiar food is tomatoes and tofu, which are cheap. I don't dare to spend much
as I have to monthly send money to my home in Thai Nguyen province," said
Van who earns VND2.5 million ($120.1) monthly."
In Vietnam, it is easy to find
such people like Hoi and Van struggling to keep their life afloat amid economic
woes, though the government recently reported that Vietnam's average per capita
income has grown from $145 in 1992 to $1,500 in 2012.
Quality or quantity?
Pham Hong Chuong, an economic
expert from Hanoi National Economics University, said at a conference on
Vietnam's macroeconomy in early February, 2013 that the government appeared to
be pursuing a new economic growth model, in which quality would be focused much
more than quantity featured by growth figures.
Growth figures considered to be
rather high over the past five years, he said, failed to reflect a better life
for many people.
"The numbers of poor people,
especially those in big urban areas, are increasing, but their opportunities in
access to high quality education and health services or to good jobs remain
limited," Chuong said.
The United Nations Development
Programme in Vietnam calculated that only 15.2 per cent of Vietnam's total
public investment was currently spent on social services and 7.7 per cent on
governance, compared to 77.1 per cent for economic growth-related purposes.
Since 2006 the government and
localities have found ways to reach their economic growth targets, which are
mostly double digits. As a result, all resources had been mobilised to spur
growth.
Economic expert Pham The Anh said
over the past decade, Vietnam witnessed an average annual growth rate of 24.9
per cent in money supply and an average annual growth rate of 19.3 per cent in
public investment.
"This means the government
has over-loosened its fiscal policy to reach the economic growth target of 6-7
per cent and a single-digit inflation rate," Anh said. "In other
words, Vietnam has used money as an administrative measure to buy its
growth."
However, the government's
loosened policy did not mean all local production could absorb the giant volume
of cash pumped out into the economy by the government. Local production had
weakened, with 52,000 enterprises going bankrupt or stopping operations last
year, according to the Ministry of Planning and Investment's statistics.
Meanwhile, the state-owned
economic sector has been criticized for performing poorly, making a big dent in
the state coffers. For instance, the National Steering Committee for Enterprise
Renovation and Development in mid January, 2013 reported that local state-run
groups and corporations' total debt within 2012 mounted to over VND1.334.9
trillion ($64.18 billion), equivalent to 47 per cent of Vietnam's gross domestic
product (GDP) last year. Meanwhile, their total profit of was VND127.51
trillion ($6.13 billion) only, down 5 per cent on-year.
"Groups and corporations'
poor performance is also responsible to high inflation and low growth,"
Chuong said.
Danger of decline
According to the university's
economic experts, Vietnam's economy had over the past five years been
undergoing a decline, with a vicious cycle, in which the government's target to
curb inflation in 2008 was shifted to fight against economic decline in 2009,
with some growth recovery in 2010. Still, the government has since 2011 placed
its prime priority on taming inflation and stabilising the macroeconomy.
"At present, the economy is
facing a decline. More exactly the economy is falling into a stagflation,
meaning that the inflation rate has always been far higher than the growth
rate," said economic expert Tran Tho Dat.
"While the growth remains
unstable, high inflation is aggravating people's life."
Statistics from the General
Statistics Office showed that Vietnam's macro-achievements, featured by
inflation and growth indexes, had worsened in the 2007-2012 period as compared
to the 2001-2006 period.
The average inflation and growth
rates were 12.6 and 6.2 per cent, respectively, in the 2007-2012 period.
Previously, the respective rates were 4.9 and 7.6 per cent in the 2001-2006.
Deepak Mishra, World Bank chief
economist in Vietnam, said monetary policies seemed to loosen in Vietnam in
2013 when the government wanted the economic growth and inflation rates of 5.5
and about 6 per cent, respectively.
He said while money supply had
increased [by 20 per cent in 2012] and interest rates had declined, the
liquidity had improved over the past few months. Therefore high inflation might
resurge if the government loosened fiscal and monetary policies too
prematurely.
"The real inflation rate or
the basic inflation of Vietnam stays high at around 11 per cent, a huge
challenge as it will drag down the nation's competitiveness and making people's
life more difficult," Mishra said.
The World Bank and the Government
Inspectorate in February-March, 2012 conducted a survey over 2,600 citizens,
asking them to identify three most serious issues for Vietnam at present. Some
44 per cent of total responses selected cost of living while 21 per cent chose
income and 15 per cent chose jobs.
"There are good reasons to
believe that Vietnamese citizens are increasingly worried about the quality of
growth and not just its quantity," Mishra said.
The government has targeted to
rein in inflation and stabilise macroeconomy for 2013 as top priorities, for
fear of possible inflation resurgence.
But according to the GSO, some 30
provinces and cities nationwide have yet to increase prices of drugs and
medical services. Moreover, the price of power is expected to increase 7 per
cent this year. This will surely push prices of oil, coal and other goods in
the market in 2013.
This also means the life of poor
people like Hoi and Van will continue being under great pressures and can only
hope that the government's macroeconomic policies would provide some relief.
Instinctively, the sole solution
they can take today is to minimize their spending to support themselves and not
become a burden to their families.
Thanh Tung | vir.com.vn
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