Economic Slide

Today I happened to catch the BBC World News Business program, and they had a short but worrying analysis from the studios of the Asia Business Report program, also on the BBC. The fact that inflation up to 25% is no secret, but the report stated this was only matched or beaten in Asia by Sri Lanka and Burma...The report also suggested that Vietnam is in serious danger of having to revalue the Dong by as much as 7,000 to the USD (taking it to 22/23,000 to $1) in order to stabalise the economy and this uncontrollable inflation (not now but sometime in the future).

Here is a link : http://news.bbc.co.uk/1/hi/business/7431195.stm : Although I am not sure if it is the same report I saw, I can't actually get the vid to play from here!

All of a sudden, after years of posturing and confidence and bravado, the wheels are falling off. Banks are unwilling to sell $$$ and the tourist rate is up to 17,500. Stories of construction companies halting work are rife, with cost of materials now too high to make projects worth completing. Government money that was probably earmarked for much needed infrastructure projects around the country -- trains, bridges, roads -- may now need to be spent on funding vital imports. The situation is the same as in many countries such as India for example, where world oil prices are driving up fuel and food therefore raising the cost of living. In Malaysia the government recently announced it was halting all fuel subsidies, meaning price increases of 40%.

Life is getting tougher for millions of people across Vietnam right now, and possibly this is the time that the facade of development (in my opinion) in this country is exposed. A recent Thanh Nien report debated the validity of the poverty line - calculated at 16% living below the minimum average monthly income per capita of $16.1 in urban areas (http://www.thanhniennews.com/commentaries/?catid=11&newsid=38688). And that is for families. I fail to see how a family living with $17 a month is NOT living in poverty, the other problem as pointed out by TN is that the statistics were calculated for a set 5 year period beginning 2006 and ending in 2010, and not taking into account the rate of inflation! As wages in Vietnam are hardly tied to inflation, obviously the figures are misleading and the real poverty line is higher than 16%. TN constantly declares that foreign investors are not put off by the situation and continue to be attracted to Vietnam, but this has to be a major concern.

So, a spanner in the works of developing Vietnam. As the government tries to control inflation by curbing the growth rate, the hopes of a developed Vietnam may have to wait a few more years yet. 2020 was my magic year for a big improvement..but let's see what happens in the next couple of years. I am just thankful that I am able to earn a decent salary here and am not directly affected by supermarket/fuel price hikes. Others, ordinary Vietnamese, must well be feeling the pinch.