Economic Boom Makes Some Vietnamese Uneasy
STEVE INSKEEP, host:
The prime minister of Vietnam has meetings in Washington next week. That's one more piece of evidence of growing ties between two former enemies. Some of those ties are economic, and Vietnam's dramatic economic growth has changed many people's lives in the past decade. The trouble is that growth is now threatened as NPR's Michael Sullivan reports from Hanoi.
MICHAEL SULLIVAN: On the face of it, the boom is still very much on. Hanoi's skyline dotted with cranes for new office buildings and pricy new condos that Vietnam's nouveau riche often pay for up front in cash.
(Soundbite of cranes moving equipment)
SULLIVAN: But for the construction workers who build the condos, and for many other ordinary Vietnamese, things are bad and getting worse in a hurry.
Ms. NUEN TI VIEN(ph) (Vietnam resident): (Vietnamese Spoken)
SULLIVAN: Nuen Ti Vien, 37, says the gap between the rich and poor is widening, that wages for people like her aren't keeping pace with inflation now running at a staggering 25 percent. The price of everything in the market is up, she says, and after paying for food and for school supplies, there's nothing left. Steelworker Chun Duk Tong(ph), 29, agrees.
Mr. CHUN DUK TONG (Vietnamese Steelworker): (Vietnamese Spoken)
SULLIVAN: Chun says he's stunned by the cost of food, up 40 percent over a year ago. And even though he takes home about $120 a month, more than twice as much as his coworker Nuen, he says he's worse off today than he was a year ago. Many middle-class Vietnamese are feeling the pinch too after putting their savings into Vietnam's sizzling stock market last year, then watching it plummet more than 60 percent since January.
Mr. JONATHAN PINCUS (Senior Country Economist, United Nations Development Program, Hanoi): Vietnam is having a very difficult year.
SULLIVAN: Jonathan Pincus is senior country economist for the United Nations development program in Hanoi. He says soaring prices for food and fuel worldwide are partly to blame. So too is the record amount of foreign capital flowing into the country and a trade deficit that's tripled in the last year. Some economists say the government has been slow in dealing with the problem many saw coming.
Mr. NGUYEN QUANG NGOC (President of the Institute of Development Studies, Hanoi): They say they were over confident.
SULLIVAN: Nguyen Quang Ngoc is president of the Institute of Development Studies in Hanoi.
Mr. NGUYEN: In the past, the policy was too concentrated on the number, on the economic drought, and they didn't pay attention very much on quality of drought.
SULLIVAN: Nguyen Quang Ngoc says Vietnam's government focused too much on hitting its growth target of eight percent a year, and not enough on underlying issues such as the trade deficit, inflation, and public spending. The U.N.'s Jonathan Pincus.
Mr. PINCUS: I think in the short term, it's probably going to get worse before it gets better unless the government takes the next step and really decides to do what's necessary in the short term no matter how painful that may be.
SULLIVAN: Pincus says that means dealing with the issue of Vietnam's politically powerful state owned enterprises, some of which seem to treat Vietnam's state owned banks as their personal ATM machines.
Mr. PINCUS: Until we get control over that, until the state owned enterprises are reined in a bit, it's going to be very difficult to find a monetary solution to the problem. In other words, you could continue to raise interest rates, but if the state owned enterprises are still getting cheap credit, then all you will succeed in doing is killing the private sector while the state owned enterprises continue to invest in a wide range of activities.
SULLIVAN: Nguyen Quang Ngoc says the government still has time to correct the problem and retain the legitimacy it's earned during more than a decade of rapid economic growth. But a wave of strikes over the past year by workers demanding raises to help offset soaring food prices are a powerful reminder that the people may not be prepared to wait indefinitely.
Mr. NGUYEN QUANG NGOC: It could bring in Vietnam, the youth to suffer, and they aren't patient. But if you were misuse that mentality of the Vietnamese people, it can be a big tumor, social tumor - it can be very dangerous.
SULLIVAN: Michael Sullivan, NPR News, Hanoi.
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