Author:
D-o^~ Muo`i vie^'t ta('t la` DM
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Date Posted: 22:50:18 02/13/08 Wed
Vietnam's rapid economic growth - - -
Vietnam's rapid economic growth has earned the country
international plaudits, but at a Hanoi street market
most people complain that it is becoming harder every
month to make ends meet.
The reason for the sour mood is rampant inflation,
especially in food prices, which in January surged by
22 percent year-on-year.
Consumer prices overall spiralled upwards by more than
14 percent, the largest rise since 1995, according to
the state-run General Statistics Office, in an
increase that has outpaced wage rises and hit the poor
the hardest.
"I have to get by on a modest salary," said teacher
Nguyen Thi Lien, 40, pointing with dismay at a
butcher's stand where a kilogramme (2.2 pounds) of
pork has gone to 80,000 dong (five dollars) from
50,000 (three dollars) in just two months.
"These steep price increases really affect my family
spending," she said. "Now I have to think carefully
about what to buy when I go shopping."
Le Thi Man, a 31-year-old accountant, said her family
of five has skipped the habit of starting the day with
a streetside bowl of pho noodle soup.
"One bowl of pho a few months ago cost 10,000 dong,"
she said. "Now it's 15,000. Some places charge 20,000
or even 40,000 dong. Now I cook at home instead. I've
just bought a box of instant noodles."
Jonathan Pincus, the UN Development Programme's chief
economist in Vietnam, said: "The problem is serious
because of the very large part that food makes up in
the budgets of poor people in Vietnam.
"It's probably forcing some people back into poverty."
Communist-ruled Vietnam -- a World Trade Organisation
member for the past year -- aims to run a "market
economy with socialist orientation" and is especially
sensitive to public anger over rising prices.
The spiralling costs of food, petrol and other basic
goods have fuelled labour unrest, mostly among workers
at Taiwanese and South Korean textile and shoe
factories around southern Ho Chi Minh City.
In the year's first 20 days, more than 25,000 workers
went on strike at nearly 40 plants demanding better
pay and conditions, said the Saigon Times.
Vietnam has in some ways become the victim of its own
success.
Optimism about the nascent "tiger economy" that grew
at 8.5 percent last year has fuelled foreign
investment -- with 20 billion dollars more pledged
last year -- a cash influx that has driven up prices.
As state enterprises have part-privatised, a stock
market boom had fuelled urban wealth before declining
in recent months. Investors then shifted their money
into gold and real estate, sending property prices
skyrocketing.
The boom has also fuelled bank lending, which grew by
over one-third last year, leading the government to
raise the reserves that banks must keep, and to hike
interest rates to slow credit growth and cool the
economy.
The galloping prices have also been driven by high
world energy prices, which the government now passes
on to consumers at the pump, and the stronger yuan in
neighbouring China, from where Vietnam imports many
goods.
High food prices worldwide have been blamed in part on
higher biofuel and livestock production, trends which
reduce the land area available for crops.
"Vietnam has liberalised its rice market, which means
the domestic price follows the international price,"
said Pincus.
"The government is now finding that this is risky
because, unlike Indonesia and Malaysia, it does not
have any buffer stocks for when prices go up."
In Vietnam, food prices have also been driven up by a
series of typhoons that battered farms last summer,
and animal health disease outbreaks such as blue-ear
pig disease and bird flu in poultry, said Pincus.
For rice, the UN economist said: "The main factor is
the increase in energy prices. Nitrogen fertiliser is
a major input. It is a byproduct of gas production, so
as energy prices go up, the cost of rice goes up."
The other major inputs -- labour and land -- are
becoming more expensive too, he said, as hired workers
demand more money in the Mekong delta, Vietnam's rice
basket, and more rice paddies are being turned into
factory land.
MINH 70/2
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