~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Gap grows between Vietnam's haves and have-nots

HO CHI MINH CITY - Up until recently, economists saw no great difference in individual incomes in Vietnam - as could be expected in a socialist country. But now a report released by the National Center for Social Sciences and Humanities (NCSSH), in cooperation with the United Nations Development Program (UNDP), says there is a fast-growing gap between haves and have-nots in this country of 78 million people.

"This trend presents a potential future social challenge for policy makers in Vietnam," says Robert Glofcheski, a senior economist with UNDP Vietnam. New UNDP resident representative Gordon Ryan also says that the emerging challenge for Vietnam today is to maintain equality. "The rising gap between rich and poor should not be considered a necessary evil to help enhance economic growth because the ultimate goal of development is people's overall well-being, " he says.

Before the report's findings were made public recently, the country's officials had been confident that if Vietnam's so-called "inequality rate" was growing at all, it was doing so slowly. After all, surveys conducted by the General Statistics Office in 1993 and 1998, using expenditure data, showed that during this period, the Gini coefficient increased slowly and modestly from 0.330 to 0.357. (In using the Gini coefficient, zero represents perfect equality and 1 perfect inequality.) But the new report says that Vietnam's Gini coefficient has risen from 0.350 in 1995 to 0.410 today, just above the level of China, which has a Gini coefficient of 0.404.

Economists here note that these numbers not only prove that income and development disparities have jumped significantly in Vietnam, but also that this country appears to be reaching such inequality much more quickly than China. This has taken place even as Vietnam was posting strong economic growth in the past decade. Indeed, from a country that found it hard to feed its growing population some 10 years ago, this Indochinese nation has developed into the world's second-largest rice exporter. Living standards have also improved tremendously.

But economists remark that the growth could be better if the gains had been shared more evenly across different groups in the population and geographical regions of the country. According to these experts, while the growth has benefited rich and poor alike, those who were well off to begin with ended up with more gains. In 1999 alone, the richest 20 percent of the population earned 7.3 times as much as the poorest 20 percent.

Between 1995 and 1999, 31 of Vietnam's 62 provinces have also seen income inequality increase by 10 percent. In the meantime, there were only nine provinces with inequality narrowed slightly over this period. The wealth gap is more noticeable between urban and rural areas, as well as between major cities and remote towns. In truth, while the urban population has enjoyed consistent economic growth since 1998, farmers' incomes have been greatly affected by continuous natural calamities and price fluctuations.

"Each year, we must buy fertilizers and chemicals at higher prices and sell our rice cheaper and cheaper," grumbles Le Van Nam, a 48-year-old farmer in Dong Nai province. "People become richer in Ho Chi Minh City while us farmers become poorer and poorer." The gains enjoyed by the urban population, however, are not limited to such things as increased income per capita. Other development indicators such as school enrollment, life expectancy, the unemployment rate and access to basic social services show that in many urban areas, residents are doing better in other areas than their compatriots in the countryside. Economists further point out that places with better human development indicators can only benefit more from economic growth. In other words, things can only get better for the people in these areas.

Says NCSSH deputy director Do Hoai Nam: "High human development tends to lessen inequality. The higher human development is, the less severe is inequality." Economists, though, say economic gains do not automatically translate into improved human development. In the Mekong Delta provinces, for instance, a majority of the population have seen an increase in their incomes in the past several years, while keeping the gap between rich and poor there at a minimum. But all of the residents in these places still suffer from inadequate provision of clean water and basic sanitation and remain highly vulnerable to natural disasters and market fluctuations.

Still, they are better off than those living in less developed provinces such as highland provinces of Kon Tum in the center, and Lai Chau and Lao Cai in the north. Both economic development and human development are low in these areas and their rich and poor share the burden of dismal basic education and sanitation, primary health care and infrastructure, as well as obsolete means of production. Vietnamese policy-makers now think that by promoting both economic development and human development, they will gradually narrow the gap between rich and poor. But they also realize that the varying circumstances from province to province mean fashioning different policy approaches for each area. That is why in the major cities of Hanoi and Ho Chi Minh City, the focuses are on boosting production, protecting the environment and fighting "social evils".

In contrast, in the remote regions - central and northern highlands, Mekong and Red River deltas - official efforts are geared more toward developing off-farm activities and convincing people to adopt hygienic practices.

By Tran Dinh Thanh Lam - Inter Press Service - April 10, 2002