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NEWS UPDATES Asean Affairs           11   August  2011

Vietnamese income gap widens

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The gap between Vietnam's rich and poor widened 9.2 times last year, according to recent General Statistics Office data.

The agency's 2010 Survey on Household Living Conditions reported that the personal average income among the rich came to VND3.4 million (US$165) while the number was VND369,000 ($18) among the poor. In general, the average per capita income last year stood at VND1.387 million ($67.5) per month.

The GSO's recent findings confirmed "what everyone has already felt," said Kenochi Ohno, research director at the Ha Noi-based Japanese think tank Viet Nam Development Forum.

"Viet Nam is rapidly becoming more unequal, mainly due to the fact that policy capability has not caught up with the new realities of a market economy and increased globalization," he added. Viet Nam's Gini-coefficient, which measures how wealth is distributed, rose to 0.43 in 2008, a number generally considered as an inequality "warning", the report said.

The rich and poor also differ in terms of spending power, the spending gap in healthcare measured at 3.8 times, while that for education was 6 times and 131 for culture, sports and entertainment.

According to professor Ohno, the largest cause for the rich-poor gap lies in the asset sector rather than in the annual flow of income. While workers, house renters and recent migrants to the city continue seeing their wages and salaries eroded by inflation, long-term urban residents have been able to reap huge profits from the "real estate casino."

"If you happen to own a house or land in Ha Noi or HCM City, you're a winner," Ohno said. "Urban people without assets, especially migrant workers from the countryside, are the losers. Their rent and living costs are skyrocketing and their living standards are falling sharply."

Nguyen Tien Phong, head of the Inclusive and Equitable Growth Team at the UNDP in Viet Nam, said that the situation calls for a raise in the level of "inclusiveness" within the country's economic growth model. This would entail providing equal access to social services and having appropriate mechanisms set in place for the redistribution of assets and incomes, among others.

"It's even more appropriate if one considers the goal of development not only in terms of GDP growth, but also people's welfare," Phong said.

"Economic growth is not enough, equal opportunities in terms of jobs, access to social services and better welfare are all important factors influencing people's happiness and quality of life."

Valerie Kozel, a senior economist at the World Bank in Viet Nam, said that findings have simply reaffirmed that poor households, mostly in rural and mountainous areas, are not progressing quickly enough.

"The government needs to look more carefully at what factors are driving rising inequality and also at how to ensure more rapid progress among poorer households in the future," she said.

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