Middle class adopts capitalism in socialist Vietnam
By Grant McCool
HANOI: The middle classes of the Socialist Republic of Vietnam, as it is formally named, have taken quite well to capitalism.
Whether it is families dining at fancy restaurants, businessmen buying luxury cars or people shopping for vanity items, conspicuous consumption is “in” -- especially in the commercial hub, Ho Chi Minh City, and the capital, Hanoi.
“Vietnam is wealthier than what we believe, but we honestly don't know how wealthy,” said Ralf Matthaes, managing director of TNS market research in Ho Chi Minh City.
“Urban Vietnam has a middle class and, when a country has a middle class, it means it is able to sustain itself for the future,” he added.
TNS research showed that in an average household in the city most still call by its old name, Saigon, people spent 2.5 to seven times more than they said they earned.
Measuring the new wealth of the middle classes is difficult because Vietnam is largely a cash economy and the personal income tax-collecting system is in its infancy.
Those born in the baby boom years that followed the Vietnam War have turned 30, and a group known as the 8X-generation born in the 1980s strive to make their mark as professional choices increase.
In the one-party state, the Communist Party leadership has made clear that as far as the economy goes, there is no turning back. On Tuesday Vietnam became the 150th member of the World Trade Organisation, the biggest capitalist free trade club.
The market-driven economic reforms that helped create Vietnam's middle class will be on view next week to the presidents, prime ministers and senior officials of the 21-member Asia Pacific Economic Cooperation (APEC) forum in Hanoi.
The annual event promotes free trade among its members, but this year it is also an international coming-out party for Vietnam, which was relatively isolated only 12 years ago after more than a century of colonialism, wars and extreme poverty.
The children of the middle class increasingly eat Western food, use mobile phones and the Internet and enrol at international schools that until a few years ago catered almost exclusively to expatriates.
They are sometimes called “cadre kids” -- sons and daughters of couples connected to the elite ruling group or of businessmen whose entrepreneurial skills in the new economy have completely transformed the lifestyle of their extended families.“The rate of change in Vietnam is accelerating beyond even our optimistic assessments,” gushed a Merrill Lynch report in October. “The rise in consumption is nothing short of shocking.”
TNS market researchers found that annual per capita gross domestic product in Ho Chi Minh City households was about $2,400, three times the official nationwide figure of $720 for this year.
Vietnam's gross domestic product grew by an estimated 8.2 per cent this year, second only to China.
In contrast, over 70 per cent of the 83 million Vietnamese live in the countryside and work in agriculture, in some places still struggling to make one dollar a day.
Even in Hanoi, hardy women in conical straw hats are still seen walking all over the city balancing two heavy baskets of cheap fruit and vegetables from a pole hoisted on a shoulder.
“In the past, having a bicycle was a dream already, let alone a motorcycle ... now even farmers go to the field on motorbikes,” said To Vinh from Thai Binh province in the northeast as he shopped for a Honda for his son, a first-year Hanoi university student.
Car sales keep growing, although Vietnam is one of the most expensive places in the world to buy a vehicle with import tariffs of up to 90 per cent.—Reuters
