VietNamNet Bridge – Vietnam’s gross domestic product (GDP) per capita has reached US$1,890, or a tad lower than US$1,960 estimated by Prime Minister Nguyen Tan Dung at the recent Vietnam Development Partner Forum.

“The higher GDP per capita is due to GSO revising up the add values of the banking sector as well as the added value from the segment of housing developed by residents,” Tuyen told reporters.

After the revision, the banking sector in 2013 accounts for 5.36% of GDP compared to only 1.82% calculated for 2012. Meanwhile, the added value of the housing segment by residents accounts for 3.96% of GDP, he said.

However, Tuyen said, “the GDP per capita in terms of the U.S. dollar is high because we peg the local currency to the greenback. If the exchange rate were also revised in line with the inflation rate, then the GDP per capita would be different.”

Tran Dinh Thien, head of the Vietnam Economy Institute, further explained that GDP per capita is high because the exchange rate almost stays put while inflation is high.

“The fact that the exchange rate is anchored is in fact a serious problem as it distorts the country’s economic structure,” Thien said.

According to GSO, Vietnam’s GDP per capita is US$1,890 this year compared to US$1,749 last year, US$1,517 in 2011, and US$1,273 in 2010.

However, the GDP does not reflect the actual wealth of the economy, according to GSO.

The statistics agency explained that Vietnam often highlights GDP while ignoring the gross national income (GNI), which is the real growth after deducting the amount of capital that foreign invested enterprises remit back to their home countries.

The difference between GDP and GNI was VND82.25 trillion in 2010, VND119 trillion in 2011, VND142.7 trillion last year, and VND171.3 trillion this year. Such figures indicate that foreign-invested enterprises have remitted a sizeable amount of foreign currency to their home countries over the past few years.

Source: SGT