Vietnamese not only lack savings but are forced to borrow money to even meet their daily spending needs according to research.

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The problem was tabled by Dr. Nguyen Ho Phi Ha from Academy of Finance and Dr. Bui Trinh from Vietnam Institute for Development Studies at a conference on the country’s economy last year and opportunities for 2018. Ha and Trinh used statistics from the General Statistics Office of Vietnam to analyse the country's economic development during 2015-2016 period.

The two economic experts had used input-output tables of various sectors to calculate that incomes from manufacturing accounted for 53% of the GDP. The average GDP per capita in 2016 was USD2,188, up 25% compared to 2012. But the average income per capita from manufacturing only increased by 1.2%, from USD860 to USD870.

"The economy depends on FDI and Vietnam didn't benefit much from it," they said in their study.

Meanwhile, the average monthly spending of Vietnamese people in 2016 was VND2.6m (USD114) while the average monthly income was VND2.4m. This shows that a large number of people have to borrow money for daily living costs and many people don't have savings. The two experts said this was a dangerous sign which showed that a high GDP index was meaningless to Vietnamese people.

According to Ha and Trinh, Vietnam receives USD10bn of remittances annually but the amount used for investment was only USD1.2bn to USD1.5bn. 

The gap between the rich and the poor is also increasing. The income of the 20% richest people is at least 10 times higher than incomes of the 20% poorest people.

Spending by high-income earners do not have much effect on the economy compared to spending by the huge numbers of low and average-income people. Lowering the gap between the rich and the poor must be considered as important as GDP growth. Vietnam needs more policies focused on improving people’s living conditions, not just aimed at businesses, they said.

Dtinews/vietnamfinance