VietNamNet Bridge – World Bank (WB) senior economist Gabriel Demonbynes on July 8 unveiled at a press conference in Hanoi that the number of super rich in Vietnam has tripled over the past decade.

Additionally, according to global real estate giant Knight Frank, the country had roughly 110 “ultra high net worth individuals” with assets of over US$30 million in 2013, 34 people higher than ten years ago, he said.

According to the best available statistics, as of the end of 2013, Vietnam had 30 millionaires in the securities market with assets of over US$1 million.

The total assets of the top 100 ultra high net worth individuals reached nearly VND71,000 billion (US$3.4 billion). Vingroup President Pham Nhat Vuong remains the nation’s richest person with total assets worth nearly VND20,000 billion, up 15% over last year. Vuong is six times richer than the average millionaire in Vietnam.

However, the WB’s report cautioned that Vietnamese citizens are generally concerned about income inequality in the country. Approximately 80% of people living in urban areas list income inequality as a top concern, while just 50% of rural people list it as a top concern.

East Sea tensions have little impact on Vietnam economy

The World Bank said in its latest report that as Vietnam’s economy has not been affected much by the East Sea tensions, it still maintains its projection that the nation will post growth of 5.4% this year.

The international lender still sticks to its forecast more than two months after China illegally deployed its Haiyang Shiyou 981 oil rig and escort ships well inside Vietnam’s exclusive economic zone and continental shelf.

At a press briefing held on July 8 to release the updated report on Vietnam’s economic development, WB Country Director for Vietnam Victoria Kwakwa said China is the biggest trade partner of Vietnam. The recent incidents between Vietnam and China have resulted in a decline in Chinese visitors to Vietnam and affected the agricultural sector though there have not been official statistics about these.

“Therefore, Vietnam’s economy, at least until now, has not been impacted much as we expect and the GDP growth for this year will still be maintained at 5.4% as we forecast earlier,” Kwakwa said.

The Vietnamese Government has taken prompt actions and measures to assist the enterprises which were stormed and looted by ill-intentioned elements during the worker protests in mid-May against China’s acts in the East Sea. Kwakwa said this demonstrated the Government’s pledges to ensure safety for foreign investors.

According to Sandeep Mahajan, WB lead economist for Vietnam, the country’s macroeconomic stability continues, enabled by easing inflation, strengthening external accounts, and stabilizing the foreign exchange market.

The country’s real GDP is projected to grow 5.4% this year, supported by continued foreign direct investment flows and strong manufacturing exports. But, domestic demand in Vietnam remains weak on account of subdued private sector confidence overleveraged State-owned enterprises, high non-performing loans of commercial banks, and narrowing fiscal scope.

The WB report also points out that Vietnam faces several challenges on competitiveness. Reenergizing medium-term growth will require renewed attention on a number of structural reforms with an emphasis on restructuring SOEs and the banking sector and removing barriers to domestic private investments.

Mahajan said most banks have invested in bonds and this indicates that Vietnam has a banking system which fears risks and is afraid of lending to the private sector. On top of that, enterprises do not believe in their own production and business activities.

Kwakwa said the projected growth of 5.4 % for Vietnam is higher than for many of the countries in the region and the world but is still below the nation’s potential.

“In the short run, the subdued economic growth is linked to soft domestic demand. But longer-term prospects will depend on whether Vietnam can quickly address structural problems that can enhance the economic efficiency and competitiveness of the country,” she said.

The WB report has a special focus on inequality in Vietnam, as the issue has been a topic of public concern and has arisen despite Vietnam’s rapid long-term growth with only modest increases in income inequality. Mean incomes of the bottom 40% of the income distribution grew at 9% annually over the two decades up to 2012.

WB senior economist Gabriel Demombynes said most of the concerns over inequality are about the gap between the very rich people and the majority of Vietnam’s population as there is one super-rich man in every one million Vietnamese people. Vietnam was estimated to have as many as 110 super-rich people whose assets are worth over US$30 million last year while the number was only 34 a decade before.

The concerns over inequality reflect the substantial differences in economic conditions by geography and ethnic groups as well as the significant inequality of opportunity. “Opportunity” refers to children’s circumstances which affect their chances of success later in life. Children from poor households are far less likely to attend secondary school and have access to sanitation facilities and healthcare, and much more likely to be malnourished.

“Popular concern about inequality and demand for policy responses is likely to grow over time as more Vietnamese move to cities and are exposed to visible differences in welfare,” according to Demombynes, one of the report’s authors.

“There is already substantial demand for redistributive social policy to narrow inequalities in Vietnam; this demand is likely to persist and to rise as Vietnam continues to urbanize.”

VOV/SGT/VNN