Too hard to make ends meet (February 26, 2008)

Inflation in East Asia hits Viet Nam hardest By Roger Mitton The Straits Times Publication Date: 24-02-2008 A good way to sense how Viet Nam's economic boom is affecting ordinary people is to visit wet markets in the city suburbs and the rural villages. Bundled up against the unseasonal cold, the shoppers look pinched and sullen as they poke about for affordable groceries. They are the great silent majority of Viet Nam's 85 million people: the salaried factory hands, the drivers and builders and labourers, the working wives and retirees, the masses of lowly state minions and municipal functionaries. And they are not happy, despite the bounty of foods on offer. The gravy train that is Viet Nam's economic boom appears to have passed them by. They are people like Nguyen Thi Hoa, 28, a typical hardworking young mother, who toils for six days a week at a Ha Noi textile company for US$70 a month. Her husband does the same at a TV assembly plant and makes $80. Out of that, they pay $60 for a babysitter and for food and milk for their six-year-old daughter. Then, after paying the electricity bill and getting fuel for their motorcycle and other essentials, they are left with $30 for themselves each month. A dollar a day for two working adults. Said Hoa: "Nowadays, I can buy some meat only for my daughter, not for my husband. Sometimes I break into tears because I love my husband, but I can't give him a decent meal." Their situation is not a rare sob story. It is increasingly the lot of ordinary working class Vietnamese who are being devastated by rampaging inflation. Viet Nam now has the highest annual inflation rate in East Asia. At 14.1 per cent, it is almost twice as high as that of its nearest rival, Indonesia, 7.4 per cent. And there is no end in sight. Viet Nam's inflation increased again last month by 2.4 per cent over the previous month and it is on track to increase again this month. It is not only labourers and factory workers who are hurting, but even young professionals bristle that their college education does not count for much when it comes to earning a decent living. Hanoi schoolteacher Nguyen Thu Phuong, 35, who earns about $150 a month, said: "A year ago, I could afford to prepare a wholesome meal of four dishes for my family. Now it's hard for me just to make two dishes.'' Even the respected former deputy prime minister Vu Khoan commented in a local newspaper that his standard of living was falling. He said: "My wife complains about rising prices every time she goes to the market. I notice it myself and we have to economise.'' Down in the nation's booming southern business centre of Ho Chi Minh City, food prices have leapt by 24 per cent compared to January last year. And the cost of other essentials like electricity, water and petrol has soared by around 17 per cent over the past year. Nguyen The Hai, 25, a worker at a Japanese industrial plant near Ho Chi Minh City, is single and shares a rented room with several friends in order to make ends meet. He said: "When I started here, I got 900,000 dong a month. Now, after three years, I make 1.1 million. But while my wage has increased a bit, my rent and food and fuel bills have shot up more than 50 per cent." Property prices have skyrocketed, as landlords exploit a lack of supply and a soaring demand caused by rural workers flocking to the cities to seek a better wage. Tenants are often abruptly told that their rent is to be doubled or even tripled, take it or leave it. And the lease contract invariably proves not worth the paper it is written on. Said Hai: "I hoped that with all the economic good times that you read about in the papers, I'd be able to make enough to send some money back to my old parents. But now I can't even make enough for my own daily needs.'' Officially, it is all happening because of a confluence of troublesome factors. They include soaring oil prices, excess foreign currency, high wage demands, a flood of expensive imports, a growing trade imbalance - Viet Nam imports far more than it exports - poor harvests due to bad weather and natural disasters, and lingering bird flu and pig disease. Government spin doctors throw in other reasons as well, but they still don't seem to appease the despairing lowincome workers. After all, other countries like Indonesia, Thailand and the Philippines have the same problems and their inflation rates are less than half that of Viet Nam. Ah, but they are more developed economies - is the usual retort. Yet Cambodia, Laos and even China are similarly developing and prices in those countries are rising less than half as fast as in Viet Nam. China's inflation rate was only 6.5 per cent last year. Even the state-owned media has found its patience wearing thin. A recent article in the best-selling Thanh Nien newspaper reported that "the government's moves to control the galloping prices have proved deficient, passive and fragmented in the emerging market economy''. That said, the Cabinet has taken steps to curb the money supply, cap fuel and food prices, and impose a temporary ban on rice exports to boost domestic supply and try to keep prices down. But it will need to do a lot more if it is to stem the growing public discontent. On Jan 1, the minimum monthly wage for state employees was upped from $28 to $34, and for those in foreign-owned companies, from $34 to $44. However, it appears to have been too little too late and a rash of wildcat strikes soon followed. Said Nguyen Thanh Mai, 27, a schoolteacher in north-western Dien Bien Phu: "The small wage increase I got last month didn't match the rise in prices, so I get a bit more, but end up worse off.'' Due to similar sentiment, truculent workers walked out of factories across the nation last month, demanding more pay and better conditions to combat price hikes and soaring rentals. Most of the strikes were settled after modest increases were paid, but that is viewed as a stop-gap measure as inflation continues unabated and ordinary folk continue to bemoan their falling living standards. Said Phuong: "Nowadays, my husband does not have enough money to take us out to dinner like he used to do. When the kids suggest it, he says we have to save or we'll starve. Life is just more miserable these days.''