Việt Nam’s fragile middle class

Vietnam Middle ClassA new middle class emerged for the first time in Việt Nam in the 1990s.

It has won a few freedoms, but remains fragile.

Now, the global economic crisis threatens to undo the achievements.

“Supermarket, supermarket, supermarket” cries Mai Chi, the four-year-old daughter of Tuyên and Liên, as she bounces up and down on her parent’s bed.

She can hardly wait to get going.

Like many families in Việt Nam’s new middle class, the Nguyễns spend Sunday at the supermarket in Hà Nội.

“Sunday is the only day the whole family can be together and do something,” says Tuyên.

“I work 50 hours a week, and then there is the three-hour commute every day.

So there is not much time.

At the supermarket, children can play and parents can take care of some shopping.”

Emerging middle class

The first supermarkets in Việt Nam were so exclusive that only the rich could afford to shop there.

Today, things are different because the government launched a reform program in 1986 under the motto “Đổi Mới,” or renewal.

Instead of the centrally-planned commando economy, the government moved toward an economic model that offered people more freedoms and latitude.

And with those freedoms, the country grew more affluent.

“A middle class developed in the course of this reform process,” Gerhard Will, an expert on Việt Nam from the German Institute for International and Security Affairs (SWP), told DW.

The Nguyễns belong to the first generation to benefit from these reforms.

Both were born at the end of the 1970s and achieved a degree of economic success through the boom years around the turn of the millennium that their parents would have never even dreamed of.

The older generation is suspicious of the country’s economic development.

When Tuyên comes home with a new kitchen gadget or toy for Mai Chi, his parents and grandparents are skeptical, asking whether it was really necessary, or whether it wouldn’t be better to save the money for bad times.

Crumbling prosperity

And perhaps the older generation isn’t wrong.

As a consequence of the 2007 global economic downturn, Việt Nam’s economic prospects have dimmed.

Economist Adam Fforde, from the University of Victoria in Melbourne, Australia, left no doubts in an interview with DW.

“The economic crisis in Việt Nam is serious,” he said.

Vietnam Economic Indicators

Toxic combination: Inflation is high and economic output is slipping

Inflation – at 7 percent in October 2012 – was shrinking income,  Fforde stressed.

Property values have dropped, so that many families are paying off loans that are worth more than their homes, he added, while the costs for education and health were rising.

“The expenditures, which in some cases are enormous, are not worth the money,” says Việt Nam expert Will, pointing out that the education system needed to be reformed and the health system was corrupt.

Academic degrees are more often bought and sold, or lent to party loyalists, than actually earned, he noted.

“It costs a lot of money just for a band-aid or a vaccination,” he said.

Little self-confidence

The ups and downs of Việt Nam’s economy hit the emerging middle class the hardest.

The last few years threaten to reverse the achievements of the past.

The middle class is crumbling before it could really establish itself.

“The middle class has experienced considerable restrictions at the economic and political level,” says Will.

Despite the dismal outlook, there have been no protests worth mentioning.

“No opposition will come from the middle class.

There is just too little self-confidence within the group about its own strength,” notes Will.

“People are afraid they could lose everything they have worked so hard for over the years if there was upheaval or sweeping change,” he says.

Tuyên, meanwhile, is banking on his own strength.

“Protesting against the government is useless.

But, betting on the government is also useless.

You have to believe in your own abilities,” he said.

The future used to be worse

What’s more, since the crisis began, the government has grown extremely nervous and is clamping down on regime critics.

“The guilty verdicts against bloggers are a signal to the others,” notes Will.

In October, the popular blogger Điếu Cày was sentenced to 12 years in prison.

A day after his DW interview, Tuyên sent a text message.

He was at work and his daughter in kindergarten:

“Times are more difficult than before the big crisis.

Maybe Việt Nam has bigger problems than the western countries, but compared to the situation 20 or 30 years ago, we are still doing well.”



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