Based on criteria set by the World Bank and the Vietnamese government for poverty identification, one person in every five is regarded as poor. But in specific areas the rate is far higher such as in the Northeast, Northern Central and the Central Highlands, where the number of poor people account for one third of regional population. The highest rate is in the Northwest, where half of the population are poor.

When Vietnam decided to change the criteria and raise the poverty line in keeping with international standards, the number of poor households saw a significant increase from 6.9% to 23.2%. This means that there had been a large number of households living just above the previously lowered poverty line that were hardly any better off than those below it. These households are just as vulnerable to poverty, and their living standards were very precarious and prone to fall at the slightest problem.

In past years, incomes across population groups have improved, but the incomes of the richer portions of the population increased far faster than the poorest. The income gap therefore has widened. In 1990 the income of richest group was 4.1 times higher than the poorest. In 1993 the ratio was 6.2 times, while in 1995 it was 7.0 times. In 1999 it was 7.6 times, and by in 2004 it was 8.3 times.

Many people say that compared with other countries, the gap between the rich and the poor in Vietnam is still small. But in America for example, after 200 years of economic development, a household of richest group earns nine times more than and one in the poorest on average, while in Vietnam the ratio is more than eight times.

A large number of rich households have become wealthy as their incomes come from illegal sources such as smuggling, tax evasion, corruption or unfair business competition and other morally corrupt practices. This means these incomes are not sustainable. For that reason many prefer to hide their income instead of investing in business.

It is reported that among the poor households, a lot of them are poor due to unemployment, shortage of capital, sickness, or accidents. A considerable number of the poor have problems with drug or alcohol addiction, gambling or are unable to manage money.

The prevailing gap between the rich and poor has therefore become one of the most challenging tasks for the government to tackle, especially when Vietnam joins the WTO, solutions to support the poor will become extremely necessary.

Source: Saigon Tiep thi