Vietnam breaks into high-income group

According to the latest data from the World Bank (WB), the average income of Vietnamese people in 2023 will reach nearly 4,347 USD/person, officially entering the upper middle-income group. However, according to the new calculation method from July 1, 2024 onwards, the group of countries with high average income per capita will be from 4,516 - 14,005 USD/person, so Vietnamese people need about 170 USD more to enter the group of countries with high average income. However, with the GDP growth rate in 2024 assuming 6.5% and the population not increasing much, each Vietnamese person will have more than 280 USD more, still enough to enter the group of countries with high average income according to the new criteria. More impressive is the speed of Vietnam's progress to this milestone compared to other countries in the past 40 years. Data shows that in the period 1986 - 2023, Vietnam's per capita income had the biggest improvement in the ASEAN bloc, increasing 44 times. Other countries also improved but more slowly. For example, Myanmar increased 30 times, Cambodia increased 15 times; Singapore increased 9.6 times; Indonesia increased 9.5 times; Thailand increased 8.3 times; Philippines increased 6.8 times; Malaysia increased 6.2 times; Laos increased 3.8 times and Brunei increased 3.5 times. Notably, in 1986, Vietnam's per capita income was only about 95 USD, belonging to the low-income group. By 2009, this figure increased to 1,120 USD, putting Vietnam in the lower middle-income group; while Thailand took 22 years to "upgrade" to the group of upper middle-income countries, the Philippines took 30 years. We also aim to move one step further, into the "middle class" in about 20 years, before 2030. However, in just 15 years, Vietnam's economy has grown rapidly to officially enter the group of upper middle-income countries...

The above figures also correspond to the change in Vietnam's economic structure, shifting from a low-income economy based on agriculture to an industrialized economy with a low average income level quite early. At present, Vietnam is continuing to shift to an economy with high added value, so meeting the new criteria of an upper average income country is feasible.

- Ảnh 3. — *Agriculture is also a strong point in Vietnam's exports.*

Professor Ha Ton Vinh, a financial economist, analyzed: The average income of a country's people is based on the GDP of that country. To increase people's income, we must find every way to increase GDP. With the current average income and the Government's growth target of 6.5% this year, Vietnam will almost certainly enter the upper middle-income group. "But what we must aim for is a high middle-income sooner than the set target and it must be much higher, not standing on the edge of the "trap" between low and high middle-income," Mr. Vinh emphasized.

Thanh Nien's pocket survey of some people about income is quite similar to the economic growth process over the past decades. Some people's income has increased sharply but they still struggle to make ends meet; some people have changed their lives and many people are still struggling. Having been attached to Ho Chi Minh City for 11 years, since she was a freshman from Phu Yen who came to the city to study at university, Quynh Nhu (30 years old, living in Binh Thanh District) has been discouraged many times because of the deadlock in finding a job. Graduating with a bachelor's degree in literature, Nhu "joined" a friend's company specializing in writing advertising content, with an income of no more than 5 million VND/month. Just for rent, Nhu has to spend 1.5 million VND/month, not to mention electricity, water, and gasoline to travel back and forth from home to work every day, more than 20 km... There were months when she ran out of money, Nhu had to ask her parents to bring rice paper and squid fish sauce from the countryside to "get by". Then, Nhu was lucky to find an acquaintance who introduced her to a media and event organization company with a salary of 10 million VND/month, then gradually increased to 17 million VND/month, 3 times higher than before, but it was still difficult because the cost of living was more expensive. Food and money still crushed many of Nhu's ambitions when she came to the city. It was not until the third job change more than 2 years ago with the position of a media specialist of a business with a monthly salary reaching 30 million VND/month that Nhu felt satisfied.

- Ảnh 5. — *Young people have fun in front of Ho Chi Minh City Post Office on the occasion of April 30th*

"I feel like I'm integrating more and more into this city. In particular, every month I save some money for the future. Thinking back, the amount of money I save each month now is equal to the salary I received 4 years ago. Looking back at 11 years, I shudder many times when thinking about the bumpy, winding roads, the fear and insecurity of a naive rural girl in a bustling city. However, these small achievements help me to be grateful and move forward, to cherish the present, and continue to hope for a more stable life in this city," Quynh Nhu said.

- Ảnh 6. — *Export-led economy, increased labor productivity will help increase people's income*

Having entered his 11th year of studying and working in Ho Chi Minh City, the life of Hoang Viet (40 years old, from Thanh Hoa ), an IT employee of a technology company in Ho Chi Minh City, has changed "beyond expectations". The day he decided to move to Ho Chi Minh City, Viet only hoped to have a stable job with a salary of about 15 - 20 million VND/month, enough to rent an apartment and spend and live alone. But thanks to his dynamism and luck, in addition to his main job at the company, his expanding relationships in the big city brought him many opportunities to have more side jobs, then invest in land, stocks... Now, Hoang Viet can earn nearly 100 million VND per month. "I just bought a 2-bedroom apartment in a mid-range apartment building and am preparing to welcome my younger brother to live with me. I never thought I would be able to buy a house in the city, this is really beyond my expectations. My income has increased rapidly not only because I work hard but also largely thanks to new economic forms and services, especially the development of technology that has helped IT workers like us have more opportunities. Financial services help us save money more easily, borrow from banks or buy houses on schedule with more suitable costs... All of these things help improve the quality of life," Mr. Hoang Viet excitedly said.

- Ảnh 7. — *Vietnam's middle class is growing*

On the contrary, many people have fallen into a situation of "retrogression" when the company could not overcome the challenge of the pandemic and the economic crisis that has lasted nearly 5 years. Ms. NH shared that her income has decreased by nearly half compared to before the Covid-19 pandemic due to the agency's salary reduction. In 2019, as a department head of a medium-sized enterprise, her income was about 40 million VND/month. When the Covid-19 pandemic hit, the company reduced salaries 3 times due to lack of revenue. "The boss encouraged us to try hard until the pandemic is over, work returns, and revenue returns, then salaries will be increased again. However, after the pandemic, the world economic crisis occurred, then the war caused disruptions in the supply chain, inflation in developed countries... affecting the Vietnamese economy and the domestic business community. The company's revenue did not recover but declined day by day, so our salaries continued to be reduced, now only 21 million VND/month, half of what they were before," Ms. NH said. That is the situation for many people and their only hope is to restore their income.

- Ảnh 8. — *Vietnam has a huge opportunity to break through and increase income.*

Looking back at Vietnam's economic growth, Professor Ha Ton Vinh raised the question, Vietnam has a good growth rate, but why is it so difficult to be considered a country with an upper middle income? One of the reasons is the large population, the economy focuses on exports but labor costs are low, because they account for the majority of processing and assembly. "Exports bring in hundreds of billions of USD, but the average income per capita still does not meet expectations because we mainly do processing. Therefore, although looking at the income of this person or that person in the office, business sector... it has increased very quickly and very well in the past 10-15 years, the majority of young people are still workers, ordinary laborers, their income does not have such an ideal increase, which has kept the average income per person low," Professor Vinh said.

- Ảnh 11. — *Golden population is an advantage for Vietnam to increase productivity and income.*

Analyzing the achievements of Vietnam in the past 30 years, Prof. Dr. Ngo Thang Loi (National Economics University) commented that Vietnam has achieved 2/3 of the major "passes". That is, ensuring food security and overcoming the low-middle income level, building the foundation for an industrialized country. The third challenging goal that has not been overcome is to become an industrialized country by 2020. "Vietnam's development process has also revealed many shortcomings when growth is showing signs of losing steam over time. The growth amplitude is on a downward trend and is not strong enough to create breakthroughs in implementing social progress. In addition, the quality of growth has been improving slowly (investment efficiency, labor productivity), especially in recent years and at a quite low level compared to countries in the same period as Vietnam (Korea, Japan, etc.), reducing the ability to increase income of the economy", Mr. Loi pointed out and said that the cause of this situation comes from the development model towards spreading evenly, which has not promoted the driving force of key regions, as well as not developed weak regions. "The dynamic regions do not have enough leverage for breakthrough development. The slow-growing regions are "closed" compared to other regions", commented Prof. Dr. Ngo Thang Loi. Therefore, according to him, it is necessary to prioritize promoting rapid growth for dynamic regions, while building policies to connect dynamic regions with other regions, especially slow-growing regions, so that they can directly participate in the income generation process. Create a level playing field for all three types of enterprises, pay more attention to policies for the private sector, and promote the role of "leading cranes".

Sharing the same view, Professor Ha Ton Vinh commented that in the current economy, the labor productivity of foreign-invested enterprises (FDI) is quite high, because this is a competitive sector with the world. Meanwhile, in the domestic enterprise sector, labor productivity is still a challenge. The private economic sector is still facing many difficulties. Even the "leading birds" have to struggle, so how can the birds in the flock survive? "Vietnam's population has officially surpassed 100 million. If we do not promote GDP growth, maintain stable development, boost export production, and provide maximum support to businesses, the goal of "upgrading the middle class" for the people will be very difficult to achieve. Vietnam is one of the countries that has maintained a very fast growth rate after the pandemic. Vietnam has the advantage of a highly open economy, participating in many bilateral and multilateral trade agreements and being a destination for FDI capital flows, as well as an important link in the global supply chain. We must take advantage of this opportunity to break out," Mr. Vinh emphasized.

- Ảnh 13. — *Income of young Vietnamese in big cities increases well*

From another perspective, economist Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy Research, said that the golden population period is a unique opportunity for countries to develop their socio-economics and it only happens once in the development history of each country. "The golden population should be turned into real solid gold, certainly and linked to the development goals and aspirations set by the country. It should be noted that this golden period is not long, less than 10 years, enough to focus on two main branches: developing production and business and skilled labor. In particular, Vietnam now has a strategy to promote the development of the semiconductor industry, with the ambition to become the top choice of chip and semiconductor investors. The human resource training cooperation strategy has also been implemented by institutes and schools. Many good signals show that the opportunity to improve the quality of Vietnamese labor is quite high in the near future," Dr. Vo Tri Thanh expected.