Twenty years ago, Vietnam was among the poorest nations in the world. Today, while tens of millions of its citizens have risen out of poverty, a small but growing number have managed to amass their own personal fortunes in the southern hub. By Dana Filek-Gibson.
In pictures, motorists sit astride their Honda Cubs, hair trailing behind them in the breeze. Colourful advertisements and hand-painted propaganda line the streets. Up above, the sky is far easier to pick out amid an absence of financial towers and high-rise buildings. And yet, for all its differences, the Saigon of 1994 is still familiar. Le Loi remains a wide, shaded avenue, and the many rooftops of Cho Lon rest upon its enormous frame in much the same way as they did before. Though the flashy motorbikes, neon lights and modern advertising of today haven’t yet appeared on the scene, Saigon’s recognisable framework prevails.
Two decades on, the southern hub, and indeed, much of Vietnam, has transformed in ways few could have imagined. Today, Saigon is full of juxtapositions: Bentleys share the road with bicycles, xe oms perch on the same block as Chanel and the plastic furniture of Saigon’s street vendors stands in stark contrast to ultra chic downtown eateries. Clearly, this is a country that has come into some money. When, in the mid-90s, the World Bank estimated Vietnam’s national poverty rate, it put roughly 60 percent of the population at or below the poverty line. As of 2012, that same figure had shrunk to around 17 percent. Though the country’s newfound wealth is far from perfect, Vietnam’s dramatic rise from one of the world’s poorest nations to a low-middle income country is nothing short of remarkable.
More impressive still has been the country’s rapid introduction to the digital age. According to TNS Vietnam, a Saigon-based custom research company, as recently as 2006 smartphones had yet to arrive in the country. Nowadays, 31 percent of Vietnamese own a ‘smart’ mobile device, and roughly two-thirds of its citizens are online. Beyond these changes in wealth and access, Vietnam’s younger generations are also blessed with greater opportunity than their parents had. College and university graduates make up over half of the country’s affluent citizens, affording young Vietnamese further opportunities to improve their social standing.
“I think probably [Vietnam’s] single largest achievement is pretty well the eradication of poverty,” says Ralf Matthaes, regional managing director at TNS.
But if the average Vietnamese citizen has managed to pull their family out of poverty over the last 20 years, a select few have really outdone themselves. Ultra-high net worth individuals (UHNWIs), or those whose net worth is valued at $30 million or more, represent the very upper echelons of Vietnamese society. By the estimates of Knight Frank, a global real estate consultancy, the country is currently home to 110 UHNWIs, 90 of whom live in Saigon. Knight Frank, which publishes an annual report analysing the wealth and spending habits of UHNWIs across the globe, believes that by 2023 Saigon’s number of ultra-wealthy will have risen to 246, making this the fastest-growing UHNWI population worldwide.
Whether or not Saigon is to produce future millionaires, for the time being the current ones are happy to stand out with flashy status symbols. Near Dong Khoi, long a bastion of upper-class delights, designer brands like Louis Vuitton, Bulgari, Chanel and Burberry occupy the posh storefronts just west of the Opera House. Luxury cars navigate Saigon’s busy streets, from Mercedes-Benz to BMWs. Though Audi got off to a slow start when it first arrived in Saigon in 2008, the company fared well enough to open a second location the following year in Hanoi. In 2013, as Vietnam recorded its lowest GDP growth in 13 years, sales at the company grew 83 percent from the previous year, far exceeding Audi’s expectations.
“Our sales in 2013 developed 10 times higher than Audi [shareholders]’s initial expectations,” says Laurent Genet, general director of Audi Vietnam. According to Genet, UHNWI customers are more likely to be interested in the company’s top-of-the-line vehicles and, provided things turn out well, will come back for more. “Most enthusiastic Audi customers buy cars for them first and, if they are happy, for their family members,” he explains.
But while Audi’s booming sales and the projections of the Knight Frank report paint a picture of continued prosperity, this wealth is top-heavy. Recent years have brought an economic slowdown to the country, where Vietnam’s annual GDP growth remains on par with most developing nations around the world but below many of its Southeast Asian neighbours. The rich are still able to get richer here, however an ever-increasing gap has begun to separate the nation’s highest and lowest earners. Vietnam’s lower and middle classes, after a period of economic gain, are beginning to reach the limit of their opportunity. Though many remain optimistic that the economy will rebound over the next few years, this sentiment is tempered with caution.
“To be fair, I think the economic plight is not going to be a rocketship in terms of recovery,” says TNS’s Matthaes, who puts Vietnam’s recovery one or two years in the future.
World Bank forecasts also suggest that things will look up again, though it could be a few years before Vietnam’s lower- and middle-class citizens find themselves enjoying the same economic growth they experienced in the first decade of the 21st century.
Meanwhile, across the city conflicting images of modern-day Saigon persist, with street vendors shuffling by Vincom’s sleek shopping malls carrying bamboo poles on their shoulders. If the past is even a fraction of an indication toward the future, Vietnam will move into the next decade just fine, though it remains to be seen whether some will come out better than others.