[Asia Report] Vietnam's Ambition to Challenge the Chronic 'Dual Pricing' Problem

Motorcycles on Ho Chi Minh Streets Halved After COVID Tunnel
Nights Revitalized as Tourism Resumes
Few Cases of ‘Dual Pricing’ for Foreigners, Unlike Most of Southeast Asia
High Potential for Development and Improvement

[Asia Economy] After about two and a half years, I visited Ho Chi Minh City, the economic capital of Vietnam, again. In early May, Thailand became the first in Southeast Asia to lift quarantine requirements for foreign arrivals, significantly easing quarantine standards, and Vietnam followed suit by allowing quarantine-free stays with just the first and second vaccine doses and a negative test certificate. It is interesting that the two countries have a tense competitive relationship in terms of quarantine policies, industry, and sports, much like Korea and Japan.

The dazzling scenery of District 1 in downtown Ho Chi Minh City captures the attention of tourists. Photo by Jeong Hojae

Tan Son Nhat Airport, the gateway to Ho Chi Minh, appeared somewhat bleak and dull compared to the glamorous airport in Bangkok. Compared to the recent influx of investment in northern Hanoi, the social overhead capital (SOC) construction projects in southern Ho Chi Minh seem noticeably stagnant. Only after going through the strict document inspection by immigration officers dressed in uniforms resembling military attire did I truly realize that Vietnam is a socialist country. It is easy to overlook, but Vietnam has neither universal suffrage nor a free press. However, its passion for money is hotter than anywhere else in the world.

In January 2020, just before COVID-19, the atmosphere in Ho Chi Minh was truly like the rising sun, the spirit of a ‘soaring dragon.’ Every corner of the roads was packed with scooters heading to work, and the streets and shops were bustling with tourists from all over the world. As the enthusiasm for the national soccer team led by coach Park Hang-seo grew louder, new buildings rose in the city center, and real estate prices soared upward due to foreign investors flocking in after hearing the rumors. In 2019, it was even said that there were more than 150,000, up to 200,000 Korean residents in Ho Chi Minh alone.

The recent scene in Ho Chi Minh, just emerging from the deep and dark tunnel caused by COVID-19, shows that the number of motorcycles on the streets has nearly halved. Even in District 1, the equivalent of Seoul’s Myeongdong, there were many traces of closed businesses. The number of Korean residents has also significantly decreased to below 50,000.

"During the COVID period, production and commercial activities stopped, and many workers returned to their hometowns to make a living. So now, factories that have restarted operations have not fully regained their workforce, causing production disruptions or conflicts over wage increases in many places." (Yu Young-guk, head of Nice Group Vietnam branch, resident of Ho Chi Minh for 12 years)

A line of motorcycles filling the street. It is far from reaching the levels seen before COVID-19. Photo by Jeong Ho-jae

Rapid COVID Recovery

Unlike us, Southeast Asian countries implemented COVID-19 quarantine based on strong state-led ‘movement restrictions.’ Due to the lack of capacity in public healthcare systems, the function of cities themselves was halted. There was even a time when Korean commercial flights, which had barely started during the early COVID period, were unable to land at Vietnamese airports, worsening relations between the two countries. Especially from last spring, when the Delta variant exploded in India, extremely strict movement bans were maintained until the end of the year, with fences erected around apartment complexes and villages.

However, due to the absolute shortage of vaccines, it was difficult to effectively control the damage. ASEAN countries, including Vietnam, announced statistics showing about 20,000 to 50,000 deaths over the past two years. Of course, no one takes these numbers at face value. Since verification is impossible from the start, there is only speculation whether the actual number is 10 or 20 times higher.

But in terms of recovery, Vietnam is not behind any society worldwide. On the contrary, it is among the best in the world. Recently, the International Monetary Fund (IMF) projected Vietnam’s GDP growth rate at 6% this year and 7.2% next year, based on consumption and industrial production recovery. Exchange rates and prices are stable, with inflation expected at 3.9%. As wallets fill and freedom of movement is secured, Ho Chi Minh’s city center and squares have once again been lit up with dazzling lights, bustling with young people dressed up and dancing to K-pop. The number of people removing masks has also greatly increased. By July, domestic tourism from provinces to big cities began in earnest, and Ho Chi Minh’s nights started to become even livelier.

In Vietnam, Banh Mi bread is enjoyed in various forms as meals. Photo by Jeong Ho-jae

High Cost-Effectiveness and Sense of Efficacy

"Sir, one banh mi sandwich, please."

"Would you like to add an egg? 25,000 dong (about 1,200 KRW)."

Banh mi and pho, which Vietnamese people enjoy eating, have long become global food cultures loved worldwide. What surprised me at every moment during this visit was that although the whole world is in turmoil due to high prices, everything in Vietnam was cheap, delicious, and of good quality. Public transportation such as buses and subways is still lacking, but ‘Grab’ transportation using motorcycles was fast and economical.

Of course, behind this is the cheap and abundant labor force and powerful agricultural productivity. Vietnam, with a population of 100 million, has continued rapid growth since 2010, but the gap between urban and rural areas remains large, so its GDP and per capita GDP are less than half of Thailand’s level (about 3,000 USD). The starting monthly salary for university graduates is about 300 to 400 USD, which is about one-quarter of Korea’s prices and labor costs.

The key lies in the serious attitude of Vietnamese people toward the ‘prices’ they create. They try to converge prices around ‘local-centered prices’ without excluding foreigners if possible. This aspect becomes the driving force that makes Vietnam even more attractive.

When traveling around the Third World, including Southeast Asia, one often feels that local prices are not very friendly to foreigners. This is often because prices are raised under the pretext of providing special services for foreigners. Especially in tourist areas, there is no way to avoid such ‘overcharging.’ This is due to lack of information, time, and language communication barriers. For example, if you can communicate with locals, the price might be 2 dollars, but if not, it could be 10 dollars. Various express fees and bribe demands imposed on foreign companies or investors also amount to a kind of ‘overcharging’.

Overcoming the Limits of ‘Dual Pricing’

Economically, this can be seen as a ‘double pricing’ phenomenon, and Southeast Asia is often defined as a dual pricing society. It is more severe in underdeveloped countries like Myanmar or Cambodia, and the more ethnically diverse the population, the stronger this phenomenon. Scholars interpret this as a result of Western imperialism that has continued since the 18th century.

In the past, Westerners who invaded these areas lived under completely different conditions from locals, and after independence, as a form of retaliation for past pain, foreigners were charged higher costs. Furthermore, imperialism indiscriminately exploited labor from third countries, unintentionally developing multiethnic states, which caused multiple pricing phenomena. This is why in many parts of Southeast Asia, Chinese, Indian, and Western people live mixed with various local ethnic groups within the borders. It is called a ‘plural society’ with multiple ethnicities and economic zones, unlike Korea’s homogeneous society.

Conflicts and chaos occurring locally in Southeast Asia are often due to the principle-less ‘dual pricing.’ One reason many people are surprised and impressed during their Vietnam journey is because such overcharging cases are rare. Duy Le, a researcher at Harvard University’s Yenching Institute, explains, “Vietnam, centered on the national father Ho Chi Minh, repelled various foreign powers and established a unified independent government, and based on this strength, has aimed for a single pricing system.” Of course, corruption and irregularities targeting foreign companies exist in Vietnam as well. However, compared to other ASEAN countries, the scale and degree are smaller, and considering the low prices, some interpret it as a quasi-tax. This indicates high potential for development and improvement.

Jung Ho-jae, author of 'The Asian Era Comes Like K-pop,' researcher at Korea University ASEAN Center

This content was produced with the assistance of AI translation services.