Living Cost – Minh Quang Duong

On 2nd May, 2019, an increase in gas price in Vietnam was announced, an 8th time such a development took place in 2019. Here is a chart that illustrates the gas price in 2019 so far. The number is in VND, our national currency. The exchange rate is at 23,314 VND for $1

Those are the two types of gas we use in Vietnam with the green one as the more popular choice and we measure it in liter, not gallon. With the exchange rate of 23,314 VND for $1, Vietnamese pay approximately $0.95 for a liter (22,190 divided by 23,314).

According to gasprices.aaa, the national average gas price in the US is $2.888 per gallon. As a gallon is worth 3.785 liters, on average Americans pay $0.76 per liter for gas. Given that GDP per capita in the US and Vietnam in 2017 is $59,532 and $2,343 respectively, according to WorldBank, it’s extraordinary that we pay more per liter in the poorer country.

I am not a chemical expert and the gas used in each country may be different in essence, but it serves the same function and the living costs in both countries are affected by gas prices.

The difference is even worse when you compare the gas price in Vietnam to affluent states in America. Keep in mind that different in America, where gas price varies from one state to another, Vietnam has universal gas price regardless of where you live in the country. Take Massachusetts as an example. GDP per capita in the state in 2017 is $64,507, but the gas price in the state is just $0.75 liter, compared to $0.95 in Vietnam.

Unless I am missing something terribly important in my assumptions, the expensive gas price that we have to pay in Vietnam is ridiculous and ludicrous. And how many companies would give employees a raise 8 times in a span of 5 months to keep up with the increasing living costs? Exactly!

Last month, Vietnam Electricity (EVN), the state-owned company that has a monopoly over electricity in Vietnam, announced an 8% price hike, citing an increase in production cost. Obviously, it leads to the hike in everything’s price and living cost overall. But what frustrates me the most is the fact that as a monopoly, the company is terribly run. It invests in other verticals where it doesn’t have the knowledge or capabilities, on top of a terrible management, something that is not uncommon in Vietnam. As a consequence, EVN suffered huge financial losses. According to this article, EVN’s loss amounts to $94 million, despite having the monopoly. The loss includes ridiculous expenses such as building a golf course or luxury villas for the company’s officials. To cover these losses, it routinely jacks up the electricity price. There is almost no oversight.

Even more frustratingly and shamelessly, they hiked the electricity price during the hottest season the country has even encountered. The highest temp recorded is 43.4°C (110.12°F). At 6AM, it’s already at 87.8°F.

This kind of egregious behavior isn’t exclusive to EVN. Gas price in Vietnam frequently increases, thanks to Petrolimex, another monopoly. The problem is that once these crucial commodities become more expensive, everything else will as well. When the price of the commodities is lowered; however, the living cost rarely follows or gets cheaper. Meanwhile, the wage in Vietnam is not even close to keeping up with the rising living cost, rendering whatever income an ordinary folk earns increasingly small.

I love my country. We have great cuisine and sceneries as well as an authentic culture. However, I don’t want to live in a place where I cannot meaningfully save anything simply because living costs increase almost on a monthly/quarterly basis while wage does once a year at most. This and among other reasons I will share in the future whenever it is appropriate

Tag: Living Cost

With GDP per capita 25 times smaller than that of America, Vietnam still pays more for gas

Electricity price hike – Why I prefer not living in Vietnam