Two wheels good, four wheels better (The Economist)

The rich are ever more visible--but where are the poor?

As ostentatious gestures go, splashing out $1.5m (including taxes) to have a custom-made Rolls-Royce Phantom air-mailed to you half-way around the world takes some beating. But Duong Thi Bach Diep, one of Vietnam's new breed of property tycoons, was tiring of being driven round in a mere BMW. "I cried when I first saw it," she told reporters in January. "All the security and customs officials at the airport shared the joy with me when it arrived." Naturally her motives were patriotic and noble: "This will show the world that Vietnam is not a country of poverty and war but a lucrative market."

So it is, these days. And despite remaining nominally communist, Vietnam, like China, is now a country where it is all right to flaunt what you have. Ms Diep's Roller arrived two months after the first consignment of Porsches landed in Vietnam. In the cities, sleek black Mercedes cars glide among the buzzing swarm of motorbikes on the ever more congested streets. The Mercedes factory in Ho Chi Minh City has a five-month waiting list for some models. The country's state-controlled press enthusiastically prints league tables such as the top 20 stockmarket tycoons and the 50 richest women in Vietnam (Ms Diep is not even in the top ten).

Even in the countryside, signs of wealth are becoming increasingly visible. Visiting Quang Ngai, a quiet town set among rice paddies, your correspondent was startled by a snappily dressed young Vietnamese couple flashing down the main street in an open-topped red Ford Mustang. The town has quite a few bank branches (farmers are coining it, thanks to high rice prices) and smart shops selling fancy clothes.

Watch the extremes

All this prosperity is hard to square with the official figure for Vietnam's GDP per person, a mere $839. Even after allowing for higher purchasing power in a low-cost country, the World Bank puts national income per person at only $3,300, below that of several sub-Saharan African states. There must be huge numbers of dirt-poor people to bring the average down, but where are they? Despite waves of migration to the cities, there are no shanty-towns to be found on their peripheries. There are a few beggars and pavement-dwellers on the city streets, but notably fewer than in officially richer Bangkok.

Ralf Matthaes, the boss in Vietnam of TNS, a market-research firm, thinks there must be something amiss with the figures. In a recent survey of the country's "deep rural" zones he found surging numbers of consumers: one-third of the people in such areas already have mobile phones, which cost at least $100 apiece--a whole month's income for this slice of the population, according to the official figures. More than nine out of ten rural homes now have cookers and televisions.

The explanation may lie in Vietnam's age-old tradition of hiding wealth from the authorities. When TNS asked a sample of consumers to keep spending diaries, the incomings and outgoings of the very poorest roughly tallied but better-off consumers were spending up to seven times their declared incomes. Plenty of people run micro-businesses alongside their formal jobs. Until 2000, when private firms were officially recognised, many prosperous people had no legal way to explain their wealth, so they got used to hiding it.

A big rural electrification programme has brought power supplies to more than 90% of Vietnamese homes. Almost all children now enter lower secondary school and nearly two-thirds stay on to upper secondary level. Increasingly, deep poverty is confined to small communities of ethnic minorities in remote mountain areas. Health services are expanding, though from a low base: a recent study by the Lancet, a medical journal, found that around a third of Vietnamese children under five years old were still below their expected height because of poor nutrition.

A welfare system along European lines is slowly emerging. In 2003 the social-security system, providing cover against sickness and work accidents as well as pensions, was extended from state employees to private-sector workers. A national unemployment-insurance scheme is due to start up next year. A 2006 study by the Vietnamese Academy of Social Sciences concluded that the country could now afford a universal old-age pension.

Over the past decade or so of rapid growth, the country's Gini coefficient, a measure of inequality, has hardly budged. But then the coefficient is an attempt to sum up all income differences in a single number. In Vietnam it may be the rapid expansion of the middle class that has kept the index steady, despite the creation of so many limousine-buying millionaires. What the government may need to start worrying about in the coming years is not the average but the two extreme ends of the income scale.

In recent months rising world commodity prices and Vietnam's economic boom have sent prices soaring: in the year to February, food prices rose by over 30% and housing and construction costs by more than 20%. Low-income workers who have moved from the country to the city no longer grow rice but still want to eat it. If they are tenants, they are facing steep rent rises and the possibility of eviction, whereas property owners stand a fair chance of compensation when their home is demolished for redevelopment. Rising prices and a growing shortage of affordable housing may be helping to create a new low-paid urban underclass.

A small but visible underclass; an ever more ostentatious millionaire set; and a concerned middle class in-between. Could this one day cause social unrest in placid Vietnam? Richer countries have found that the extreme ends of the income spectrum can cause disquiet even when, overall, everyone is pretty well off and getting more so. Despite its attempts to create social safety-nets, Vietnam's government may increasingly have to contend with this particular problem of success.