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Survey: Vietnam Has One of Highest Rates of Consumer Savings

VOA News

   Vietnamese savings are reaching new highs, but observers disagree about
   whether saving so much is a good sign.

   Market research company Nielsen found in a survey last month that
   Vietnam has one of the world's highest rates of consumer savings, with
   69% of Vietnamese surveyed saying they put spare cash into savings,
   compared with 68% in Hong Kong, 66% in China, and 62% in Indonesia.

   As a developing nation, Vietnam is becoming increasingly wealthy, and
   citizens are saving more, joining a global trend of increased savings.

   Although saving seems good for individuals, observers, from Deutsche
   Bank strategist Binky Chadha to former U.S. Federal Reserve chair Ben
   S. Bernanke, have worried there is a surplus in savings in the world
   economy, which can distort the broader investment environment and lead
   to negative interest rates-- meaning retirees must pay to keep their
   savings in a bank.

   'An asset bubble'

   In the U.S. for instance, the excess savings have pushed the stock
   market to record highs, which analysts say is approaching a bubble. In
   Vietnam, the excess savings has also fed an asset bubble, particularly
   in real estate.

   Vietnam's economy is growing quickly but experts disagree on how to
   interpret the wealth that it is generating. On the one hand, there may
   not be enough productive investments available, so savers are investing
   in luxury real estate that is feeding a bubble, according to a research
   note by Oxford Analytica. On the other hand, being able to set aside so
   much money is a positive sign from consumers, according to Nielsen
   Vietnam.

   "As more and more people feel confident about their future, despite
   better job security, they are putting away more for a rainy day rather
   than spending today," Louise Hawley, managing director at Nielsen
   Vietnam, said. "This also suggests optimism in what tomorrow will
   bring."

   A sign of anxiety?

   However the high savings rate could also be interpreted as a sign of
   anxiety, as people worry they will need the money for retirement.

   "One of the main reasons why Vietnamese people have to save is because
   there is no social security network," a commenter wrote in the local
   newspaper Thanh Nien.

   This means Vietnam is part of a global trend identified by Chadha. He
   noticed that savings rates are going up, even though interest rates are
   going down, sometimes to negative rates, so people are not saving money
   to earn interest. Instead Chadha sees this as a sign that people are
   saving because they fear they will not have enough funds in the future.

   Vietnam's savings rate is not an isolated issue. Bernanke argued that
   Asia, particularly China, has earned so much from exports that the
   money has contributed to a "global savings glut." More recently Vietnam
   has also become one of the developing Asia nations with high exports
   and, therefore, a current account surplus.

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