Economy of scale for overcharged foreigners

PUBLISHED : Sunday, 20 December, 1998, 12:00am
UPDATED : Sunday, 20 December, 1998, 12:00am

DIG around in the increasingly diverse shops and markets of inner Hanoi and the one thing you often cannot find is a price tag.


Charging what the market will pay is almost an art-form among the capital's traders, a hard-boiled bunch generally not schooled in the works of economist Adam Smith.


The Government has an official dual-pricing policy that separates foreigners and overseas Vietnamese from locals and is one administration directive taken to heart and amplified on the streets.


Whatever you are buying, you can expect a battle over numbers punched out on a calculator that often starts at an absurd figure and slowly retreats to normality.


You might be asked US$5 (HK$38.70) for a bunch of decaying bananas and finally snare it for less than 5,000 dong (about HK$2.30).


It is best to buy an item as soon as you are offered a decent price, as further bargaining can be a depressing experience.


Mrs Nguyen, a veteran of some of Hanoi's toughest markets, gives her best as she haggles over goods at a stall on Ngo Quyen.


'Local Hanoi people should get the best price. It is their city,' she said.


'People from the outside get charged more, and southerners even more than them. Then come Russians, local Westerners, Chinese, Koreans then tourists and lastly my favourites, the Japanese.


'Sometimes the Japanese claim they should be getting Hanoi prices, so I give them a little bit off, then stand firm. I know they can afford to pay.' It is a policy that irks South Koreans more than most. They have been forced to vacate Hanoi in droves since their economy collapsed late last year.


'Haven't these people heard of recession?' one depressed engineer asked. 'We are no longer rich. I get pains in my stomach whenever I go near a market.' The Government has heard the cries for change and Prime Minister Phan Van Khai has ordered state corporations to examine how to abolish dual-pricing schemes.


Foreigners working through official channels must pay about three times the regular price for air tickets, rail passes, power, water and phone calls. They now make up enough of a market to subsidise services for locals.


Government legislation is now being drafted but fierce debate is expected. Vietnam Airlines has warned of a collapse from any immediate change. Vietnam Electricity claims it will have no cash for reinvestment.


But the capital's foreign community seems to be showing little sympathy, despite living in what remains one of the world's poorest nations. Hanoi's streets are a tough school in economics.