Vietnam is about to pass Indonesia on income per person

Vietnam's income per person is set to pass Indonesia's this year. Nikkei Asia reports the projection comes from the IMF, and gives one main reason: Vietnam has become the place companies pick when they want an alternative to China for high-tech manufacturing, in semiconductors and electronics. Foxconn and Samsung are among the firms building there.

The measure doing the work here is GDP per capita. Take everything a country produces in a year and divide it by the number of people living in it. It is an average, not a wage, and it says nothing about how the money is shared. Indonesia's economy is still far bigger in total, because its population is close to three times Vietnam's. Being passed on this measure means Vietnam is adding output faster than it adds people, and faster than Indonesia is.

What makes the crossing sting is the kind of factory behind it. Chip and electronics plants bring in suppliers, train technicians, and pay more per worker than simple assembly, and once a cluster of them settles in one country it tends to stay. Nobody in Indonesia got poorer because two lines crossed on a chart, but the ranking is one of the short cuts foreign investors use when they compare two Southeast Asian markets quickly.

Why it matters

If you are a graduate hunting for work in manufacturing, this is really about where the next electronics plant gets built, and right now that answer is more often Vietnam than Indonesia. Watch whether the gap widens in next year's IMF numbers or the two lines sit together, because a one-year crossing is a headline and a widening gap is a trend. For anyone saving in rupiah, the slower story matters more: countries that attract higher-value factories earn more foreign currency, and that is part of what holds a currency steady.