How Vietnam’s Sidewalk Economy Makes Money | Vietcetera

How Vietnam’s Sidewalk Economy Makes Money

In Ho Chi Minh City alone, street vendors and other sidewalk businesses generate a whopping 11 to 13% of the city’s overall GDP.

How Vietnam’s ‘Sidewalk Economy’ Makes Money

Street vendors are an undeniable part of Vietnamese culture. | Source: Tin Phung for Vietcetera

The sidewalk economy often refers to people who depend on sidewalks and even roadways for business. In modern Vietnamese society, there is a sustainable element to the local urban economy — and the economic benefits from sidewalks are very real.

So how is it possible that we can still sit and enjoy a cup of coffee on the sidewalk, eat pho on the sidewalk and have drinks on the sidewalk? And what is so special about the way people make a living on the sidewalk that allows many people to become so successful?

Origins of the sidewalk economy 

When people traveled from the countryside to cities bringing goods to sell, they naturally gravitated to streets and alleyways where they might find potential buyers. Over time, sellers "parked" in a fixed place to be more conveniently found by their regular customers and network. From street food vendors to small shop fronts, sidewalk businesses have become an indispensable part of culture in urban Vietnam. 

International experts estimate that “informal economies” or “gig economies” comprise at least 20% of the world’s total GDP. Within the umbrella of “gig economy,” the sidewalk workers in the commercial sector account for 31% of that output, while the service sector accounts for 26%. Over the years, Vietnam’s sidewalk economy has contributed nearly 11 million of the total 22 million gig workers, according to Vietnam’s General Statistics Office. Sidewalks have become a source of employment and income for a large number of urban poor residents.

Beyond Vietnam, many countries are experimenting with and developing their sidewalk economies. In order to make good use of its properties, developed and developing countries are gradually perfecting processes and management models to take advantage of these spaces. For example, Times Square in New York has experimented with blocking cars and creating sidewalk space for urban life — which resulted in greater foot traffic and interest in the area. 

Another American city, San Francisco, has converted some parking areas along both sides of the road into sidewalks, making outdoor activities and eating right in this area more vibrant. Korea is another country that’s famous for its sidewalk businesses. 

In Asia, many countries are also bringing back designated “food streets” and promoting them as part of their cultural identity. In Japan, Korea and Thailand you’ll find vibrant night markets and sidewalks with crowded sidewalks. 

The changing socio economics of sidewalk businesses 

In Vietnam, there’s a joke that: "that old lady sells iced tea but owns a few luxurious houses,” or "that man sells sticky rice, but makes enough to feed his children studying abroad.” There’s some truth to these sayings, as folks from all different socioeconomic backgrounds have become rich from trading and trading items on the street.

According to Vietnam’s General Statistics Office, sidewalk businesses generate 11-13% of the GDP of the whole of Saigon — possibly more. Indeed, there are tens of thousands of people who have stable jobs and incomes as street vendors, working predominantly on the sidewalk. It’s a simple calculation: One only needs about 500,000 VND (roughly $21.71) for an initial investment to earn about 200,000 VND a day in profit. If every vendor churns this amount for about 300 days a year, and there are some millions of vendors, that number becomes quite large. As an added benefit, street economies help boost the widespread availability of many consumer goods. 

In 2016, Professor Annette Kim, an American urban studies processor at the University of Southern California, penned a study entitled “Sidewalk City: Remapping Public Space in Ho Chi Minh City.” In this report, Kim and her colleagues observed that the same sidewalk corner or public space was often used by different people for different activities at different times. For example, at 5am, the sidewalk is someone's place to lie down and take a nap. After that, it becomes a place to serve breakfast and coffee. 

Selling street food on the sidewalk is not an easy or idyllic career. For some people, this is a choice they must make to earn a livelihood. But street vendors are an undeniable part of Vietnamese culture. And there’s a social element that makes people want to stick to the sidewalks, especially elderly folks. One the flipside, there are also people, traditions, family specialties that have earned a notable name and acclaim, thereby making more money. 

Stratification in sidewalk culture

Fixed group

This is the most dominant group in this economy with ownership of premises and space. They trade directly on an owned or leased piece of land, using the sidewalk as a buffer space for entry, temporary parking or expansion of business space or parking lots. According to the survey, the rental price for a 3 meter-wide sidewalk and about 15 square-meter in a house in Saigon or Hanoi can be up to 30 million per month.

In more beautiful and crowded areas, the price can be up to 150,000 VND per month per square meter, with a monthly cost of 450 billion VND. Under stable conditions, these coveted spots can earn reputation, draw regular customers, and work with food delivery apps to increase monthly revenue. Some famous food shops in Hanoi such as Xoi Yen, Hang Quat Bun Cha and Pho Bat Dan have lines of customers and it’s estimated that Hanoi vendors collect hundreds to thousands of visitors daily, pocketing several tens of millions per day.

With some stores being able to take advantage of famous customers like "Bun Cha Obama" as part of their brand identity and franchising, this helps them bring in several hundred million dong. Smaller, less well-known stores in fixed premises will have a number of regular customers and temporary customers. These are households with a smaller income but enough to make up for the revenue and expenditure. 

Mobile group

The mobile group is generally considered less favored in the sidewalk economy. They are traders right on the sidewalk such as water vendors, street vendors, eateries, and lottery ticket sellers. At the same time, they are not subject to registration sanctions and are under the management of the Urban Order Management Board under the Ward People's Committee. 

Some of the more established street vendors may have extensive connections, and thus obtain large and permanent use of the space. On the contrary, others have to move constantly because they cannot have a fixed place. They are the people who often joke with each other that the money they earn is only enough for "vegetables and porridge through the day.” 

Travel and itinerant trade leave them unable to secure legitimacy and personal branding. They are non-franchised, and the sale of their goods are highly dependent on weather, society and policy. The amount they collect is only a few hundred thousand, or more than a few million dong a day. 

Protecting the future of sidewalk economies in urban areas

It’s worth pointing out the protection “fees” as another avenue of income in the sidewalk economy. With high demand for sidewalk businesses, people are willing to spend money to do "underground" businesses. As a result, designated “sidewalk protection” was born.

In some areas, the government negotiates with local business establishments for temporary use of sidewalks, typically charging a fee. This "protection" fee ranges from 2-4 million VND per month for small businesses and small business households. For larger, more crowded stores, the fee can be up to 5-7 million VND. When not regulated by the government, sidewalk shops may sometimes face acts of vandalism and other disturbances by those who intimidate small business owners and street vendors trying to make an honest living. 

In addition, business activities on the sidewalk often have great competition for space and space. Even parking spaces are extremely sensitive. To be able to safely sell goods and attract customers, shippers also have to spend a few hundred to a million dong per month to own a parking space for customers.

Our takeaway 

I still remember the harshest days of the pandemic, when the whole city closed and lay dormant. On social media, my feed was bustling with friends sharing how much they craved a bowl of beef noodle soup, a plate of boiled snails, a cup of iced tea or a cup of coconut kumquat. During the pandemic, it was street food that we missed most of all — not just fancy restaurants. Street food and sidewalk culture are important and familiar parts of Vietnamese life. 

Vietnam is not India, where one can simply build a house on the sidewalk, but it’s also not Singapore, which is cracking down harshly on its vendors and pushing them off the streets. Vietnam is somewhere in the middle of these two countries. We need to find a model that allows vendors to experiment and innovate, thus allowing our vibrant street economies to flourish.

Adapted by Dan Q. Dao