III.

Recommendations and policy implications

3.1 Opportunities and challengs ( nh hng cho cc chnh sch mi)
3.1.1: Opportunities
High and stable economic growth rate
Maintaining high economic growth to underpin further rapid reductions in poverty.
The high and sustainable growth is the pre-condition to create employment, improve
income and create resources needed to implement well being and social - safety
programs. The high economic growth from 2000 to 2010 was regarded as substantial
cause in poverty reduction and hunger eradication.
Governmental policies and programs to solve poverty issue
The high political determination and commitment of the government in fighting
against poverty and hunger play a critical role. In the two last decades, many policies
have been promulgated with huge governmental funds. The most prominent program is
the socio-economic development program for the most vulnerable communes in ethnic
minority and mountainous areas, also shortly referred to as the 135 program. The
programs target is to:

Promote production and increase living standard for ethic minority households;

Develop infrastructure and develop public essential public service in the localities
such as electricity, schools, health clinics, small irrigation system, roads, clean water
providing systems;

Enhance the people's awareness for better living standards and quality of life.
In the first period (1998 2005), the program invested VND 9142 billion (US 571

million) from the governmental fund for 1870 extremely difficult communes. The
programs secon period (2006 2010) continued to cover 1879 communes with a total
budget of US $1 billion.
Assistance from the international community
As an under-developed country, Vietnam had been prioritized to receive Official
Development Assistance (ODA) from international organizations and developed

countries such as The World Bank, The Asian Development Bank, The United
Nations and The European Commission. Over the last decades, these organizations have
provided millions of dollars to invest for infrastructure, human resource development,
public administration reform. For example, in the period of 19932001 a total of US
$17.5 billion was pledged to the Government of Vietnam, with annual pledges remaining
at a constant level in the order of US $2.2 billion each year. From this amount, the total
value of signed ODA is around US $14 billion, with actual disbursements estimated to be
US $9 billion.
Collaboration between parties
Reduction in poverty is only successful if all parties from the Government to civil
society and donors, from central to local Government and people themselves involve in
the process. However, it is essential that the roles and responsibilities of the various
stakeholders are assigned clearly and specifically. Greater clarity of their roles will result
in a more effective and greater coherence between them. The Vietnam Development
Report (2001) suggests a way of addressing this by making a clear division of
responsibility between central and local Government, the role of poverty reduction staff
at local levels, and of related stakeholders, for the management and delivery of poverty
reduction activities.
The social protection system
The social protection system plays an essential role for sustainable poverty
reduction. In Vietnam, the current social protection system consist of three main
components which are social security, social assistance and area based programs. The
social security includes social insurance, health insurance and unemployment insurance.
The social assistance targets beneficiaries including the elderly aged 85 and over or living
alone, the disabled, mentally disorder patients, single parents, orphans and others
whereas the area based program is to spend on emergency relief to provide aid to
natural disaster victims.[4]

Vietnam is a development success story. Political and economic reforms (Doi Moi)
launched in 1986 have transformed Vietnam from one of the poorest countries in the
world, with per capita income below $100, to a lower middle income country within a

quarter of a century with per capita income of over $2,000 by the end of 2014. To date,
Viet Nam has achieved most and in some cases surpassed a number of the Millennium
Development Goals (MDGs), particularly with the goals on poverty reduction, education
and gender equality.
Over the last few decades, Vietnam has made remarkable progress in reducing
poverty. The percentage of people living in poverty dropped from almost 60% in the
1990s to less than 3% today. Vietnams growth rate has averaged 6.4% per year for the
last decade, but it has begun to slow recently. In 2014, GDP growth was 6 %, projected to
flatten in 2015 and start to pick up in 2016. Vietnam has managed to improve
macroeconomic stability, with headline inflation falling from a peak of 23% in August
2011 to about 4.1% for 2014.
The external sector continues to be an important engine of growth. Export value in
US dollar terms is estimated to have grown by 11.6% in 2014, outperforming other
countries in the region. Vietnams traditional labor-intensive manufacturing exports such
as garments, footwear and furniture, continue to grow at a rapid clip. Recent additions to
the export basket such as hi-tech and high-value products (cell phones, computers,
electronics, and automobile parts) have also maintained rapid growth, and have now
become the largest share of export.

The Socio-Economic Development Strategy (SEDS) 2011-2020 gives attention to

structural reforms, environmental sustainability, social equity, and emerging issues of
macroeconomic stability. It defines three "breakthrough areas": (i) promoting human
resources/skills development (particularly skills for modern industry and innovation), (ii)
improving market institutions, and (iii) infrastructure development.

A five-year Socio-Economic Development Plan (SEDP 2011-2015) elaborated

objectives for the first five years of the SEDS and identifies the specific measures and
resources that are needed to achieve high quality and sustainable economic growth,
including: the need to restructure the economy to increase the share of high value-adding
economic activities; improve the living standards of ethnic minority populations;
strengthen environmental protection; and mitigate and prevent the adverse impacts of
climate change. The country has completed review of this 5 year plan and is preparing the
next 5 year plan, 2016 2020 to achieve the targets set in the 10-year strategy.

The Government has recently paid more attention to improving the business
environment, with two Resolutions issued in March 2014 and March 2015, setting out
concrete actions to remove obstacles to doing business in Vietnam, with a goal of
achieving a business environment comparable to the average of the ASEAN-6 group.3.2
Policy Implications ( hon thin cc chnh sch c, sa nhng tn ti)
Conclusion
Challenges
Problems to be solved
In 2010, Vietnam successfully met six out of eight Millennium Development Goals, one
of them is poverty reduction. Concern should be given to quality of these goals. Based on
findings of surveys and monitoring results, the Committee on Social Issues of the
National Assembly found that there were still limitations and difficulties as follows:
The annual percentage of poverty reduction and poor households has not been accurately
accounted. Poverty reduction programs and projects have been scattered and there have
been overlapping of intervention and coordination. Limitations have been found in
integration and joint coordination. Poverty reduction has not been sustainable.
To promote what have been achieved and overcome shortages, attention should be paid to
the following issues:
First, the National Assembly should allocate sufficient budget to social security sector
including poverty reduction to implement socio-economic norms set out by the National
Assembly. Implementation of programs and project relating to poverty reduction should
be regularly oversight.
Second, the Government should issue poverty line for 2011-2015 period to facilitate
budget preparation for 2011.
The new poverty line should be considered, studied and developed, taking into account
other factors namely personal subsistence spending, health service, environment, equal
opportunities and other non-income elements namely human resource, property,
accessibility to supporting services. After the Government issues new poverty line,
provinces and centrally-rum cities will be assigned to decide their poverty line.
Third, concerned ministries and branches and localities should study and develop a
comprehensive strategy for the coming ten years and a poverty reduction program for the
period of 2011-2015. Following issues whould be given attention to:

National Target Program must be comprehensive and systematic, closely associated with
other programs such as building new rural areas, and job training for rural labour forces.
Budget should be allocated to localities to that they can identify and implement porverty
reduction activities which are suitable to their own conditions and needs of local poor
people. Potential provinces and cities are encouraged to highten their porverty line and
issue poverty policies, and mobilized resources for reducing poverty in their localities.
Prioirty in resouces and other assisstance should be given to difficult areas and vulnerable
groups affected by economic fluctuations. Different policies should be developed for
permanent poor groups and temorary poor groups. Assisstance to poor people should be
varied from providing free, loans to conditioned cash assistance. Free assistance should
be restricted to extremely necessary cases. State management and dessignation of focal
points should be strengthened . MOLISA should coordinated with the Ministry of
Planning and Investment to agree on methodology to indentify poor households and
percentage to come up with a unique set of legal data on percentage of poor household in
Viet Nam. Data relating to policies on poverty reduction should be reviewed and updated
to produce a set of accurate and unified data for policy analysis at national level. Model
of sustainable poverty reduction should be multiplied by provinces. Communication
should be stepped up to raise awareness to people and community. Capacity building for
officials is necessary to ensure the effectiveness of poverty reduction./.

Policy Implications

Emerging Policy and Program Implications

The report is primarily focused on poverty and inequality diagnostics, and as such
aims to support a better informed debate on policy and program responses with key
stakeholders in Vietnam (government ministries, the National Assembly, local researchers
and research institutes, INGOs and NGOs, and international partners). The findings of the
report suggest four emerging areas of policy focus.
First, it is essential for Vietnam to reduce volatility and macro instability, and
undertake complementary structural reforms-restructuring state owned enterprises,
reforming the financial sector, raising the effectiveness of public investments and moving
to a more transparent and open development processnecessary to put Vietnam back on
the path of high and sustained rates of economic growth. But the quality of growth
matters as much of the rate of growth.
Second, measures are needed to make Vietnams economic growth more
inclusive, for example by supporting productivity and growth in the rural sector through

improving connectivity, strengthening skills, improving the investment climate,

expanding access to basic services, also better targeting agriculture support measures
(e.g. credit, agriculture extension, and market information) to the needs of poor and
ethnic minority farmers. Support for labor intensive industries and SMEs in both formal
and informal sectors will also contribute to inclusive growth, including better access to
credit and training, expanded vocational training for youth in poor and ethnic minority
areas, and incentives for local enterprise development to provide more diversified
employment options in local communities. The occupational and geographic mobility of
labor should be enhanced: migration of rural workers into Vietnams rapidly growing
cities and towns as well as to foreign countries such as South Korea, Japan and Malaysia
has been a powerful force for inclusive growth and poverty reduction in the past. It is
important to reduce inequality of opportunities, including improving the quality of
education and promoting skills development, particularly in rural areas. Improving
governance through greater 8 transparency and accountability will help to increase local
participation and prevent a rise in the inequalities that undermine inclusive growth.
Third, policies to promote high and inclusive growth must be complemented by
effective social insurance and social assistance policies. Vietnam should protect social
spending and social assistance in the process of economic restructuring. To put in place
automatic stabilizers to effectively protect the poor in challenging times of economic
instability, social benefits and official poverty lines should be inflation-indexed, also
adjusted to capture differences in the spatial cost of living, including between rural and
urban areas, and to properly take into account the basket of goods and services specific to
the poor. Better measures are needed to protect poor and vulnerable households from the
rising cost of basic services, particularly rising electricity costs in the context of the
planned energy subsidy phase-out . Migrant workers have been hard hit by the rising cost
of living in urban areas; they should have equal access to basic services, portable benefits
(including health insurance), and better access to social protection programs.
Finally, continuing improvements are needed in Vietnams poverty monitoring
system so that it provides a reliable source of information for policy making in a rapidly
changing economy. To this effect, objective resource-independent poverty lines should be
used in parallel with resource-linked targeting lines, and the source and appropriate
application of the two types of poverty lines should be communicated clearly to policy
makers, practitioners, and the public. Furthermore, the construction of future poverty
profiles and poverty estimates should be done in a transparent way to facilitate
monitoring of progress by independent experts and the public at large.
References :

1. "Poverty Reduction in Vietnam: Achievements and Challenges" The World Bank.

March 2011. Retrieved March 6, 2012.
2. "Vietnam Poverty Analysis" . Australian Government. May 9, 2002.
Retrieved March 6, 2012.
3.