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Poverty reduction in Viet Nam - Challenges and solutions
29/6/2015 15:34' Send Print

Poverty reduction achievements: Impressive success story of Viet Nam

The cross-cutting point of view of the Party and State is poverty reduction is both objective and demand and a driving force for socio-economic development, contributing to ensuring social security and equity. With the determination and efforts of the whole political system and people, Viet Nam has fulfilled the Millennium Development Goal of eradicating extreme poverty and hunger by 2002 (13 years earlier than Viet Nam’s goal and 8 years earlier than the global common result). This has created an important mainstay for continued national endeavors on poverty reduction.

Especially, after 10 years of implementing the comprehensive strategy on growth and poverty reduction, the number of poor households dropped from 29% in 2002 to below 9.45% in 2010. During the period of 2011-2015, the implementation of the National Target Program on sustainable poverty reduction helped reduce the rate of poor household according to new poverty lines (500,000 dong per person per month in urban areas and 400,000 dong per person per month in rural areas) from 14.2% in 2010 to 11.76% in 2011, 9.6% in 2012, 7.8% in 2013 and more than 6% in 2014 with an average decrease of 2% per year. With the implementation of Resolution 30a/2008/NQ-CP, the poor household rate in 62 poor districts fell from 58.33% in 2010 to 50.9% in 2011, 43.89% in 2012 and approximately 30% in 2014 with an average decrease of more than 7% per year. The gap of living standards between urban and rural areas dropped from 2.3 times in 1999 to 2 times in 2008. Viet Nam’s average per capita income has surpassed that of a poor country (US$ 1,000). Viet Nam has become a middle-income country with average per capita income of approximately US$ 2,000. Infrastructure in especially difficult communes has been improved remarkably. Tens of thousands of public works such as electric works, schools, health stations and irrigation system were built and put into use. The material and spiritual life of ethnic minority people in remote areas have basically changed. More importantly, the Party and State’s correct and timely policies and persistent efforts to eliminate hunger and poverty reduction have encouraged and uphold people’s will and capacity to rise out of poverty and helped a number of poor people get out of extreme poverty.

Poverty reduction is not merely a social policy but must be considered a priority development goal of Viet Nam. Placed in the harmonious relation with economic growth, poverty policies have been developed in line with economic development in each period and vice versa, policy linkage has played an important role in contributing and promoting economic growth.

Prompted by determination and consensus of the whole political system, poverty mechanisms and policies have been actively and comprehensively developed, conforming to poverty characteristics and nature of beneficiaries and focusing on creating necessary premise to empower the poor to improve their life and rise out of poverty. These policies regulate investment on infrastructure, loans to develop production, vocational training, assistance to access to basic social services such as healthcare, culture, education, housing, clean water, among others.

Poverty reduction programs and projects have been dynamically and flexibly executed and implemented with concrete and suitable solutions, accounting for factors relating to region, area, habits and community, and poverty reduction programs of branches and socio-economic development programs of regions.

Targeting, classifying poverty causes and poverty development of different population groups help build poverty policies with focus, priority and effective impacts.

Viet Nam’s inclusive poverty reduction has involved levels, branches, society, and resources from different channels and sources and capitalized on the international community’s assistance and resources including capital, technical support and expertise.

Basically, the Party’s point of view towards poverty reduction policies has changed in line with socio-economic conditions, from large-scale and nationwide poverty reduction with multi-dimensional policies to concentrating on local poverty reduction, poorest groups and localities to allocate resources more appropriately, bridging the rich and poor gap, integrate policies, building poverty lines with a multi-dimensional approach and enhancing the quality of sustainable poverty reduction. Most of the poverty policies have been issued as sub-law documents, regularly revised and supplemented to conform to socio-economic conditions and budget allocation in each period. Viet Nam’s successes in poverty reduction have been confirmed as substantive results in different assessed fields. Despite limited resources, Viet Nam has implemented policies, programs and projects focusing on three major objectives: first, to improve access to basic social services of the poor, namely healthcare, education, vocational training, housing and clean water; second, to generate jobs and income through policies ensuring production land, priority credit, agriculture, forestry and fishery extension and business development; third, to build essential infrastructure in especially difficult communes and villages.

Constraints and challenges in future

Beside achievements, there remain constraints and challenges in poverty reduction in future.

1. Poverty reduction policy development and implementation have been overlapping, and heavily subsidized without focus. Constraints in coordination, and integrations of policies and resources have become an obstacle to the realization of poverty reduction policies.

Since the end of 2009, Viet Nam has been expediting 41 projects and policies on poverty reduction with more than 75 main interventions in different fields, regulated by more than 100 decrees, decisions and circulars. Of which the most embracing ones are the National Target Program on poverty reduction, Program 135 (second phase) and Resolution 30a on assisting 62 poor districts. These programs and policies or components of these programs and policies have been managed by many different ministries, branches and sectors, making it difficult to implement and avoid overlapping and repetition. To achieve cost effectiveness, it is essential to reduce overlapping in poverty policy development and implementation in the new period.

2. There remain limitations in resource mobilization and allocation, delay in resource allocation has not yet been overcome.

Resources for poverty reduction in programs and projects including the National Target Program on poverty reduction and the Program 135 have been concentrated on infrastructure development. Apart from limited resources, resource allocation has been delayed, directly affecting the progress and quality of program and project implementation.

3. Poverty line and poverty measurement have not been appropriate to poverty reduction issues

Viet Nam’s poverty lines, formal or non-formal, used for monitoring and assessment, have been based on economic elements. Using the sole factors of income and expenditure to assess and define poverty has no longer been suitable to the issues of poverty reduction, especially while social security norms have been expanded and upgraded in conformity with the current socio-economic development as well as objectives of sustainable poverty reduction. To effectively reduce poverty to achieve the objective that by 2020 Viet Nam will basically become a modern industrialized country, it is necessary to scientifically, objectively, and flexibly redesign poverty measurements which reach international standards, and fully account for people’s demands on minimum spending while satisfactorily taking into consideration education, healthcare, environment, opportunity equality, access to supporting services, among others to reflect the nature of poverty in the new period. It is necessary to develop new poverty lines by using the multi-dimensional approach to help poor people, communes and regions identify clearly the gaps and strive to escape from poverty and effectively reduce poverty.

4. Growing rich and poor gap

According to the latest statistics of the World Bank and the General Office of Statistics, this gap coefficient has risen from 8.1 in 2002 to 9.4 in 2012. This gap has been growing in parallel with poverty reduction results. The Northwestern region and the Central Highlands are the two regions with highest rate of poverty in Viet Nam. In 2010, as per official poverty line, the poor households in the Northwestern region was 2.52 times higher than that of the country’ average and in the Central Highlands it was 1.6 times higher. Income gap among population groups and regions has been widened while the Consumer Price Index (CPI) has been increasing. These lead to a fall in opportunity to access basic social welfare of the poor.

5. Approach to ethnic minorities’ poverty should be changed and a primary priority in poverty policies

Poverty among ethnic minorities has existed from the very beginning as a big challenge to poverty reduction in Viet Nam. Although Viet Nam’s 53 ethnic minority groups make up 15% of the population, they account for 47% of the poor. Poverty gap among regions and areas is large. By 2012, there were only three regions with poor household rate under 10%. They are the Southeastern region with 1.27%, the Red River Delta with 4.89% and the Mekong Delta with 9.24%. Regions with high rate of poor household are the Northwestern mountainous region with 28.55%, the Northeastern mountainous region with 17.39% and the Central Highlands with 15%. One out of 5 provinces has the poverty rate of more 20%. High poverty rate among ethnic minority communities is a challenge to poverty reduction in the next period. Most of target districts assisted by Resolution 30a are inhabited by ethnic minority people.

6. Poverty among the elderly, urban areas and low-income groups has been on the rise along with the aging population and urbanization and migration from rural to urban areas.

Analysis of population and income patterns suggests that Viet Nam has to face challenges in poverty among the elderly due to increasingly aging population and slowly increasing income. The elderly may be at higher risk of poverty; female elderly face higher risk of poverty than male. Those in rural areas are more vulnerable and poorer than those live in urban areas. Those of ethnic minority groups are more at risk than those of the Kinh ethnic group.

For people in urban areas, they have to cope with difficulties and challenges in livelihood due to higher costs of healthcare, housing, education, travel and minimum subsistence. Besides, poverty is also influenced by impacts of climate change, natural disasters, risks in life and increasing social ills.

7. Credit policies for poverty have not associated with training programs, capacity building, and production thinking for the poor.

Lack of close linkage with agricultural extension policies also limits the effectiveness of credit policies towards production. New loans only help increase total income not a change in income structure. This is attributable to the separation of credit assistance from training programs, capacity building and production thinking for the poor.

New solutions for sustainable poverty reduction

First, overcome overlapping in designing and implementing poverty policies, step up delegation to heighten local administration’s role and responsibilities. Promote the core role of the Vietnam Fatherland Front, mass organizations and community.

Reduce component and small projects in poverty reduction programs, build an integrated poverty reduction program, especially transfer autonomy in planning and developing poverty reduction programs and delegate disbursement to provinces. Reduce the number of documents and policies on poverty reduction to avoid overlapping and be more flexible in policy content, target and timeline.

Allocation of resources and issuance of decisions concerning poverty reduction to provinces to facilitate flexibility, dynamism and appropriateness in implementation of poverty policies in each locality. Delegation of responsibility on resources can help avoid delay in fund allocation to poverty programs and projects.

The Vietnam Fatherland Front and its member organizations continue to play a key role in mobilizing social and community participation, pay attention to coordinating and balancing mobilized resources with the State’s allocations to improve effectiveness of poverty policies; mass organizations and community, show concern and assistance to poor households in the areas, and coordinate with grassroots administration to support each poor household.

Second, define poverty lines and targets with a multi-dimensional approach.

Viet Nam’s poverty lines over the past 20 years is one-dimensional while causes to poverty are varied and poor groups are economically different. For years, sustainable poverty reduction has been a challenge for Viet Nam and studies suggest that the multi-dimensional approach to poverty is more effective.

In addition, potential provinces and cities are encouraged to raise their poverty lines above the national lines, allocate and mobilize resources for reduce poverty in their localities.

Third, bridge rich and poor gap is a primary priority in poverty policy in the future.

Reducing rich and poor gap between social groups, particularly between poor group and the remaining does not only call for poverty reduction policies, remarkably macro economic policies relating to Viet Nam’s economic growth pattern. Analysis shows that the growth model which brought about remarkable positive achievements in poverty reduction in the past becomes less effective for the poor. Lack of education and expertise has widen rich and poor gap among groups. These requires more attention to poverty policies through increasing investment in human resource development in the future.

Fourth, focus on promoting internal strength and cultural traditions in poverty reduction for ethnic minority community.

Poverty reduction for ethnic minority groups has emerged as a big challenge to poverty policy implementation in Viet Nam. As a result, recommendations on poverty reduction for ethnic minority groups often relate to some key contents such as viewpoint consensus on policies on poverty reduction for ethnic minority groups, enhancement of internal strength, respect for their cultural traditions and values, local knowledge, and targeting the ethnic minority people in poverty reduction.

Fifth, poverty reduction for the elderly must show sufficient concern to methods and social policies (1) by region, area and urban region.

As the number of the elderly is increasing, their income rise coming from labor resources and social pension program is a solution to help them avoid risks of poverty. Supporting and encouraging them to continue taking part in economic activities, particularly those with professional expertise. Assistance amount and methods must be studied to meet their demands and conform to each region and area.

Under the impacts of escalating prices, economic crisis, unceasing migration of laborers, overload of urban, urban poverty has stood out in the poverty picture of Viet Nam. To have an in-depth knowledge of urban poverty, it is necessary to apply the multi-dimensional approach and take measures to increase the coverage of social assistance policies along with minimizing discrimination against migrants.

Sixth, credit to the poor must be diversified, accessible and flexible.

Continue increasing resources, allocate and manage credit and loans to generate employments and other programs for sustainable poverty reduction. Flexibly and effectively adjust loans, interest rates and duration in conformity with jobs, craft, and production branches. Link giving loans with transfer of science and technique, give guidance to self-reliant poor households to help them rise out of poverty sustainably. Poor people must be considered partners of poverty policies not passive beneficiaries. Link production with preservation, processing, and sale of products, shift to commodity production to achieve sustainable poverty reduction.

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(1) Presently, Viet Nam boasts 1.4 million elderly people from 80 years of age living on a pension of 180,000 dong per month.

Bui Sy Loi, PhDVice Chairman of the Committee on social affairs of the National Assembly