New Challenges for Poverty Reduction in Vietnam

This is quoted from the latest World Bank report titled “Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges."

 

“These achievements are very impressive,” said Valerie Kozel, Senior Economist for the World Bank and lead author of the newly released report. “But growth has slowed in recent years due to macro-instability and external shocks, inequality is rising, and ethnic minority poverty remains persistently high. The remaining poor are harder to reach; they face difficult challenges - of isolation, limited assets, low levels of education, and poor health conditions.”

 

The report emphasises that the prevailing poverty of ethnic minorities in the country is of particular concern. Although Vietnam’s 53 ethnic minority groups make up less than 15 percent of the population, they account for nearly 50 percent of the poor in 2010. Most minorities continue to reside in the more isolated and less productive upland regions of Vietnam.

 

Rapid economic transformation and growth have meanwhile contributed to rising inequality in income and opportunities. Some of the poor, especially those living in rural areas or small cities, have limited access to high quality education and health services, or to good jobs.

 

Also according to this report, with the rapid pace of urbanisation, the urban poor pose another new challenge in Vietnam. A growing number of workers from rural areas are migrating to the cities to work in private industry and services, and many of these jobs are informal and lack employment benefits such as health insurance and pension.

 

Ms Nguyen Thi Lan Huong, Director General of the Institute of Labour, Science and Social Affairs affiliated to the Ministry of Labour, Invalids and Social Affairs, said, “In the coming years, poverty reduction in Vietnam will be more challenging, requiring more efforts from the government, the society, and the poor themselves.”

 

“Vietnam needs to move forward in a number of important areas,” said Kozel, “Growth has been the main driver of poverty reduction and Vietnam needs to take measures to promote macro-economic stability, reduce inflation, and ensure sustainable growth in the future.”

 

According to the report, it is critical to make growth more inclusive, by expanding investments in rural areas and promoting higher productivity in agriculture. Support for labour-intensive manufacturing and SMEs 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 labour should be enhanced: migration of rural workers into Vietnam’s 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.

 

According to the report, 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 transparency and accountability will help to increase local participation and prevent a rise in the inequalities that undermine inclusive growth.

 

Vietnam should also improve its poverty reduction and social protection programs so that more poor households will benefit from them. For now, only 50 percent of the poorest households are eligible to receive benefits from the government’s poverty reduction program, and the level of benefits received is generally very low.

 

Besides, continuing improvements are needed in Vietnam’s poverty monitoring system so that it provides reliable 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.