■ Poverty reduction in Vietnam

- Vietnam has obtained remarkable achievements in its battle against poverty over the past two decades. The country’s high economic growth during the last 20 years helps improve the living standard for most of Vietnamese people. A series of policies to support poor areas was carried out in order to quickly and sustainably reduce the country’s poverty rate. People living in poor areas are supported in terms of production, education, training, economic restructuring, labour export and legal issues.  According to the statistics from the General Statistics Office of Vietnam, poverty rate of the country keeps decreasing. If the rate of Vietnamese living in poverty was 58.1% in 1993, the figure reduced to 37.4% in 1998, 28.9% in 2002, 15.5% in 2006 and 14.2% in 2010. The country’s poverty rate stood at 12.6% in 2011 and 11.1% in 2012.[1] It is estimated that 28 million Vietnamese people have risen out of poverty over the past two decades. The average income of poor households has doubled from VND184, 300/person/year to VND369,300/person/year during 2006-2010. Thus, Vietnam was recognized by Food and Agriculture Organization of the United Nations (FAO) as one of the first 38 countries accomplishing the first task of the Millennium Development Goals which is to halve extreme poverty rate by 2015.

- Despite the undeniable progress, poverty eradication in Vietnam has not been considered sustainable. Many erstwhile poor remain vulnerable to slipping back into poverty.[2] By the end of 2011, the poverty rate of poor districts, towns facing extreme difficulties, towns at the border and coastal areas, and areas which are home for ethnic minorities was still high with 38% and 900 pro-poor households accounted for 34% of ethnic minority households. In addition, as the concept of poverty still focuses on income poverty while national poverty line is low, the rate of pro-poor households is high. Other non-income factors such as access to clean water, children dropping out of school, malnourished children in poor households are not included in the assessment. Moreover, there is a big difference between urban and rural poverty. During 2004-2012, the poverty rate of rural areas reduced from 21.2% to 14.4% while the rate of urban areas declined from 8.6% to 3.9%. There are about 8 million Vietnamese in rural areas and 1.3 million people in urban areas still live in poverty.

Table 1 – Vietnam’s poverty rate, 1993 – 2012

(Unit: %)

Source: General Statistics Office of Vietnam

■ Income inequality in Vietnam

- The average per capita income of Vietnam has increased but income distributional imbalance tends to increase (Table 2). In Table 2, the population of Vietnam is broken down into 5 group of equal size from the poorest to the richest. The difference between quintile 5 (20% of the population with highest income) and quintile 1 including 20% of the poorest Vietnamese was 8.4 times. The figure, however, increased to 9.2 times in 2010.

- The income difference between quintile 5 and quintile 1 in urban areas is higher than that in rural areas. While income inequality in urban areas tends to decline, that in rural areas tends to widen.

Table 2 – Vietnam’s average per capita income by quintile and region

(Unit: VND1000)

Source: General Statistics Office of Vietnam (2006, 2008, 2010)

- Gini index slightly increased from 0.42 in 2002 to 0.43 in 2010. In urban areas, the index is quite stable at high level of about 0.4. The index in rural areas, however, increased from 0.36 in 2002 to 0.39 in 2010. In addition, income inequality tends to be widened within the poorest group (Table 4).

Table 3 – Gini index for income by region, 2002-2010

Source: General Statistics Office of Vietnam (2002- 2010)

Table 4 – Gini index for in come by quintile, 2006-2010

Source: General Statistics Office of Vietnam (2006- 2010)

■ Reducing income inequality between urban and rural areas – a task for Vietnam

- Improving productivity and quality of agricultural products is a direct measure to improve the living standards of Vietnamese farmers. This can be done based on new crop varieties of high quality and upgrading the country’s irrigation systems. In addition, in order to enhance the value of agricultural products, it is necessary for Vietnam to apply quality management systems for those items which helps, on the one hand, meet consumers’ requirement regarding product safety and increase incomes for farmers, on the other hand.

- Human resources development also plays an important role in this battle. The government of Vietnam should continue implementing the national target program on employment in order to achieve the objective of improving the quality and effectiveness of vocational training, job creation and income generation for workers in rural areas. As a matter of fact, the gap between urban and rural areas has hindered the attraction of educated people to live and work in the countryside. Therefore, the government should provide incentives and policies to support the intellectualization process in rural areas, which is considered as a fundamental measure to address development issues in those regions.

- Vietnam also needs to increase investment in public projects in rural and, especially, undeveloped areas. Constructing public works and upgrading transportation system as well as power supply can provide benefits for key areas through job creation. Moreover, it helps improve investment climate in rural areas, creating more favourable conditions to attract domestic and foreign investment in those areas.

- Furthermore, it is possible to increase income for rural people by diversifying their livelihoods such as creating jobs for farmers between crops, developing industry and services. Improving public services including education, health care, clean water supply and waste management services which enhance the living standards of rural people also play an important role in dealing with other aspects of poverty.

References

[1]. General Statistics Office of Vietnam. http://www.gso.gov.vn/ . Accessed February 18, 2014.

[2]. General Statistics Office of Vietnam. (2002, 2004, 2006,2008, 2010). Vietnam Household Living Standards Survey 2010. Statisitcal Publishing House.

[3]. General Statistics Office of Vietnam. (2012). Statistical Yearbook of Vietnam 2011. Statistical Publishing House, Hanoi.

[4]. World Bank. (2012). 2012 Vietnam Poverty Assessment:Well Begun, Not Yet Done: Vietnam’s Remarkable Progess on Poverty Reduction and the Emerging Challenges. World Bank in Vietnam.