Poverty in Vietnam

Rice fields, Sapa, Vietnam © Piet van der Poel

Vietnam has the remarkable record for a developing country of achieving the first of the Millennium Development Goals (MDGs) - halving poverty over the period 1990-2015 - more than a decade in advance. According to the most recent progress report published in 2005, the percentage of households below the poverty line (assessed as the cost of adequate food plus non-food essentials) fell from 58% in 1993 to less than 24% in 2004, whilst extreme poverty (food costs alone) dropped from 25% to below 8%.

Although no formal sources of more recent date can be traced, it is generally accepted that this rate of poverty reduction has continued unchecked, at least until the end of 2007. The UK Department for International Development suggests that 3 million people moved above the poverty line in 2006 alone. Other key social indicators show similar spectacular improvement to the extent that Vietnam claims to have achieved all of the MDG targets except those for HIV/AIDS and sanitation.

Despite these successes, Vietnam remains classified as a “low income” country where poverty limits opportunities for 12 million people and a further 10 million hover just above the poverty line. The Vietnamese government’s Socio-Economic Development Plan (2006-2010) is clearly focused on the MDGs – indeed under new and tougher criteria for poverty assessment, the government has set a range of 12 more demanding targets for 2010 which are known as the Vietnam Development Goals.

Studying in Vietnam © unicef

The most challenging component of this programme is the concentration of poverty amongst Vietnam’s minority ethnic groups who form about 13% of the population and who predominantly live in the remote upland and highland regions. Cut off from the country’s prosperity by underdeveloped infrastructure and dependent on low yielding agriculture and forest products, more than 60% of these groups were assessed as below the poverty line in the 2004 survey. Key government services such as education tend to be below standard and NGO development programmes struggle to produce sustainable results. Decentralisation of project responsibility to the areas in need is often cited as the remedy.

The Economy in Vietnam

Nike factory, Vietnam. © Corporate Watch

Vietnam’s success in poverty reduction is widely attributed to the doi moi (open door) policy introduced by the government in 1986 and which signalled a move away from central planning and collectivist agriculture towards the beginnings of a market economy and farm ownership. The country’s traditions of social welfare may also have been important in ensuring that the benefits of spectacular growth rates have been shared – the Gini coefficient measure of inequality has increased less in Vietnam than in other countries of comparable headline performance.

ICT for Vietnamese children © United Nations Development Programme

The radical shift in economic philosophy culminated in Vietnam’s successful application to join the World Trade Organisation (WTO) in January 2007, supported by a frenzy of new laws and regulations necessary to align business activities with the western model. The Vietnamese government has nevertheless attempted to maintain state control over key industries through a much slower programme of privatisation than has been prescribed elsewhere. Underperforming state-owned enterprises are however blamed by international advisers such as the IMF for the difficulties that Vietnam is experiencing in guiding its macro-economy through the 2008 crisis of rising food and energy prices. If inflation cannot be brought under control, poverty indicators could swiftly move into reverse. The government’s decision to freeze rice exports at 3.5 million tonnes for 2008 (compared with 4.5 million in 2007) was driven by the motive to stabilise domestic food prices.

Vietnam has retained strong support from the international donor community which pledged a substantial $4.4 billion for 2007, unaffected by possible concerns about governance and human rights. Conditionality instead focuses on overcoming inconsistency and inadequacy in the legal infrastructure for business and property, and on compliance with the rules of global trade.

Climate Change in Vietnam

Floating fishing village in Halong Bay, Vietnam © Piet van der Poel

The achievement in poverty reduction faces a more fundamental uncertainty than transient world economic instability. A 2007 UNDP case study stated that climate change represents “a very real threat to Vietnam’s continued socio-economic development” with the poorest communities most at risk. Vietnam has been identified as one of five countries most vulnerable to rising sea levels which will impact the low-lying Mekong Delta. A one metre rise could displace a significant proportion of the 25% of the population that lives in the coastal region, destroying agriculture and fishing livelihoods. And predictions of changing rainfall patterns and more extreme weather events impinge on sensitive rice yields.

The case study warns that awareness of the implications of climate change is contained within a small group of experts in Vietnam, that there is no national adaptation strategy and that government bodies will require greater coordination. By contrast, the country has long experience in disaster management which could provide a basis for action. For example, the restoration of lost mangrove plantations and better maintenance of thousands of existing dykes are relatively straightforward steps. An exceptionally severe typhoon season in 2007, with extensive loss of life, the worst flooding for 50 years and damage valued at $725 million, may catalyse a more concerted response.
Health in Vietnam

Traditional medicine at market, Vietnam © Piet van der Poel

Despite a dramatic fall in cases of malaria since 1995 and control over polio and tuberculosis, healthcare at local level - especially in remote areas - is still very poor in terms of quantity and quality. Health insurance for the poor was adopted several years ago but access to free healthcare for those groups has remained modest. UNDP is recommending that the government increases the relatively small share of national income devoted to health.

To fulfil its commitment to child protection, the government introduced a new regulation in 2005 under which children up to six years old should receive primary healthcare, medical check-ups and treatment free of charge. However there are signs that the necessary funding has not yet materialised at the level of individual health centres. In 2005 27% of young children were underweight for their age and a more concerted effort will be needed to address malnutrition and child health problems – a contributory factor is the slow progress in improving access to adequate sanitation, in part a failure of donor coordination.

A problem which insistently causes concern for Vietnam's leaders is HIV/AIDS, despite generous donor funding in excess of $50 million pa. Prevalence is officially relatively low at 0.5% but has been increasing sharply amongst high risk groups in recent years. Although the government has made it a priority to address the issue at both national and community levels, the virus has now spread to every province in Vietnam. The government’s 2006/07 report on HIV/AIDS acknowledges that more effort and more spending is required if the MDG target is to be achieved.



The OneWorld Vietnam Guide was first published in this format in September 2005 with a text written by Volunteer Editor Hanh Vu.

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