Viet Nam sets a precedent for tackling poverty, says The Banker
The declining poverty rate in Viet Nam is due to the country’s policy of inclusive development, said a recent article from the World Bank (WB).
In an article published in The Banker magazine February 2008 edition, WB Country Director for Viet Nam Ajay Chhibber said the country has achieved one of the world’s fastest declining rates of poverty in the past 15 years.
The poverty rate, measured as the percentage of people who live below US$1 a day, dropped from 58 per cent in 1993 to 16 per cent in 2006, with 34 million people no longer in poverty.
The steady and rapid growth in income, 7 to 8 per cent a year, has been a key factor in this reduction, the article noted.
What distinguishes Viet Nam from other fast growing economies, such as China and India, is the combination of spectacular growth and comparatively little increase in inequality.
The Gini coefficient, a measure of income inequality, has increased from 0.34 in 1993 to 0.36 in 2006—lower than in other emerging economies—which helps explain the dramatic poverty reduction.
"The depth of poverty, measured by what proportion of the poor are close to the poverty line, is declining rapidly, so we could expect many more people to escape poverty in the near future," said Chhibber.
The secret of success
Unlike in many other countries, growth and poverty reduction have occurred in both rural and urban areas.
While urban poverty is much lower—about 4 per cent of the urban population in 2006—rural areas have also fared better. In 1993, two-thirds of the rural population was considered poor; today one-fifth are.
The reduction in poverty has occurred in all parts of the country. It is much lower in the Mekong and Red River deltas than in other areas. Populations in the Northern Mountain and Central Highlands are better off overall as well, although poverty is still relatively high.
Poverty is much lower among the Kinh and Chinese people compared to other ethnic groups. But even among ethnic minorities, while poverty remains high, it has shown a steady decline.
Chhibber said literacy, trade and infrastructure are the three factors that have led to Viet Nam’s inclusive growth so far.
Viet Nam’s drive towards literacy began as early as 1945 and picked up through the 1970s and 1980s. Another major push for universal literacy was made in the 1990s, when provincial and commune level literacy campaigns were launched.
Today, Viet Nam has a 95 per cent literacy, higher than China and India.
Viet Nam’s openness to trade is one of the highest in the world and has been another key to inclusive growth. From a food deficit country in the early 1990s, Viet Nam has emerged as a major exporter of agricultural products.
The country’s far-sighted bilateral and World Trade Organisation trade agreements have encouraged high levels of foreign direct investment and turned the country into a major exporter of apparel and light industrial products and wood products.
Infrastructure has ensured that remote areas are not left behind. Today, almost 95 per cent of Vietnamese households have electricity connections, compared to only 50 per cent in the early 1990s, and 90 per cent of the population is within two kilometres of an all-weather road. This has allowed connectivity between rural and urban areas, to major ports and transport networks, and access to radio and television, even in remote areas.
As Viet Nam strives for an average income of $1000 and middle income status by 2009, the big question is whether an inclusive development pattern can be sustained.
To do so, Chhibber said, Viet Nam must ensure that its citizens have access to higher education, rural productivity rises as it further industrialises, and ethnic minorities have a share of the pie.
The country must build modern social safety nets for those who are left behind and check that growth does not come at the cost of the environment.
Chhibber found the progress encouraging for other countries. "[As] it meets these challenges, Viet Nam has left behind a record of inclusive development which others can learn from," he said.
VNS 16.2

Viet kieu get special treatment
Nguyen Thanh Son, Acting Chairman of the Committee on Overseas Vietnamese under the Ministry of Foreign Affairs, spoke to Thoi bao Kinh te Viet Nam (Vietnam Economic Times) about benefits for Viet kieu.
What is the situation for Viet kieu (Overseas Vietnamese) returning home to celebrate Tet this year?
The number of Viet kieu coming back to celebrate Tet (Lunar New Year) is expected to be around half a million. The committee has also invited 54 representative overseas Vietnamese, between the ages of 34 and 80 hailing from 11 nations, to a national level party.
Under the Prime Minister’s Decision on Visa Exemption, overseas Vietnamese no longer need visas to visit Viet Nam. Many overseas Vietnamese have expressed their appreciation for this new policy. The decision will also enhance business opportunities for the Viet kieu in the near future.
What have the reactions been to the new policy of visa exemption among Viet Kieu, especially those who left the country as so-called "boat people"?
For those who left Viet Nam as boat people, we will not take the context of leaving into consideration. As long as they can prove they are Vietnamese and have legal residency in the country where they are living, we will grant the visa exemption. This is one of the ways by which the Government wants to show overseas Vietnamese communities its goodwill.
Dual-nationality was a hot topic among both domestic and overseas Vietnamese communities last year. What course will the issue take this year?
The nationality issue relates to our law and constitution. Therefore, it can’t be solved in one or two days. It requires a long period and efforts to approve a new law or a regulation. We have created favourable conditions to help overseas Vietnamese enter Viet Nam at any time with no barriers. We know the issue of dual-nationality is one of great concern for overseas Vietnamese. We will have an action plan that meets both the requirements of the nation and the demands of overseas Vietnamese communities.
What are plans of the committee toward Viet Kieu in the future?
We will boost communication activities aimed at bringing Viet Kieu a better view of the country after 20 years of renovation.
In addition, the State has enacted some policies establishing benefits for our overseas Vietnamese. In the future, we will strengthen the spread of Vietnamese language. A series of new proposals have been submitted to the Government to be approved to allow overseas Vietnamese to own houses in Viet Nam and eventually obtain dual-nationality as well.
VNECONOMY  13.02
 
Ministry predicts rise in overseas investment
Overseas investment by major State-owned enterprises is on the rise due to investment promotion policies and simplified administrative procedures, according to the Ministry of Planning and Investment.
An official from the ministry who declined to be named predicted that Vietnamese businesses would invest an average of over 500 million USD a year overseas during 2008-10.
Vietnamese enterprises last year invested 391.2 million USD overseas in 64 projects, bringing total investment overseas during 1988-2007 to 1.39 billion USD.
So far in 2008, the Viet Nam Automobile industry Group (Vinamotor) has announced a plan to invest about 200 million USD in four projects in Venezuela and the Dominican Republic . Among these projects were plants to manufacture cement mixers, light trucks and motorbikes.
PetroVietnam has already committed to a 1.8 billion USD hydroelectric project in Laos , with plans to get a number of projects off the ground in the neighbouring state in the near future. PetroVietnam has opened a representative office in Laos to explore oil and gas projects in Pakse and Vientiane , a petroleum, depot and warehouse in southern Laos , and some mining projects.
Several other enterprises involved in food and wood processing and telecommunications are also preparing to make investment abroad.
Le Cong Dinh from DC Lawyers Co said that dozens of businesses have sought legal advice on overseas investments, including seafood firms seeking to invest in the US market.
VNECONOMY  13.02
 
Vinalines to build 9 seaports in 2008
The Vietnam National Shipping Line (Vinalines) will kick off the construction of 11 projects, including 9 seaport projects, said its General Director Mr. Mai Van Phuc.
These are the constructions of Van Phong international port (Khanh Hoa), the first phase of Hai Phong international port, and a new port in Hiep Phuong (Ho Chi Minh City) to prepare for the transfer from Nha Rong and Khanh Hoi Ports.
Vinaline has also established a yard to repair ships in Ba Ria – Vung Tau, Quang Ninh provinces and Hai Phong City. At present, businesses must spend hundreds million USD a year sending ships abroad to be repaired because the country is short of yards capable of repairing ships.
Vinalines spent a staggering 630 million USD on 30 new ships last year, a record for the corporation.
It is targeting 17 trillion VND (1 billion USD) in earnings this year, a year-on-year increase of 16 percent.
Last year, Vinalines earned 14.64 trillion VND while posting profits of 861 billion VND, with respective gains of 26 and 51 percent over 2006. Such impressive results saw Vinalines contribute 777 billion VND to the State budget last year.
 VNECONOMY 1.02

Pepper spices up Vietnam’s export status
There is a shortage of pepper around the globe and the pepper price is expected to stay firmly high for the next three years, at least. Vietnam now provides 60% of the world’s total pepper. International pepper traders say that if domestic production is allowed to be adversely affected, the supply shortage will intensify.
How do you think Vietnam should organize pepper production to maintain its position as the world’s biggest exporter?
The biggest problem now is that farmers in different localities apply different production methods, which results is Vietnam’s pepper to widely differ in quality. The best solution to this problem is to guide farmers towards applying standardized technical procedures in order to ensure uniform quality standards. The pepper production chain in Chu Se in Gia Lai province is an example of a successful model. Chu Se’s pepper is always good quality and sells for commensurate prices. The cooperation between the State, scientists, farmers and journalists can also help Vietnam’s pepper industry cement its position in the global market.
What should Vietnam do to stabilize export prices and minimize risks for farmers?
Other country’s pepper exporters cooperate in deciding prices; but Vietnam’s exporters always sell for whatever price they can get. Farmers and exporters should be cautious about making deals. They should limit sales when prices go down, while they should sell products gradually when prices go up. The Government should provide credit to help collect and store pepper, which will help minimize risks for farmers.
Previously, Vietnam’s pepper was mostly sold through intermediaries; therefore, Vietnam’s export prices were always $200-250/ton less than other countries, but the situation has been steadily improving.
In 2007, Vietnam’s pepper prices were equal to that of other countries, and at some times, Vietnam’s prices were higher. Currently, 50% of Vietnam’s pepper exports are being sold directly to clients who sell pepper directly to spice processors. Vietnamese exporters have become a link on the global distribution chain, and, therefore, its influence over the global market has been heightened.
Other major pepper producers, including Indonesia and Malaysia, have asked Vietnam to cooperate in producing and exporting pepper, which will benefit all pepper exporting nations. Many foreign investors have also invested in local pepper projects.
It is my opinion that Vietnam’s pepper industry will no longer depend on intermediaries.
You have said that now is a golden era for Vietnam’s pepper industry. What should Vietnam do to make that opportunity a reality?
The key to success is solidarity. One problem we face is that enterprises always scramble to buy pepper materials from farmers, which is not efficient nor most profitable for all. However, there is good news that very recently Vietnamese enterprises have sat together and found a common voice.
VNECONOMY 14.02

US$1.5 billion for market development
The Ministry of Industry and Trade has approved a plan to spend almost US$1 billion to develop a network of markets across the country over the next 12 years.
The network would consist of markets for local shopping, whosesale markets for agricultural products sold in auctions, and wholesale and retail markets in the centres of cities and provinces.
According to the ministry, investment, set aside from the State budget should require more than 15 trillion VND (937.5 million USD) with 7.2 trillion VND from now to 2010, 6.9 trillion VND from 2011-2015 and 1 trillion VND leading up to 2020.
The plan should help ensure commodities are transported rapidly under good management, reasonable structure and sufficient equipment. In managing the markets, the plan follows the principle of the country’s free market economy where,” “The market sets the prices, the State regulates the market.”
For wholesale markets of agricultural products, the ministry plans to invest 7.8 trillion VND to develop 157 such markets, including 77 markets for varieties of farm produce, 30 wholesale markets for fruits and vegetables, 12 wholesale markets for rice and 36 markets for aquaculture products.
Dealing with wholesale and retail sale markets in the provinces and cities’ commercial centres, the Government anticipates an investment of 5.6 trillion VND to develop 319 markets, in which 110 markets would be upgraded and 153 markets would be dismantled and rebuilt. These markets could function as the core for the provinces’ commercial centres, delivering sale markets, while acting as provincial commercial and service centres.
According to the plan, markets in the border areas would be developed to have 490 markets in 25 border provinces, including the upgrade of 167 markets with 323 new markets.
The border markets include 397 border gates, and 58 markets inside the border gates’ economic zones. All this work should come at a price tag of 1.7 trillion VND. These border markets are expected to encourage mountainous and border residents to exchange commodities via the markets.
 VNECONOMY 14.02