A World Bank photo shows a Red Dao woman embroidering a shirt at the weekly market in Sapa, northern Vietnam
Vietnam has lifted some 30 million people out of poverty in the past two decades, but macro instability now leaves the remaining poor harder to reach, the World Bank said in a report.
The poverty rate has fallen from nearly 58 percent of the population in the early 1990s to 20.7 percent in 2010, the bank said in its 2012 assessment on Vietnam's poverty.
The new rate was based on a poverty line established by the bank and Vietnam General Statistics Office to better reflect the living conditions of the poor, at VND653,000/person/month or US$1.05/person/day, meaning any person earning below that is marked as poor.
Vietnam's labor ministry earlier came up with a poverty rate of 14.2 percent for 2010, using the poverty lines of VND 500,000/person/month and VND400,000/person/month for urban and rural areas respectively.
Thanh Thi Thach, 41, a farmer in the southern province of Tra Vinh, one of those cleared from the poverty list, told a World Bank interview her family used to harvest only one crop a year.
But they have been able to grow more crops and raise productivity thanks to new varieties, and canals for irrigation, she said.
Rising levels of education and diverse employment choices other than farms such as construction sites, factories or domestic housework, have also contributed to poverty reduction in the country, the bank said, noting that primary and secondary enrollments for the poor have reached more than 90 percent and 70 percent respectively.
Thach said she has never been to school but now she can afford to hope that her grandchildren will finish high school and get better jobs. "More knowledge, higher pay," she said.
But there come the bigger and persistent problems, according to the report titled "Well Begun, Not Yet Done: Vietnam's Remarkable Progress on Poverty Reduction and the Emerging Challenges."
"[The] achievements are very impressive," said Valerie Kozel, Senior Economist for the World Bank and lead author of the 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, poor health conditions," Kozel said.
The report said Vietnam's 53 ethnic minority groups make up less than 15 percent of the population but they accounted for nearly 50 percent of the poor in 2010.
It said most minorities continue to reside in more isolated and less productive mountainous regions of the country.
The poverty maps of Vietnam cities and provinces in 1999 and 2009 showed that poverty has fallen in the two deltas Red River in the north and Mekong in the south, and around major cities and coastal areas.
But there has been little progress in the Central Highlands and the northern mountainous provinces, the homes of the ethnic groups. The maps showed poverty rates among many minorities remain at between 50 and 80 percent.
The report said people in rural areas have also been forgotten all the same in the rapid economic transformation and are left with limited access to high quality education and health services, as well as good jobs, compared to those in urban areas.
It said the rapid pace of urbanization also pulled more people from their rural homes to migrate to cities to work in private industry and services, mostly in informal jobs that lack benefits such as health insurance and pension.
That is not to mention that many households who have just risen out of poverty are very likely to fall back again due to job losses as the impacts of the global economic crisis, or related shocks such as the effects of climate change on rainfall and temperatures, and human and animal influenza pandemics, the report said.
Experts in the report said with all the problems, poverty reduction in Vietnam in the coming time will be more challenging and needs more and better government policies.
They said Vietnam needs to increase macro stability by restructuring state owned enterprises, reforming the financial sector, raising the effectiveness of public investments and employing a more transparent and open development process.
Growth needs to be more inclusive, by expanding investments in rural areas and promoting higher productivity in agriculture, the report said. The 2010 Vietnam Household Living Standard Survey by the General Statistics Office suggested that agriculture will continue to be the main source of income for many poor people in Vietnam.
Vietnam should also improve its social insurance and social assistance policies to protect the poor and vulnerable households from the rising cost of basic needs like electricity costs, the bank said. Vietnam's government recently announced it would stop subsidizing power prices and allow the monopoly state-owned Electricity of Vietnam to raise prices accordingly.
It said the country should set up a system with "automatic stabilizers" to protect the poor in challenging times of economic instability, and that official poverty lines should be "inflation-indexed" to truthfully reflect living conditions.
Also, poverty reduction programs themselves should be improved as only 50 percent of the poorest households are currently eligible to receive benefits from the government's poverty reduction program, and the benefits are insufficient.
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