Impacts of Basic Public Services Liberalization on the Poor and Marginalized People: The Case of Health, Education and Electricity in Viet Nam

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Impacts of Basic Public Services Liberalization on the Poor and Marginalized People: The Case of Health, Education and Electricity in Viet Nam

June 14, 2013

Fundamentally, Viet Nam is still an agricultural country with over 78 percent of the population living in rural areas and  often in isolated mountainous regions, many of whom belong to ethnic minority groups.  People living in poverty in Viet Nam are essentially the rural poor, and the challenge facing the Government of Viet Nam is first, that these basic services should reach the poor at an adequate level of quality and second, that the poor should be able to afford them,  In this respect it has achieved notable success through programmes such as the National Hunger Elimination and Poverty Reduction Programme (HEPR)a nd the Rural Electrification Programme (REP), and although many poor people still do not enjoy such access, the government has set up programmes to address remaining obstacles.  The strong community involvement in programmes to provide health, education and energy services in rural areas has been a major factor in the achievements to date and will be essential for their success in the future.  Grassroots involvement has permitted Viet Nam to avoid  errors made by countries which have followed a more “top down” approach.

The Government of Viet Nam  has thus accepted bound commitments to liberalize trade in services, including basic services, and it is under pressure to engage in further liberalization.  Foreign participation is seen vital to obtain capital and technology.  However,  the opening of public services, which all citizens have a right to access, to foreign participation must be carried out within a strong, detailed regulatory framework. In addition, the different characteristics of the health, education and energy sectors that are examined in this report seem to call for tailored approaches. In the case of health services, the penetration of foreign suppliers of health services, including health insurance could pose a direct threat to the basis health system in Viet Nam and divert resources from the poor. In the education sector, foreign suppliers could make a positive contribution if directed to in specific targeted areas, in energy services foreign investors could make a major contribution, particularly if they can be attracted to providing services in the rural and isolated areas.

The recommendations of the General Framework for a National Strategy for the Services Sector in Viet Nam up to 2020 that a strong regulatory environment is needed for the services sector is particularly valid in these sectors.  While the main impact of liberalization arises from the commercial presence of foreign service providers, a strong regulatory environment needs to be applied to trade through Mode 1 (cross-border supply).  For example, telemedicine and distance learning would need regulation to ensure the widest possible diffusion of benefits, as well as to establish responsibility, liability and quality control.  The same considerations of quality control would apply to trade under Mode 4 (movement of persons).  In both cases imports could be seen as beneficial to the strengthening of the service sector in Viet Nam, for upgrading medical technology, for acquiring specialized education, and for the design and maintenance of electrical facilities.  However, the positive impacts would be determined by the regulatory framework in which the trade took place.

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