UNDP Calls for Rapid, Equitable Growth to Attack Serious Pockets of Poverty in Viet Nam

13 Aug 2003

Ha Noi -The United Nations Development Programme (UNDP) urged the Government of Viet Nam to promote more rapid and equitable growth as the most effective way to attack on deep poverty pockets during a meeting held today in Ha Noi.

The meeting, co-organized by UNDP and the National Centre for Social Sciences and Humanities, brought together representatives from international and national agencies to discuss the implications for Viet Nam arising from the recently published Human Development Report 2003 Millennium Development Goals: A compact among nations to end poverty.

UNDP said despite a decade of sustained economic growth and impressive reduction in rates of poverty, pockets of deep poverty remain in regions of the nation and these must be addressed if Viet Nam is to achieve the spirit of the Millennium Development Goals (MDGs). The MDGs, endorsed by all member states of the United Nations, set out a series of time-bound and quantifiable targets ranging from halving extreme poverty to halting the spread of HIV/AIDS by 2015.

“Viet Nam’s achievements on the MDGs have been impressive and can be held up as a worthy example for the world, noted UNDP Resident Representative Jordan Ryan. But he cautioned, “Viet Nam should not be lulled by its success. Viet Nam can and must do much better as it faces intense global competition.”

The UNDP reports and presentations by experts pointed to growing concerns that Viet Nam must address quickly, to avoid shortfalls in the quality of growth and sustainable development.

The UNDP urges that rapid, equitable growth offers the best prospect to get as many people out of poverty as possible. But further attention is needed for the areas of Viet Nam that have yet to fully benefit in the promises of doi moi. Recent research reveals that significant number of provinces, and areas within provinces are falling behing. This is especially so in rural areas where the vast majority of Vietnamese people live. Provinces like Hoa Binh, Bac Lieu, Yen Bai, An Giang, Lang Son, Ha Giang, Lao Cai, Tra Vinh, Gia Lai, Kon Tum, Lai Chau, Cao Bang and Son La are faring worse by wide margins. In many of these provinces, dependence on one commodity, isolation from the mainstream economy and an absence of investment in agriculture, resulting in environmental degradation, have left them unable to pull themselves out of the poverty trap.

UNDP calls for renewed attention to this group of often remote and isolated provinces, which are "perilously off track". UNDP recommends an interventionist strategy in these vulnerable provinces in a range of areas from infant mortality to capacity building for improved local governance.

The meeting benefited from a range of national and international experts. Professor Le Dang Doanh, Senior Economist from the Ministry of Planning and Investment, stated that in addition to addressing geographic, social, linguistic and ethnic isolation, further progress would require Viet Nam to deepen the reform process. The country should further develop market institutions including the land, capital and labour markets, as well as improve state institutions responsible for creating necessary legal framework and favourable business environment.

Professor David Dapice, a longtime Viet Nam observer, questioned the country's long-term economic sustainability in a recent report, “Viet Nam’s Economy: Success Story or Weird Dualism?” commissioned by UNDP and the Prime Minister’s Research Commission. The report reveals some worrisome developments including the growing inefficiency of overall investment, especially public investment, the slowing rate of poverty reduction, widening rural-urban inequalities and risks to the overall sustainability of Viet Nam's development process.

Of the three major types of investment, state/public investment, foreign direct investment and domestic private investment, the latter appears to be generating by far the highest returns in terms of new jobs, poverty reduction and reducing inequalities. However, development of the private sector in Viet Nam, the report analyzes, has offered a mixed bag, with some urban centres thriving on it and rural areas failing equally dramatically. Therefore, success stories, including “One stop Shops” and licensing deregulation for a more business friendly local environment, need to be repeated in the provinces lagging behind. State incentives to promote more private investment, both domestic and FDI, are seen as critical.

Dr. Cao Viet Sinh, Director of the Department of National Economic Issues discussed the way the MDGs have been embedded in the national planning framework and the required reallocation of resources to social development goals for the achievement of the MDGs.

UNDP noted the important role governance plays in promoting growth and reducing poverty, especially at the local levels. Good governance is about improved decision-making processes. It is also about making the right choices on public investments and ensuring that resources are used effectively and properly to ensure pro-poor growth. Therefore UNDP recommends much greater capacity development assistance for effective local governance at the provincial and sub-provincial levels.

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