major challenges for economic growth and poverty reduction in the Mekong river delta

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized major challenges for economic growth and poverty reduction in the Mekong river delta Public Disclosure Authorized NguyÔn V n Thµnh PhD Ph¹m Lª Ph ng PhD Th i Bïi H i An M.A Public Disclosure Authorized hµ néi september 2005

2 table of content Content Page A Introduction 3 I Purpose of the study 3 II Subjects and scope of the study 3 III Method of the study 3 B Content of the study 4 I Some regional common features 4 II Main features of poverty situation in the MRD 4 III Implementation results of the economic growth and poverty reduction policy (strategy) in the MRD 7 1 Implementation results of policies (strategies) on economic growth 7 2 Implementation results of poverty reduction policy 10 IV Challenges in economic growth and poverty reduction in the Mekong River delta 13 1 Challenges in economic growth 14 2 Challenges in poverty reduction 16 3 Challenges in the capacity of local workers doing poverty reduction activities 19 V Recommendations for more effective economic growth and poverty reduction in the Mekong River Delta 20 1 Recommendations concerning orientation and development 20 2 Recommendations on solutions to poverty reduction 21 VI Conclusion 23 2

3 Annex 24 National strategies and policies affecting growth and poverty reduction in the 24 MRD Figure 1: Relations between GDP per capita and poverty reduction in the MRD in Table 6: Poverty rate in areas of Vietnam 26 Table 7: Assessment on Vietnam's Development Goals (VDGs) achievement in the MRD compared with the whole country Main references A. Introduction I. Purpose of the study - Clarify the situation and identify main challenges in economic growth and poverty reduction in the Mekong River Delta (MRD); - Propose policy measures to overcome the challenges and achieve the economic growth and poverty reduction targets in the region; - Lay the foundation for programs, plans, projects and solutions to continue the CPRGS programme, to make the fiveyear plan , to develop socio-economy and to eliminate poverty in the MRD on the yearly basis; 3

4 II. Subjects and scope of the study The study focuses on analyzing and assessing some main features of the situation and the implementation results of CPRGS in order to identify major challenges for economic growth and poverty reduction, which will serve as the basis for the proposal of policy framework to overcome the challenges as well as achieve the basic targets for economic growth and poverty reduction in the MRD. This analysis is put in the general context of the whole country's and the MRD's socio-economic development and in the interrelationship between sustainable economic growth and poverty reduction. The scope of the study in this stage focuses on the general problems and regional features of economic growth and poverty reduction. The poverty percentage statistics are calculated basing on the common international poverty standards used in the Living Standard Surveys of the years 1992/93, 1997/98, 2002/03 and 2004 by the General Statistics Office (GSO). The poverty percentage according to the national standards is also used when necessary. III. Method of the study In this stage, the main method is to collect the information, materials, analyze and assess the legal documents, data, figures and results of the existing studies in the MRD, including: - Strategies, and plans of the regional socio-economic development; - Statistics and results of the thematic investigations and research by national and international organizations on socio-economic development and poverty reduction of the whole country and the MRD in particular; - Other related documents. 4

5 B. Content of the study I. Some regional common features - The Mekong River Delta (also called the South West region) consists of 13 provinces with the total area of 39,734 km2, accounting for 12% of the country's total area. The population of 2004 was about 17 million people, making up 20.7% of the country's total population. The population density is 428 people/km2, which is 1.8 times higher than that of the whole country (248 people/km2), and this percentage is increasing fast, faster than that of the whole county for the past period. - Ethnic minority people live in this region but it is not as complicated and diversified as other regions in the country. Ethnic people live here are the Khmer, about 1.3 million of them (contributing 6.2% of the region's population) concentrating mainly in Tra Vinh (about 30%), Soc Trang (about 28%), Kien Giang (about 12%) and the rest 30% in Can Tho city, Vinh Long, Hau Giang, An Giang, Bac Lieu and Camau provinces. - As this region lies in the downstream of the Mekong River, in the estuary, where the river flows into the South China Sea, the terrain is flat delta with three sides (the East, South and West) adjoin the sea. This is one of the world's most fertile deltas with the second largest area of mangrove forests (second to the Amazon's), which is ideal for agriculture and fishery (including in-land and coastal fishraising and offshore fishing). - Most economic activities and people's life in the region is attached to and affected by the Mekong River, especially nearly half of the area including over 600 households have to suffer from floods for 3-4 months every year, which live adverse impacts on people's life and production. 5

6 - The area next to the South East region, including Ho Chi Minh city is the one with the most dynamic economic development in the country. With 400 km of land border and 700 km of sea border with Cambodia, a short sea distance from Thailand, this region is very convenient for developing economic and trade relations with these countries. II. Main features of poverty situation in the MRD The poverty situation in the MRD has some differences compared to the whole country and other regions. Firstly, since the appearance of the poverty assessment (VHLSS in 1992), the MRD s poverty rate has always been higher than that of the whole country. Secondly, the poverty seriousness in the MRD, which is reflected by the poverty gap, has been lower than that of the whole country and has been dramatically decreasing over the past years. Thirdly, the number of absolutely poor people is rather high. In 2004, the whole region has 3.3 million poor people, accounting for about 16-17% of the whole country s percentage, although down by 3.4 million compared to 1998, which means down by over a half after six years (the number in 1997/98 was about 6.7 million, equivalent to 36.9%). Table 1: The poverty percentage in the MRD and in the whole country The general poverty rate In the whole 58,1 37,4 28,9 24,1 country In the MRD 47,1 36,9 23,2 19,5 2. The poverty rate 6

7 across the provincescities In the whole 24,9 15,0 10,9 7,8 country In the MRD 17,7 11,3 6,5 5,1 3. The poverty gap In the whole 18,5 9,5 6,9 - country In the MRD 13,8 8,1 4,7 - Source: GSO, VHLSS. The 2004 s figures are taken from the GSO s reports on the preliminary results of the Living Standard Survey. The poverty rate is calculated according to the population rate. The poverty gap is the average percentage difference between the poor s expenditure and the poverty standard. Although the region s poverty rate is low, there is a big difference in poverty level between provinces. Especially, in 2002, some provinces had rather high poverty rate: Soc Trang 37.5%, Tra Vinh 33.6%, Ca Mau 32% and Dong Thap 31.4% 1. It is worth noted that high poverty rate concentrates in areas with Khmer people (Soc Trang, Tra Vinh), or in areas having difficulties in contacting with the outside due to bad infrastructure (Camau, Bac Lieu). The rural poverty rate in 2002 was 27%, 3.5 times higher than that in the urban areas (8%). So who are poor people in the MRD and where do they live? First of all, most of them are farmers living in rural areas. Of the total number of poor people, farmers account for 78%, people working in the service sector, 12.8%, people working in the construction-industry, 8.7% and people working in other profession groups, nearly 1%. Farmers are the majority and also have the highest poverty rate which is 27.8% while the rate among people working in the service, industry and construction sectors is all around % and that among people working in other sectors is only 3.7%. 1 The action group against poverty. Poverty assessment in the MRD. Page 37. Hanoi,

8 Secondly, 52% of the total 1.2 million Khmer people in the region are poor, which means there are 600 thousand poor Khmer people among the total 3.3 million poor people in the region (poor Khmer people account for 18.2% of the poor in the whole region while Khmer people account for only 6.2% of the region s total population). The poverty rate among Khmer people is also higher than that of the Kinh/ Hoa people (the 2002 s general poverty rate of Khmer people was 52% while that of the Kinh/Hoa people was 21%) and in the period of , the Khmer people s poverty reduction rate was also lower (only down by about 10%, from 58% to 52%) than that of the Kinh/Hoa people (down by 40%, from 35% to 21%). Because the MRD is a large delta area with the agricultural economy playing the dominant role and with the history heritage, poor people in the MRD have some differences compared to poor people in other regions. First of all, the average intellectual level of the MRD s poor people is lower than that of the whole country s. The rate of people who haven t finished primary education in the MRD is 70.7% while that of the whole country is 58.5%. The rate of poor people who have finished junior secondary education and above in the MRD is only 4.0% while that of the whole country is 16.4%. Of the total poor people in the whole region, 95% haven t finished junior secondary education (according to the 2002 s LSS). Secondly, the percentage of poor people who have no or little land for production in this region is the highest (the rate of poor people having no land in 2002 in the MRD was 39.1% while that of the whole country was only 10.5%). As a result, allocating land to poor people is an urgent matter. If this can t be done, there must be other suitable solutions. Thirdly, poor people s income is mainly from working for others including doing agricultural work (one of the reasons is that nearly 40% of poor people have no or little land). So we can see that creating more jobs for poor people is an 8

9 important solution to generate income and reduce poverty in the region. Fourthly, the living condition of poor people in the MRD is worse than that of other regions, reflected in the fact that the percentage of households living in temporary houses is 81.4% (while that of the whole country is 41.2%). In addition, this region has to suffer from serious, prolonged floods every year so the living condition is getting worse and every year households have to spend large sums of money on repairing their houses. As a result, helping the poor have better living conditions (first in terms of accommodation) is a necessary solution contributing to poverty reduction and increasing the poor s living standard in the region. Fifthly, the rate of possessing and using durable goods, especially tools for production and for generating income and reducing poverty is still low. The percentage of poor households having motorbikes is only 3.6%, the poorest group among the 5 income groups have no telephones. This not only reflects the poverty situation but also creates obstacles in seeking jobs for poor households in the region. III. Implementation results of the economic growth and poverty reduction policy (strategy) in the MRD Up to now in the MRD region two major groups of State's policy on economic growth and poverty reduction are being implemented. They are: (1) The general policy group with national significance and (2) the specialized policy group for the MRD in particular. These policies add to one another, together promote the economic growth and reduce poverty. (these policies are listed in the annex) 1. Implementation results of policies (strategies) on economic growth 9

10 1.1 Economically The first positive result of the above measures is to maintain the relatively high economic growth rate, which is higher in the five year period of than that of ten years ago (the above GDP growth rate in the five-year period of is estimated to reach 6.5% per year 2, while that in was 5.5% and that in was 5.45%). Economic growth creates more jobs (the total additional jobs created in the period of was 807 thousand, in which 383 thousand jobs were in the agriculture, forestry and fishery sectors 3 and that in the period of was about 1.2 million, in which 780 thousand jobs were in the agriculture, forestry and fishery sectors 4, helping to rapidly increase the poverty reduction rate. Especially, although the region s economic growth rate and GDP per capita is lower than that of the whole country, the region s poverty rate is lower and decreasing faster. The economic structure continues to make progress with the proportion of agriculture, forestry and fishery decreasing fast (from 60.1% in 2000 down to the estimated 51.8% in 2005) and the industry-construction and service sectors increasing considerably. The region produces some important products which have the national significance and export value ensuring the region s high growth rate and the people s income such as cement, rice, fishery sea products and fruits of different kinds, etc. The MRD has become the country s focal point in terms of production and export of important products such as rice (the region contributes 40% and 95% to the whole country s production and export respectively). Exploiting and raising fisheries in the region has the highest rate in the 2 Statistics of the GSO have been adjusted to the general growth rate of the whole country. 3 According to the GSO s statistics. 4 According to the statistics of the yearly survey on labour and jobs (MOLISA) 10

11 country (66% in raising, 44.6% in exploiting and 61.3% in export value). The fruit productivity of the region is the highest. The region s infrastructure network has been improved, especially external transport has been upgraded, helping to reduce the difference between the region, the South East and the outside world (National road No.1 and its bridges, Tra Noc airport, Phu Quoc airport and Can Tho port), to promote trade and attract investment. The rural transportation has been considerably improved (road transport has replaced water transport, foot bridges have quickly been destroyed and the rate of communes having roads to the commune centre has gone up relatively fast), creating favourable conditions and helping people in their production and business, creating jobs and improving their everyday life. Some important irrigation works funded by the WB have been completed, put into use with great efficiency (anti-salination projects in Ba Lai, South Mang Thit, Quan Lo-Phung Hiep and Omon-Xano, etc.), helping to increase the production area, the number of harvesting seasons, to do intensive farming to increase productivity, to push up the agriculture and fishery output and to generate more income for farmers and fishermen. However, the region s economy still shows shortcomings. Up to now agriculture has still played the dominant role and basically the MRD is still an agricultural economic region depending too much on the external factors and still lacks the foundation for achieving a high growth rate, creating much employment and generating more income for people in the region. The difference between the region and the outside(other regions in the country and other countries in the world) and between provinces hasn t been absolutely eliminated (for example, there aren t roads linking provinces in the region and the outside, there is no international sea port and there aren t enough bridges, so ferries are still used.). The rural transportations is still limited (149 communes haven t got roads to the commune centres, even if they have, these roads can only be used in the dry season and 11

12 there are still too many footbridges preventing vehicles, etc.). 1.2 Socially Economic growth has positive effects on social aspects, first of all creating jobs for 1.5 million people in five years (300 thousand people/year on average) 5. The result is that income has increased, people's material and spiritual life has been improved. This is clearly reflected in the fact that the poverty rates in general, across provinces-cities and according to the national standard are all lower than those of the whole country on average and are decreasing relatively fast. Education and training are also making great progress. The infrastructure in secondary schools has been upgraded, floors of some classrooms are raised, strengthened and basically improved, three-shift classes have been abandoned. The total number of classrooms at different levels has increased by 13.3% in (from 60,375 rooms in 2000 to 68,417 in 2003) with the highest increase at the lower secondary level (by 32.7%) in order to achieve the targets of lower secondary universalization by The rate of school enrolment rises at all levels. The training capacity has been enhanced (Can Tho University has been widened and upgraded, some new universities have been set up such as Can Tho Medical and Pharmaceutical University, Can Tho Teacher Training University, An Giang Public University, etc.). Many vocational schools have been built and the training scale has been enlarged.. The local health network has been enhanced considerably. The number and proportion of commune's health care centers whose floors have been raised and strengthened to avoid floods increased, the number of communes having doctors increased (65% commune's health care centers have doctors). Can Tho 5 According to the Local Economic Department, MPI 12

13 General Hospital has been upgraded to create more opportunities for local people to enjoy medical facilities. People in the region have easier access to infrastructure. The rural transportation network has been considerably improved: Foot paths to the commune centres have been built replacing the former exclusive water transportation; 97% of communes have roads to the commune centre, tens of thousands of strong concrete bridges have replaced foot bridges. Access to sources of information has been improved and made easier: In 2004, 79.5% of households could get access to television (that of 2000 was 69%), 84% could access the Vietnam's Radio Station (compared to 76.3% in 2000), nearly 1% of households had computers, 7.4% of which were connected to the Internet, this increases access to, diversifies and provides more choices about sources of information for the people. Besides the progress, the region s social aspect still has shortcomings. Some indicators show that the region s human resources are less abundant than the average level of the rest of the country. Even among the young working population (youths), the intellectual, professional and technical level is still low. In 2002 the rate of literate population under 10 years old was 89.2% (while that of the whole country was 92.1%), the rate of people over 15 years old who haven t finished primary school reached 37.5% (that of the whole country was 20.6%), the rate of literate youths (from years old) in the region was lower than the average level of the whole country (93.9% against 95.4%). The rate of trained labour force in 2004 was almost the lowest among regions, being only 14.3% (that of the whole country was 25.5%), ranking No.7 among 8 regions (the region with the lowest rate is the Northwest). Access to mass media, although improved, is still more restricted than the average level of the country, especially among poor people. The number of people who can get access to 13

14 television in the region is 79.5%, that rate among 20% poorest households is only 64.3% (that of the whole country is 94.7% and 93% respectively). The number of people who can get access to Vietnam radio in the region is 84%, that rate among 20% poorest households is only 75.3% (that of the whole country is 92.8% and 94.3% respectively) 2. Implementation results of poverty reduction policy 2.1 General results of poverty reduction The poverty rate in the region decreases the fastest compared to 8 regions all over the country, from 36.9% in down to only 19.5% in , a decrease of 1.9 times ( that of the whole country was 1.55 times), which means the number of poor people in five years has fallen by over a half. Table 2: Economic growth and poverty reduction rate of the period (estimated) The whole country - GDP growth rate 8,20 6, (1992/93) (1997/98) (2002) (2004) - Poverty rate 58,1 37,4 28,9 24,1 - Poverty ,7-8,9-4,8 reduction rate The Mekong River Delta - GDP growth rate 5,50 5,45 6,50 (1992/93) (1997/98) (2002) (2004) - Poverty rate 47, ,4 19,5 - Poverty - - 5, ,9 reduction rate Source: GSO and VHLSS The rate of inequality in the MDR (including GINI and Theil L index) is low and gradually decreasing. The GINI index is lower than that of the whole country and there is little 14

15 change between and , only 0.30 (meanwhile that of the country is higher and increases continuously, from 0.34 in 1993 to 0.35 in 1998, to 0.37 in 2002). Table 3: The GINI and Theil L index of the whole country and the MRD 1992/ / /03 1. GINI index - The MRD The whole country Theil L index - The MRD The whole country Source: GSO and VHLSS - The income difference among the region's groups of population is lower than that of the whole country and tends to slightly decrease in 2 years (the income difference between 10% of the highest income people and 10% of the lowest income people was 10.9 times in 2002 and 10.5 times in 2004 (those of the whole country were 12.5 and 13.5 times). However, the spending rate of 20% of the richest group is higher than that of the poorest group (17% compared to 9.7%), possibly leading to increased inequality in the future. - The per capita consumption rate in rural areas increases faster than that of the urban areas (26% against 7%) resulting in a rapid drop of poverty rate in rural areas and consequently all over the region. This also results in narrower gap between urban and rural areas, going down from 2.0 times in 1998 to 1.6 times in This is another proof of the positive effects of economic growth and the implementation of poverty reduction policies in the region. 2.2 Assessment on the implementation of poverty reduction policies in the region Together with the implementation of the nation's general policies on poverty reduction and supporting poor people (The 15

16 national program on poverty reduction and employment - CT 134, Program 135, Coastal commune infrastructure building program, Rural environment and clean water program, Decision 139 on the health care fund for the poor, etc. ), the MRD region has also carried out specialized policies in accordance with Decisions 173, 99, 256, etc. and Programs on floor raising to avoid flood, Program on demolishing foot bridges, etc. These policies help to raise poor people's income and improve the poor's access capacity to technical infrastructure, education and health care services, etc. and quickly reduce the region s poverty rate. However, due to the poor's features, contents of policies and shortcomings in the implementation process, the benefits gained are still limited. The poverty reduction policies mean to aim at the poor but the poor are not capable of enjoying these benefits (many poor people in the region having no or little land don't benefit anything from the agriculture, forestry and fishery extension policies or agricultural tax exemption, etc., only rich people with much land can benefit). Table 4: Assessment on the degree of accessing and enjoying the Government's policies (services) for the poor in the MRD Policies Credit Agriculture, forestry and fishery Degree of enjoying Receiving small and medium-sized loans (mainly short-term) from the poverty reduction and employment program. In general, the loans are too small and too short-term to invest and bring benefits. Many people don't have professional knowledge and skills, they therefore don't dare to borrow or if they do, they can't use the loans efficiently. No or few benefits due to limited means of production. Direct benefits are limited as the poor has little land, however they can enjoy 16

17 extension services: Irrigation, plant protection, training, advising how to do business, grants to buy new breeds, etc. Infrastructure development Encouraging the establishment and development of small business projects Agricultural tax exemption Health care support policy Education support policy indirect benefits by working for richer households. Less use because the consumption rate of water and electricity is lower or because they can't afford. Many poor households have no or few facilities and activities consuming a lot of water, electricity or transportation roads (the rate of poor people having motorbikes is very low) No direct benefits because the poor have few small business projects. They can only enjoy indirect benefits by working for these projects. Not many benefits because the poor in the region have no or little land Significant and practical benefits from health insurance certificates and Fund 139. Useful benefits from tuition, school construction fee reduction and exemption, free textbooks and notebooks, mainly for children in primary and lower secondary schools. Only a few benefits for children in upper secondary 17

18 schools because only a small proportion of the poor can reach this level. Support to Bring benefits. Most people resettling in overflooded areas benefit from this support. raise floor and build houses Cultural and Bring benefits but the people show little information interest. support Aid program Prioritized in terms of aid in flood season and prioritized in borrowing or receiving money to raise their house floor to overcome floods. Emergency aid Prioritized to reduce risks Welfare policy Prioritized on emigrants and women Source: Reconstructed from the report by The World s Vision and Adam Fford company: Analysis of the poverty situation in the MRD. The author has added and updated with information and statistics from reports by MPI. Following are the main reasons why the poor can't take full advantage of the benefits brought by the policies: - Lack of capital and means of production: many poor people (nearly 40%) have no or little land, capital and means of production. At the same time, it is more difficult to access sources of capital and even if there is capital, it is not enough as required. - The intellectual level is low, there is a lack of knowledge and skills while the technical support is limited and has little use (because the forms of technical support is not suitable, poor households have no or little access): leading to failures in doing business and looking for work ( in terms of livestock, animal and fish raising, it is difficult to find stable jobs with high income, etc.). 18

19 - Lack of information or inaccurate information. So people often have to take risks and suffer from losses in doing business and looking for work. - Lack of jobs or no jobs - Risks in investment and doing business (due to markets, natural disasters, plant diseases or pests, etc.). Iv. challenges in economic growth and poverty reduction in the Mekong river delta 1. Challenges in economic growth The first challenge is that the MRD s economic development level, reflected in the average GDP per capita, lags behind that of the whole country and the neighbouring Southeastern region. Over the last 15 years ( ), the region s economic growth rate has always been well below the average level of the whole country, especially much lower than that of the neighbouring Southeastern region. It is estimated that in the years to come, the region s economic growth rate will still be lower than the average rate of the whole county. In addition, the region s population growth rate is higher than that of the whole country, so the GDP per capita gap between the region and the rest of the country will be larger, leading to lower economic development level and people s living standard, these rates will lag further behind those of the whole country and the neighbouring Southeastern region on average. Table 5: GDP annual growth rates and GDP per capita of the whole country and the Mekong River Delta (estimated)

20 1. GDP growth rate (%) - The whole country The Mekong River Delta 2. GPD per capita (1000 VND) - The whole country 3,174 5,630 10,010 - The Mekong River Delta 3,006 5,340 9,000 % of the MRD 94,7 94,8 90,0 compared to the whole country Source:GSO & MPI The second challenge is the lack of capital investment in developing the socio-economy and creating employment. This means the proportion of budget mobilization is low (the proportion of budget mobilization compared to GDP reaches only 7.6% while that of the whole country is 24.3%. The budget collection per capita in 2003 reached only 550 thousand VND, equivalent to 30.7% of the country s average). The source of budget collected from economic activities of most provinces in the region can t meet the need of expenditure, so there is still support from the Central budget. Every year, the Central budget supports about 1/3 of the total budget collected from provinces in the region. Some provinces receiving a high percentage of the Central budget support are Tra Vinh: 64%, Bac Lieu: nearly 47%, Camau: 49% and Soc Trang, etc. Capital investments are still negligible as compared to the demand and the population size. In the period , average capital investment per head is projected at 7.4 mil. VND, just equivalent to 72% of the figure recorded at the national level, 57% of the Red River Delta and 40% of the Southeastern Region. The investment/gdp ratio is too low (only 26% in 2003 as contrasted with 36% of the whole nation). The Central s support for investment and development is limited and the 20

21 region s FDI attraction is not as good as other regions. Therefore, lack of capital investment prevents high growth rate and the region haven t been able to narrow the development gap with the rest of the country and haven t been able to reduce poverty faster and more sustainably. The third challenge is that employment demand is very high as the region s economic structure can t absorb much labour (sectors that can creates much employment have low proportions and growth rate in the economy, for example the proportion of the construction-industry sector accounts for only 45.3% of the total GDP (meanwhile that of the whole country is 72.7%). The number of the unemployed, semi-unemployed and youths joining the workforce every year is high (about 400 thousand people/year and this number increases each year). The fourth challenge is the need to raise the intellectual and professional level of the workforce to meet the region s development needs and narrow the gap with the average level of the whole country and the next door Southeastern region. The workforce s intellectual and professional level is very low and there is a lack of highly qualified technical workers and labour. As a result, it is necessary to enhance the capacity and qualification of the workforce and the quality of education and training of the Provincial Education and Training Departments should be improved to be suitable to the scale of population and labour force as well as to the needs of socio-economic development of the whole region and all provinces in the region. The fifth challenge is the great and urgent need to increase, upgrade and modernize the infrastructure network of the region to meet the need for developing the region, promoting trade and communication between the region with others and the world. At the moment, many national and provincial roads are too narrow, at a low level and downgrading quickly, many bridges are narrow and weak while the traffic density is high resulting in many accidents, frequent traffic congestions, travelling from provinces in the 21

22 region to Ho Chi Minh city and abroad takes time, resulting in higher production cost, lower product quality and discourages investors. The sixth challenge is the fierce competition by other products which are the strength of other regions in the world (such as rice, sea products and fruits, etc.), especially when Vietnam has to apply tax reduction and exemption after joining the WTO and having to implement the bilateral, multilateral trade commitments and higher level regulations on food safety. This can result in lower export and has some bearing on economic growth, job creation and income generation. MRD s key exports are facing fierce competition. Examples are the cases of catfish and shrimp in the US or obstacles against exported fruits to China. Such incidents have major implications for the generation of income and jobs for local residents, especially the poor. The seventh challenge is the need to change the methods of exploiting and using natural resources and backward living habits in order to protect the environment, natural resources and maintain the biodiversity in the region. Gaining economic growth by overexploiting natural resources and biological benefits has had adverse effects on the region s environment, and biodiversity. The wrong use of plant protection chemicals and the fact that people live alongside rivers, canals and release their waste into water cause serious water pollution. Enlarging the area and using industrial methods in shrimpraising have made the area of mangrove forests shrink (Mangrove forest area in the MRD is the second largest in the world only to the Amazon River mangrove forests). The lack of coordination between provinces and management methods of waste from sea and aqua-products raised by the industrial method not only pollute the environment but also do harm to the producers. The yearly phenomenon of shrimp s mass dying due to diseases is a clear evidence. 2. Challenges in poverty reduction 22

23 Although the MRD s poverty rate is the second lowest in the country (the Southeastern region has the lowest rate), for different reasons, in the poverty reduction campaign, the region has to face with many challenges. They are: First of all, the number of absolutely poor households is still large, therefore there needs to be more resources and solutions to poverty reduction should be applied on a larger scale. According to the new poverty standard approved by the Poverty Reduction Programme for , the number is projected to be 770,000 in 2005, accounting for 21.4% of its households (i.e. the poverty rate is 21.4%) and 16.7% of the country s poor households (about 770 thousand households among 4.6 million households). If MRD could speed up its poverty reduction, that would help the country a lot in the fight against poverty (as it is estimated that if the number of poor households reduces by 1% in MRD, the respective figure of the whole country will go down by nearly 0.8%). The risk of falling back into poverty is high because as many as 40% of the rural poor have little or no land at all. Worse still, there are few off-farm job opportunities for these people. Therefore, it is very difficult of these people to get out of poverty. Even when they have done, it is likely that they may fall back into that trap. The major source of income for the poor is farming and fishery activities (even when they work for others). The problem is that risks that couple such activities are becoming more frequent (for example, floods and epidemics result in mass killings in aquaculture. Many agricultural produces suffer from price falls or high tariffs, etc.). All of these increase the likelihood to fall under the poverty line. Secondly, the need for poverty reduction among Khmer people is more urgent and it is also more difficult to apply methods of reducing poverty in this community. The reason is that according to the new national poverty standard, the number of poor Khmer households will increase and their intellectual and professional levels are often lower, in addition the rate of 23

24 school drop-outs among Khmer children is higher than those of the Kinh/Hoa people. The Khmer people mainly concentrate in areas with poorer infrastructure, so the accessibility to markets and social services are highly restricted. The third challenge to be overcome is to quickly change poor people s awareness, discourage them from being self-satisfied with their poverty situation so that they become self-reliant in escaping from poverty. Especially, there should be suitable solutions for the group of poor households who are short of land and account for nearly 40% of the total poor households in the region as this group not only account for a large proportion but also difficult to be affected. The fourth is the challenge in providing the poor with some basic social services (the first and foremost are education and health care) and in ensuring that they have a fair share of benefits in terms of both quality and quantity. This challenge results from the fact that the intellectual level and accessibility to education, training and health care services still remain very low. At the moment, 214 communes still haven t got secondary schools so children have to travel far, causing the high rate of school drop-outs and few children can attend higher education. MRD s rates of school enrolment at the right age (at all three levels primary, junior high and high school) are lower than those of some other regions and the national average. In the school year , MRD s primary school enrolment at the right age was 91.43% (just above the Central Highland with 88.72%, but below the national average of 94.43%). The figure at junior high education level was 64.71% (below the national average of 76.86%, but above the Central Highland 62.2% and the Northwestern 59.56%. The figures indicate that a large number of population do not have access to education. So there is an urgent need to create favourable conditions for providing education and training services and easier access to education and training for people in the 24

25 region.. This challenge is great and difficult to be dealt with because the expenditure on education compared with the household s total expenditure is still too low (accounting for only 4.3% of the total expenditure). In addition, the fact that many people in the region are not aware of the benefits of going to school in order to raise their intellectual and professional level 6 is also an obstacle in improving the education and training situation for poor people in the region. This challenge can t be dealt with overnight. Poor accessibility to healthcare services is a real challenge, as large investments would be needed in order to reach the national average. Basic healthcare services (provided by communal clinics, which are most accessible to the poor) are inadequate in both qualitative and quantitative terms. Investments should be made to increase the number of clinics with at least a doctor, clinics with concrete buildings, clinics with access to clean water, and clinics with sufficient amount of essential medicines. It is necessary to extend the coverage of healthcare insurance (at the moment, only 20.5% of MRD residents are medically covered (as compared to 23.2% of the whole nation). The figures are only 22% among the poorest group and 18.5% among those marginally above the poverty line, lower than respectively 23.3% and 23.0% at the national level). It is also necessary to increase the health care fund for the poor according to decision No.139. Fifth, it is necessary to overcome the shortcomings in the poor s access to essential infrastructure to assist them in their doing business and improving their life. Now 14 communes still haven t got roads to the commune centre. Raising the rate of people who have accessibility to the national electricity grid form the current 73% to 92% (to the same level as in the Southeastern Delta), or to 99% (to the same 6 The World Vision and Adam Fford company. An analysis of the poverty situation in the MRD. Summary report October,

26 level as in the Red River Delta) and ensuring that 100% of communes have roads to the commune centre as well as upgrading roads need great efforts both in terms of human resources and capital investment. Sixth, the need to improve living conditions (first accommodation and domestic water) for the poor in the region is great because accommodation is in poor condition. Temporary and semi-concrete houses still account for a large number of MRD housing. As few as 6.7% of MRD households live in concrete houses, 39.3% in semi-concrete houses and the remaining 54% in temporary houses (as opposed to respective figures of 17.2%; 24.5%, and 57.3% of the whole country). Reduction of temporary houses has been slow. Between , MRD reduced the number of temporary houses by only 6% while the reduction percentage was 14% at the national level. There is also a great need to raise house floor and provide housing to residents of flooded areas. Up to 150,000 households are in urgent need of housing provision. However, only about 35,000 houses have been provided between (around a quarter of which built by residents themselves). That leaves nearly 135,000 still in need of accommodation. Repayment of borrowed loans is facing a lot of difficulties, as most borrowing households are poor. This certainly has implications for the availability of housing loans in the years to come. The need to raise quickly the number of local residents with access to clean water and improved rural living environment hygiene is rather urgent. Up to 42% of MRD population have no other choice but use water from rivers, lakes or ponds. These are all unsafe sources of water, as they have been polluted with pesticides, insecticides, waste from cattle breeding, aquaculture and latrines ( at the moment, 77.4% of households still used latrines which don t meet the hygiene standards, in which 68.2% are latrines on the natural surface of rivers, canals, lakes and ponds, etc.). Shortage of fresh water in 26

27 coastal areas due to salination happens frequently in longer period of time. 3. Challenges in the capacity of local workers doing poverty elimination activities According to assessment in many surveys and studies, local workers in the MRD, including people who directly implement poverty elimination activities, generally are not enough in numbers and weak in professional knowledge and skills. This is not a small challenge which has been creating obstacles in the process of poverty elimination in the region. First of all, there is a lack of specialized staff of poverty elimination at local levels. There are no specialized staff of poverty reduction at commune and district levels. All of them work part-time and lack professional knowledge and skills to adopt new methods of policy development, planning and implementation in the aspect of hunger eradication and poverty reduction. Secondly, there is a difference between the requirements and the conditions to implement the task. Poverty reduction staff are assigned with numerous duties. However, working conditions are poor with limited manpower, money, equipment and means of travel. This constrains the capacity to approach the isolated communities or poor households in far-flung areas. Thirdly, the qualifications of the commune s poverty reduction staff don t meet the requirements. They lacks professional knowledge and skills to fulfill their tasks. For example, many of them cannot speak Khmer language and therefore, fail to deliver effective support to Khmer communities. Some even do not know how to organize their own work so as to operate more efficiently. Some use their authority in such an appropriate way that it deals a serious blow to the decision-making process. 27

28 V. Recommendations for more effective economic growth and poverty reduction in the Mekong river delta 1. Recommendations concerning policy orientation and economic growth To create favourable conditions and an attractive investment environment, the Government needs to issue particular policies, especially for the MRD. First of all, there needs to be a new Government decision to continue the decision No.173. At the moment, the MPI is developing the MRD s socio-economic development orientation draft to replace the Prime Minister s Decision No173. In the period of , the Government will continue to implement the National Program for Creating employment and Eliminate poverty. To improve the fact that the National Program only mentions general orientations and measures, many parts of the Program deal only with a particular region including the MRD (like what has happened in the past period and as assessed above). On the basis of the general Program for the whole nation, it is necessary to develop the regional Program for Creating employment and Eliminate poverty for the MRD in particular, which specifies policy solutions, programs and projects basing on the particular features of the poor in the MRD as well as the advantages and disadvantages of the region in terms of socio-economic development (they are the features and recommendations mentioned in this report). The provincial governments in the region, basing on their authority should develop and issue policies encouraging and attracting investment. Localities have to review their already issued policies and mechanism to avoid overlapping and actions beyond their power or inter-competition adversely affecting the region s investment environment. It is necessary to implement fairly the support policies for non-state enterprises, encourage the establishment and development of small and medium-sized enterprises (SOEs), push up the 28

29 administrative reform in granting licenses and simplify registration procedures, enhance the efficiency and coordination between functional units and raise professional capacity and morality of the government officers. Concentrate all the invested capital to build important infrastructure to meet the needs of growth and poverty elimination (roads for transportation, irrigation works, ports, the supply of electricity and information), to reduce the isolation, first by building main national roads to shorten the distance between the region and the outside (the Southeastern region and other countries), between localities in the region and to control floods, exploit the natural advantages and the region s natural resources. Develop some key industries, which serve as a basis for faster economic growth and create more employment. Speed up the completion of Ca Mau Gas-Power-Nitrogen Fertilizer Industrial Complex. Develop Can Tho into the region s hub and Phu Quoc island into an international tourism center, etc. Promote the development of industries processing agricultural and sea products, provide technology after harvesting, produce garments for export and consumption goods, etc. to create more jobs. The effect of the Camau Gas-Electricity-Nitrogen Complex on economic development and poverty reduction in the MRD: - The building and operation of the Camau Gas-Electricity- Nitrogen Complex lead to the building of many supplementary facilities and services forming a big industrial area and creating jobs for tens of thousand people. At the same time, the effect can also be encouraging and increasing public investment including big transportation routes, big ports connecting the MRD with the outside, human resource management centers, schools, etc. - To increase the source of budget for Camau province (estimated at hundreds of billion VND), creating a big source of capital for socio-economic development, especially public 29

30 and social works having direct effects on poverty reduction. - The results of the industrial area are great sources of goods to create a distribution network, and more jobs for the poor. - To supply energy sources, electricity and fertilizers at cheaper prices compared with other sources and imports. Thanks to this, the price of fertilizers and electricity will be lower and always stable (compared with imports with high price and instability). As a result, input costs into agricultural production will be reduced, therefore profits and income for farmers will be improved. In this program poor people who have land for farming will receive benefit. Protect natural environment and biological diversity in areas for industrial aquaculture, in Ca Mau Gas-Power-Nitrogen Fertilizer Industrial Complex, protect Phu Quoc National Park, restore U Minh forest, coastal mangrove forests and natural bird parks and fast-growing urban areas and industrial zones (such as Can Tho, Vinh Long, Long Xuyen, Kien Giang, My Tho and Tan An, etc.). Expand and improve the efficiency of activities of technological transfer, agriculture, fisheries, industry and trade extension and provide information to farmers, fishermen and enterprises in the region, find outlets, expand markets for the region s products. 2. Recommendations on solutions to poverty reduction Together with the policies to promote economic growth which serves as the basis for poverty reduction, it is necessary to continue the implementation of policies having direct effects on poverty reduction: - For the group of households having little or no land at all: The solution in which the Government creates favourable conditions including the provision of credit so that poor households can buy back their already-sold, mortgaged land and reallocates land to poor households with little or no land has 30