Overview  Ninety percent of the poor in Vietnam, or three quarters of the population, live in the rural areas which is why rural development and agriculture are critical to Vietnam’s development.Â
Agriculture accounts for 22 percent of GDP, 30 percent of exports and 60 percent of employment. The majority of the rural population makes its living by growing and selling crops (rice accounts for 45 percent of agricultural production), raising and selling livestock and fish, and from forest products. Because the poorest populations are dependent on the land and water for their livelihood, it is critical that these natural resources are maintained, that the people are able to grow a variety of crops, so that they are not dependent on a single crop in case of crop failure or lack of market demand, and able to access markets to sell their products. The World Bank’s rural development and agriculture activities in Vietnam have focused on ensuring (a) agricultural productivity growth and diversification; (b) improved access of farmers to markets and market information; and (c) natural resource management, to ensure that these can support people’s livelihoods. Figure 1: Share of Agriculture in Total Employment, GDP and Exports |   | |  Source: FAO Database |
Back to top Progress Since 2000, there has been strong progress in the agricultural sector (which includes crops, livestock, forestry, aquaculture and fisheries) – overall agricultural growth has averaged 4 percent a year. This is partly due to policy reforms including ongoing impacts of allocating land use rights to individuals, and the result of market-based incentives such as higher prices for crops.  Also during this period, Vietnam has moved well beyond earlier experiences of chronic food shortages to being the world’s second largest rice exporter.Â
Major improvements have been made in rural development as well. The number of communes still lacking rural transport access to district centers was reduced by more than half, from over 600 in 1999 to 269 most recently, or under 3 percent of communes. Rural access (proportion of people connected by an all weather road) improved from 73 percent in 1998 to over 76 percent according to recent data, or an additional 2.5 million people. For rural electrification, access has similarly increased from around 63 percent to over 81 percent at the household level. For rural water supply and sanitation, annual growth rates in access to improved water sources over the recent decade reached an impressive 7.1 percent overall. Back to top Key Issues  Although progress has been made, significant challenges still remain:
- Stagnant agricultural productivity.
 - Slow rate of investment in agricultural diversification. Rice continues to dominate, accounting for 45 percent of agricultural production and 60 percent of cultivated land. Industrial crops (e.g. coffee, rubber, cashew, sugar cane and pepper) account for only 20 percent of production.
 - Underdeveloped marketing channels, institutions and infrastructure. For example, farmers may not receive timely information on crop prices which affects their ability to sell products if the price is too high, or the lack of roads prevents them from transporting their crops to market in time and transaction costs increase.
 - A widening gap between urban and rural areas and ethnic populations in particular. Economic growth has not benefited all populations equally, with poverty increasingly concentrated among ethnic groups and the more remote northern uplands populations.
 Figure 2. Incidence of Poverty by Ethnicity, 1993-2002 |   | |  Source: Swinkels and Turk (2004), calculated by authors using VHLSS data |
- Unsustainable and inequitable patterns of natural resource use, access and control. In the forestry sector, for example, unmanaged logging leads to problems of erosion, flooding and loss of biodiversity. Water scarcity becomes a problem for both consumption and crop irrigation.
 - Vulnerability to natural hazards. Flooding and storm surges in low-lying areas cause crop failure and livestock disease leading to loss of income and food insecurity.
 - Limited capacity of public institutions and misalignment of public expenditure serving rural sector interests. The budget for agriculture and rural development has been de-centralized from the central to the sub-national governments which are still in the process of increasing their capacity to manage rural development projects.
Back to top World Bank Program  In response to these challenges, with the goal of reducing poverty and hunger in Vietnam, the World Bank has developed an Agriculture and Rural Development Strategy.Â
 This strategy is aligned with the Vietnamese Ministry of Agriculture and Rural Development's own strategy, Five-Year Socio-economic Development Plan 2006-2010. The goal of the World Bank’s strategy is to re-balance the rural development program and place greater emphasis on agricultural growth and development towards more market-oriented activities and greater participation in world markets, through emphasis on the following three pillars:  Creating opportunity through accelerating market-orientation
Due to rural growth and opening markets, attention needs to be paid to the diversification of agricultural activities, deepening of market systems, management of trade integration and pursuit of state owned enterprise (SOE) reform.
 - Managing natural assets for broad-based growth (land, water and forests)
Vietnam needs to continue to strengthen land management and administration (including land titling and farm parcel consolidation), improve forest resource management, and continue investment in irrigation systems to increase efficiency and modernization.
 - Mainstreaming poverty reduction for inclusion and empowerment
Approaches need to be taken to increase agricultural and forestry productivity in the more complex, diverse, risk-prone farming systems of upland areas and among poorer producers in particular.Â
The World Bank-supported rural development projects being implemented in Vietnam are: The World Bank also provides analytical and advisory services in partnership with the Vietnamese government and other stakeholders in the sector. This work creates a more comprehensive sector-wide knowledge base, drawing on experience and knowledge from the country itself and other organizations working in Vietnam. Avian Flu in Vietnam  Vietnam has been one of the hardest hit of East Asian countries with 93 confirmed cases and 42 deaths.
The World Bank’s Avian Influenza Emergency Recovery Project for Vietnam was approved in August 2004 for an expected total project cost of US$6.2 million. The three development objectives are in support of Vietnam’s National Action Plan: strengthen disease surveillance and diagnostic capacity; strengthen the poultry sector infrastructure to better cope with outbreaks; and to safeguard human health by improving public awareness and information.
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More Information:
  Vietnam Rural Development Strategy (1mb pdf) Back to top February 2007 |
 
 
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