Development workers visiting Vietnam in the early 1990s to support poverty reduction initiatives were met with a vacuum of information on the extent and scope of poverty. There were few donors operating in Vietnam at the time. There were no formal estimates of poverty headcount, nor were statistics available on the distribution of poverty across the country. There was a general understanding that some regions were more disadvantaged and that certain groups required public support, but no mechanisms were in place to verify this or to track progress in reducing poverty as a result of government efforts.
Two decades later, Vietnam has in place a reliable system for measuring and monitoring poverty over time and across regions and socio-economic groups, with publicly available data from various rounds of the Vietnam Household Living Standards Survey (VHLSS) informing the debates and discourse around poverty reduction and influencing the policymaking and resource allocation process. The donor-supported Living Standards Survey carried out in 1992-93 and 1997 and 1998, and a subsequent series of state-financed VHLSS in 2002, 2004, 2006, 2008 and 2010 have had a profound influence on the way in which poverty is understood in Vietnam.
The World Bank’s approach has been to work side by side with the institutions charged with the poverty analysis and policy intervention work. The Bank provided sustained technical and financial support to the General Statistics Office in the implementation and development of the VHLSS and the dissemination of data since the early 1990s and, at the same time supported the research section of the Ministry of Labor, Invalids and Social Affairs and other institutes in the development of tools to improve poverty targeting. Support to the development of poverty measurement systems has resulted in the institutions’ enhanced capacity. The World Bank invested heavily in up-front training on new methods and techniques. The client notes in particular, the value of having consistent technical advice and ongoing capacity building efforts.
With its financing tools, the Bank supported the government’s initiative with a series of development policy operations and investment projects totaling more than US$3.5 billion. The support started in late 1990s.
The collection of reliable poverty data began in 1992, when an estimated 58 percent of the population lived in poverty. Many children did not finish school, and there was widespread hunger and malnutrition in rural areas. Most households supported themselves through subsistence agriculture. By 2008, the poverty rate had fallen to less than 15 percent, progress that is unparalleled in modern times. The vast majority of children completed primary education and most go on to enroll in secondary schools. Extreme poverty linked to hunger is rare, limited to isolated regions and the short-term impacts of drought or other weather shocks. Recent years have witnessed a dramatic transition in the labor market: many workers have moved out of agriculture and into better-paid jobs in industry and services. The World Bank, through its partnership with the Government of Vietnam and other development partners, has contributed to building the capacity of government counterparts at both central and local levels in poverty measurement, analysis, strategic planning and the policy-making process for poverty reduction, as well as providing financial resources and technical support to poverty reduction programs.
The World Bank and other development partners’ support benefited the entire population.
Total IDA commitment: US$13.1 billion. The active portfolio consists of 51 IDA/IBRD-financed operations, five stand-alone Global Environment Facility (GEF), Vietnam National Chlorofluorocarbons (CFC) and Halon Phase-Out Project, and recipient-executed trust fund (RETF). With one other large RETF, net commitment is US$8.5 billion.
Technical assistance through a trust fund provided by the UK Department for International Development (DFID): US$7 million.
Poverty Reduction Support Credits (PRSC) 1-10: total amount from IDA was US$2.9 billion. Total amount from co-financiers was US$1.3 billion.
Program 135 1 and 2 (development policy operations in support of the government’s poverty reduction program, known as Program 135): US$100 million (closed).
Investment projects focused on poverty reduction: Northern Region Poverty Reduction Project US$150 million (closed) and the Urban Upgrading Project US$382 million (ongoing).
Government counterparts, including the Ministry of Planning and Investment, State Bank of Vietnam, Ministry of Finance, Vietnam Academy of Social Science, Ministry of Labor, Invalids and Social Affairs, Committee on Ethnic Minorities, General Statistics Office and development partners, including DFID, the Japan International Cooperation Agency (JICA), the Asian Development Bank (ADB), the European Union (EU) and EU member countries, and the United Nations agencies.
Toward the Future
The Government of Vietnam and the World Bank will continue its partnership in bringing the country to a middle-income country status and addressing the persistent poverty among more disadvantaged groups, particularly ethnic minorities.