COMPREHENSIVE POVERTY REDUCTION AND GROWTH STRATEGY (CPRGS)

Hanoi, January 2002

The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) Paper(1) is an action
plan that translates the Government’s general policies, mechanisms and measures into specific
concrete measures with well-defined road maps for implementation. This action plan to realize
economic growth and poverty reduction objectives also provides guidance to enhance the donor
community’s support of the Government of Vietnam’s economic development and poverty
reduction program.

Part I
Socio-Economic Setting, Current Poverty Situation, Achievements and Challenges

III. CURRENT POVERTY SITUATION AND CAUSES OF POVERTY IN VIETNAM

2. Poverty Situation in Vietnam
2.1. Vietnam ranks among the world’s poorest countries.
The percentage of poor and hungry households in Vietnam is still relatively high. According
to the Living Standards Measurement Survey (using the international poverty line), Vietnam’s
poverty incidence is 58% in 1992-1993, over 37% in 1998, and is estimated at about 32% in 2000.
Applying Vietnam’s food poverty standard (2100 calorie intake per day), the poverty rate is 25%
and 15% in 1993 and 1998 respectively.
2.3 Poverty is concentrated in areas with unfavourable conditions for making a
living.
A majority of the poor live in areas that have very poor natural resources and harsh natural
conditions such as mountainous, remote and isolated areas. In addition to poor physical and
socio-economic infrastructure, the poor often suffer from natural disasters. As for the Mekong River
Delta region and the Central region, sudden weather changes (typhoons, floods) make conditions
for living and producing even more difficult. In particular, the underdeveloped infrastructure of poor
regions causes the gap between them and other regions in the country to widen.
In addition, due to unfavourable natural conditions, each year the number of people qualified
to receive emergency relief is relatively high, between 1 and 1.5 million. On average, the number of
households that fall below the poverty line again each year remains large relative to the number of
households that manage to escape from poverty.

3. Causes of Poverty and Factors Contributing to Poverty

3.4. Risk of High Vulnerability and Isolation
Poor households are highly vulnerable to the daily difficulties and occasional shocks that
may strike an individual, a family or a community. Because their income level is very low and
unstable, they have low savings capacity and are unlikely to be able to resist unexpected shocks
such as loss of harvest, job loss, natural disaster, loss of labor resources, loss of health, and so on.
Given the fragile economic conditions of poor households in rural areas, these shocks will create
great instability in their lives.

(1)
The Poverty Reduction Strategy Paper (similar to the previous Policy Framework Paper – PFP under the IMF Poverty
Reduction Growth Facility (PRGF) and the WB Structural Adjustment Credit (SAC)) serve as both the basis for obtaining
concessional credit under the IMF Poverty Reduction Growth Facility (PRGF) and the World Bank Poverty Reduction
Support Credit (PRSC), and as a general guidance for the donor community to support the Government of Vietnam in
economic development and poverty reduction.
 Production and business risks are also very high because the poor have little or no skills and
lack business experience. Their ability to respond to and overcome these risks is very weak; their
limited sources of income limit their capacity to overcome risks and may even expose them to
additional risks.
Each year, the number of people who need emergency relief due to natural calamities range
from 1 to 1.5 million. On average, the number of households that fall below the poverty line again is
large compared to the number of households that manage to escape from poverty. This is because
a very large number of households live just above the poverty line and therefore are highly
vulnerable to negative shocks such as natural disasters, job loss, sickness, and so on.
Analysis of the Household Living Standards Measurement Surveys in 1992-93 and 1997-98
indicate that the households that suffer from frequent natural disasters are likely to fall deep into
poverty. Consequently, efforts to measure progress in mitigating the consequences of natural
calamities may be an important part of evaluating the progress of poverty reduction.

IV. ACHIEVEMENTS AND CHALLENGES

3. Challenges
While acknowledging the above-mentioned achievements on poverty reduction in recent
years, many new difficulties and challenges confront us.
(1) The incidence of poverty is still high. Using the new poverty standards, although
lower than those of other countries in the region, there remains about 2.8 million poor households,
accounting for 17 percent of households in Vietnam, in early 2001.
Poverty is not evenly distributed throughout Vietnam. A relatively high poverty incidence is
found in mountainous, remote, isolated, and disaster-prone areas and in the communes of ethnic
minorities. Progress has been slow in improving infrastructure in poor communes. A majority of
the poor have no access to basic social services.
(5) Poverty reduction gains remain fragile. Poor people remain highly vulnerable to risks
and unexpected shocks such as sickness, natural disasters, harvest losses, loss of the family
breadwinner, unemployment, and so on. In particular, the fact that our country is situated in a
natural disaster - prone area and that 80 percent of the poor work in the agricultural sector
increases the risk that people will fall back into poverty. That a very large number of households
live barely above the poverty line and have unstable incomes also increases the risk that they will
fall back into poverty.

Part III
Policies and measures to develop major sectors and industries with an aim to ensuring the
achievement of sustainable growth and hunger eradication and poverty alleviation

I. POLICIES AND MEASURES TO DEVELOP MAJOR SECTORS AND INDUSTRIES

TO CREATE INCOME GENERATION OPPORTUNITIES FOR THE POOR
1. Make Development Investment to Create Opportunities for Poor
Communes and Poor Areas to Have Access to Public Services
1.1 Invest to Develop Essential Infrastructure for Poor Communes
Invest in developing essential categories of infrastructure for poor communes, including
small-scale irrigation schemes, schools, health clinics, people-made roads, electricity, water for
livelihood needs, and markets; reorient State budget expenditure structure towards more projects
with special attention to rural, remote, and isolated areas. Improve the structure of state budget
expenditure in these sectors to redirect more resources to poor communes and poor areas.
Renovate the mechanism for investing in developing infrastructure in poor communes and
poor areas; strive to provide step by step poor and especially disadvantaged communes with basic
infrastructure, with a view to creating an enabling environment for the poor to develop their
production capacity and to have greater access to basic social services at low cost. Encourage the
poor to participate in the construction of these basic infrastructure projects, considering that a
means to create jobs for them and improve their incomes. Combine the task of building
infrastructure projects with preventive measures to combat floods and other natural disasters.

8. Environmental Protection and Maintenance of a Health Life for the Poor

There is a two-way relationship between environment and poverty. Effective improvement of
environment also contributes to poverty reduction. Improvement of the clean water supply system
can help improve the health of people and reduce the amount of time spent on getting water,
thereby allowing them to have more time to spend on other activities. Reduction of impacts of
natural disasters on the poor will enable their better access to ways to make living and sources of
food supply. Improvement of the quality of natural resources management can help those poor
people who rely on those resources to improve their income.

III. DEVELOPMENT OF SOCIAL SAFETY NETS FOR THE POOR AND FOR VICTIMS
OF NATURAL DISASTERS
(1) Add policies on providing emergency and regular support to complete the system of
state support for the poor, the disabled and vulnerable groups so that they can create jobs on their
own or work for other people on a contract basis, with the aim that they will be able to earn enough
to feed themselves, to participate in the community and in social activities, and to be able to reap
more of the benefits of economic reform.
(2) Establish a priority system to help disadvantaged groups benefit from national
targeted programs on social development. Establish a preferential regime for poor and vulnerable
people to reduce contributions, fees and costs related to their social transactions and their access
to basic social services, and in cultural and educational activities to elevate the people’s intellectual
level.
(3) Expand the social protection and safety net through different funds. Provide
humanitarian support on a regular basis for the poor and hungry, especially for those unable to
work and have no one to rely on; organise and carry out the activities of these funds in
communities and villages where the poor and vulnerable are concentrated. In that context, special
attention should be given to provide assistance in kind (such as rice foodstuff, clothes and so on)
to people in rural and selected urban areas who fall into very difficult circumstances.
Develop social relief centers in poor areas and in localities that often suffer from shocks in
order to nurture those who lose the ability and the opportunity to earn a living. In the immediate
future, effectively implement the specific stipulations of Government Decree No. 07/2000/ND-CP
dated March 9, 2000 on the policy to provide social relief in the three-year period from 2001-2003.
(4) Develop an effective system of emergency social relief solutions for poor and
vulnerable people who are hurt by natural disasters, accidents, and other negative social shocks;
improve this policy based on adopting emergency relief measures, including:
Improve the mechanism to establish and coordinate Emergency Relief Fund.
Help the poor to take preventive measures against and fight effectively natural
disasters such as storms, flood, drought, pests, etc. by organising training, and transferring
knowledge and practical experiences about managing natural disasters. Provide a share of
the needed material support (if necessary) to help them create physical conditions for
preventing and overcoming disasters, for example by upgrading the floors in their homes,
making floating rafts for temporary living, and building small warehouses to protect their
food and foodstuffs from flooding, etc.
Organise and prepare aid facilities to respond rapidly and in a timely fashion to limit
the negative effects of natural disasters; provide guidance for the poor so that they can take
the initiative to help each other when hit with natural disasters.
Organise assistance to help the poor recover from natural disasters so they can quickly
resume normal life and production; for example, provide them with necessary factors of production
(such as seeds, trees, livestock, tools for cultivation); solve environmental problems after the
natural disaster has struck. Establish local medicine storage to cure in time and effectively
diseases caused by natural disasters. Build facilities to store food, foodstuffs, and clothes in each
community where natural disasters are frequent so they can be distributed quickly to disaster
victims.
 Reorganise populated areas and production and social infrastructure to become convenient
for preventing and combating natural disasters and providing relief.
(5) Expand the participation and enhance the role of domestic social organisations and
non-governmental organisations in the process of building and implementing the social safety net
The Fatherland Front at all levels takes the lead and coordinates with governments of
different levels and mass organisations to develop measures to motivate agencies, enterprises and
the entire people to take part in social relief and to help children from poor families to have
opportunities for learning and taking part in cultural and sports activities.

Part v
Poverty reduction and growth strategy monitoring and evaluation

I. OBJECTIVES OF POVERTY REDUCTION AND GROWTH STRATEGY

MONITORING AND EVALUATION

(2) Poverty reduction Achievement and Efficiency Indicators

Poverty Reduction
Ratio of number of households living below international and national poverty lines
to total population
Poverty Depth
Share of poorest quintile in the total society’s consumption
Rate of population living below international food poverty line
Natural disaster risk indicators (loss of life, damage of asset, harvest loss,
movement of residence)
Non-farm Job Creation
Percentage of agricultural households with over 75% of income coming from one
type of activity