Vietnam's Coastal Communities: An Assessment of Poverty

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Vietnam's Coastal Communities: An Assessment ofPovertyTran Thi Hong Nhung aa Hanoi National University of EducationPublished online: 15 May 2013.

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Eurasian Geography and Economics, 2007, 48, No. 4, pp. 481–494.Copyright © 2007 by Bellwether Publishing, Ltd. All rights reserved.

Vietnam’s Coastal Communities: An Assessmentof Poverty

Tran Thi Hong Nhung1

Abstract: A Vietnamese geographer examines factors leading to the persistence of poverty inthe coastal regions of Vietnam, against the backdrop of the country’s overall recent success inpoverty amelioration. After reviewing the spatial pattern of poverty for Vietnam as a whole,based on current government statistics, the author contrasts the situation in the country’s inte-rior relative to coastal locations, based on a detailed survey of over 200 households inKhanhhoa Province, located in south-central Vietnam. The changing labor market conditionsin East Asia are discussed briefly in light of continued poverty reduction in the country. Jour-nal of Economic Literature, Classification Numbers: D31, I31, O15, P20. 4 figures, 5 tables,33 references. Key words: Vietnam, poverty reduction, economic development, coastal com-munities, East Asia, marine resources, World Bank, China, labor markets.

INTRODUCTION

he purpose of this study is to present an overview of poverty in Vietnam in light of thecountry’s impressive economic development and successful efforts to reduce poverty

rates. On February 5, 2007, which marked the commencement of a five-year program ofinterest-free grants and loans to support the ongoing economic development in Vietnam,2World Bank officials lauded the country’s progress as “. . . one of the great success stories ofdevelopment,” and the record of poverty reduction and economic growth as “spectacular”(World Bank, 2007a). Largely due to a series of economic reforms,3 Vietnam has since 1986been remarkably successful in reducing poverty. While the officially measured poverty rate

1Lecturer, Department of Vietnamese Studies, Hanoi National University of Education, 136 Xuan ThuyStreet, Cau Giay District, Hanoi, Vietnam ([email protected]). Field work for this paper was under-taken as part of a research project on Poverty Reduction and Resources Management in Coastal Communities inVietnam, a collaborative effort of the Hanoi National University of Education (HNUE) and the Norwegian Insti-tute of Urban and Regional Research (NIBR). The project is funded by the Norwegian Agency for DevelopmentCooperation (NORAD). The author wishes to thank Dr. Andrew Bond and anonymous reviewers for constructivesuggestions leading to improvements in the paper, as well as for bringing to her attention a number of sourcesfrom the Western media (cited in the paper) that augment the perspective derived from recent field observationsand analysis of government statistics.

2The Bank’s Country Partnership Strategy for Vietnam envisages a disbursement of over $800 million annu-ally over the period 2007–2011.

3Referred to as doi moi (“change to make new”), reforms adopted at Vietnam’s Sixth Party Congress in 1986included the decollectivization of agriculture and distribution of agricultural land to rural households, a program ofincentives to increase farm output, and the privatization of state-owned enterprises (e.g., Yeung, 2007, p. 269). Morerecently the primary factors underlying poverty reduction have been private-sector job creation (over 2.5 millionjobs by 2002) and improved integration of the agrarian sector within a market economic framework, boosting labor-market participation rates among the highest in the world (World Bank, 2003; for background see Van Arkadie andMallon, 2003; Glewwe et al., 2004).

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482 EURASIAN GEOGRAPHY AND ECONOMICS

in 1990 was over 70 percent, it had fallen below 20 percent by 2004 (Table 1),4 accompaniedby a 7.3 percent average growth in real income since the early 1990s (ibid.). In all, some 24million people (of a total population of 84 million) were lifted out of poverty between 1993and 2004 (Vietnamese Academy, 2006, p. 11).

It follows that Vietnam’s success in poverty reduction is in part the result of a period ofrapid and sustained economic growth. Between 1990 and 2000, the growth rate of Vietnam’seconomy has averaged 7.5 percent annually (World Bank, 2007a); more recently, it hasincreased even more rapidly from 7.3 percent in 2003 to 8.4 percent in 2005 (World Bank,2007b). These rates are among the highest in East Asia (e.g., see Bradsher, 2006). As anemerging economic force, Vietnam has been gradually integrating itself into the internationaleconomy through membership in supranational trade associations such as ASEAN (Associa-tion of Southeast Asian Nations),5 APEC (Asia-Pacific Economic Cooperation), ASEM(Asia-Europe Meeting), and, most recently, the WTO (World Trade Organization).

Poverty reduction in Vietnam, however, is more than a passive response to rapid economicgrowth. The government, with the assistance of other country governments and internationalfinancial institutions (the governments of Japan and Australia, as well as the World Bank andthe Asian Development Bank), has proactively addressed the problem, investing ca. $1.6 bil-lion in poverty reduction programs between 1992 and 2000.6 Much of the funding was directedat overhauling the infrastructure of the former commune system, assisting low-income farmersobtain loans to support production, and extending the social safety net for the population as awhole (e.g., a large share of the population now has access to health insurance).

PATTERNS OF POVERTY

Despite the international recognition and support received by Vietnam, it remains a poorcountry,7 with rates of poverty higher than in many countries in the world, and even inSoutheast Asia. Thus many challenges remain if poverty is to be reduced throughout the

Table 1. Official Government Standards of Poverty Ratea in Vietnam, 1997–2004 (percent of total households)

Date of standard 1992 1999 2000 2002 2004

1997b 30.0 13.0 10.02001c 17.2 14.7 8.32005d 23.0 18.1

aPoverty rate based on mean monthly income in Vietnamese dollars (VND).bBelow 80,000 VND in mountainous rural areas; 100,000 VND in rural plains; and 150,000 in urban areas.cBelow 55,000 VND in mountainous rural areas; 70,000 VND in rural plains; and 90,000 in urban areas.dBelow 200,000 VND in rural areas (mountains and plains); 260,000 in urban areas.Source: Compiled by author from Vietnam General Statistics Office, 2002, 2003, 2006, and various public media outlets.

4It should be noted that the official poverty definition in Vietnam (Table 1) used in this study is based solely onincome. As such, it is not truly an adequate measure of a phenomenon that is multidimensional, and related to a vari-ety of living conditions as well as access to education and health care services. A more general definition, adoptedby the World Bank and quantified according to a formula utilizing a range of statistical indicators, is “the inability toattain a minimal standard of living” (e.g., Vietnamese Academy, 2006).

5For an appraisal of regional economic integration within ASEAN, see Chen et al. (2007).6For background, see Socialist Republic of Vietnam (2002), MOLISA (2001), and MOLISA/UNDP (2004).


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TRAN THI HONG NHUNG 483

nation. Among the major ones are: (a) decreasing the currently substantial and growing gapbetween the country’s rich and the poor; and (b) resolving inequities that exist between urbanand rural areas,8 as well as among Vietnam’s geographic regions. It is upon such regional dif-ferences in well-being that the present study focuses, positing that policies recognizing thediverse conditions promoting poverty in Vietnam’s different regions ultimately stand the bestchance of success. It further argues that the character of poverty in coastal regions ofVietnam differs in many respects from that in the interior. And given the processes expectedto drive the country’s economic growth in the near future (and the sheer numbers of peopleinvolved), this paper suggests that a program targeting poverty reduction in coastal regionslikely would yield a more immediate benefit for the country as a whole.

Substantial variance in poverty levels are evident at the levels of Vietnam’s eight mac-roregions.9 As shown in Figure 1, the most impoverished regions of Vietnam have tended tobe the Northwest, North-Central, and Central Highlands—the former region with over half ofits population in poverty and the latter two regions with roughly one-third.10 Although theagricultural potential of all three regions is significant, infrastructure improvements (first andforemost in transportation) are essential in order to increase their accessibility to the coun-try’s major markets (i.e., foster integration of these often remote areas into a market econ-omy) and to the world economy more broadly. Education and training also are necessary inthese regions in order to promote more effective and diversified resource development and tocurb the exodus of rural migrants to the larger cities.

A slightly different picture would emerge if macroregional shares of the country’s totalimpoverished population were mapped. Such a map of Vietnam would show that 21 percent ofall individuals in poverty resided in the country’s North-Central region, followed by the North-east (18 percent) and Mekong Delta (17 percent) regions (Vietnamese Academy, 2006, p. 23).

Despite the achievements of the doi moi program, only a small proportion of Vietnam’spopulation has experienced the direct benefits. Consequently, as in many transitional coun-tries in Eastern Europe and Asia, the income gap between rich and poor is increasing.11 Thedifference in average per capita expenditures between the richest 20 percent and poorest 20percent of households in Vietnam increased from a ratio of roughly 5 to 1 in 1993 to 6.3 to 1in 2004; to express it differently, the richest 20 percent of households accounted for 42 per-cent of the society’s total expenditures in 1993 (45 percent in 2004) versus 8 percent (7 per-cent in 2004) for the poorest 20 percent of households; Vietnamese Academy, 2006, p. 17).Narrowing this gap is a primary objective of both government policy and the World Bank’s2007–2011 Country Partnership Strategy (World Bank, 2007a).

7Although gross national income per capita (purchasing power parity) increased from $180 in 1993 to $690 in2006 (Perlez, 2006; World Bank, 2007b), this figure was still below that of India ($820), and much lower thanIndonesia and the Philippines ($1420 each), not to mention China (sans Hong Kong, $2010).

8Poverty in Vietnam, as in many other countries, is predominantly a rural phenomenon; 25 percent of the pop-ulation in the countryside in 2004 was impoverished, as opposed to only 3.6 percent of the urbanites (VietnameseAcademy, 2007, p. 18). (These figures are much reduced from 1993, when the corresponding figures were 66 and 25percent, respectively.) When one considers that only 27 percent of Vietnam’s population is urban, the rural characterof poverty in the country comes more clearly into focus.

9Northeast, Northwest, Red River Delta, North-Central, Coastal Central, Central Highlands, Southeast, andMekong River Delta. Within each macroregion are a number of provinces (n = 61 for Vietnam as a whole).

10Thirty-two and 33 percent, respectively, according to Vietnamese Academy (2006, p. 22).11A study by the Asian Development Bank disclosed that income inequality increased during the 1993–2004

period in 15 Asian countries. A widening gap was evident in Vietnam, which ranked seventh on a Gini coefficientscale after Nepal, China, Cambodia, India, South Korea, and Taiwan (Asia’s Rich, 2007).


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DISTINCT CHARACTERISTICS OF POVERTY INCOASTAL REGIONS OF VIETNAM

As shown in Figure 1, that the poverty rate in coastal regions is generally lower than inVietnam’s mountainous interior. That notwithstanding, efforts to reduce poverty in coastalcommunities confront a distinct set of challenges involving natural resource protection and

Fig. 1. Poverty map of Vietnam in 2004, based on the 2001 national poverty standard.


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sustainable development (e.g., see Asian Development Bank, 1999; Ministry of Fisheries,2000; Khanhhoa People’s Committee, 2001; Aasen et al., 2003).

Unlike the mountainous interior, the economy of coastal regions is more diverse, whichin turn results in a more diverse labor force, including a variety of skilled and educated work-ers. Job opportunities range from commercial fishing and aquaculture to manufacturing(including food processing), maritime trade, as well as jobs in the incipient tourist and finan-cial services industries. These favorable characteristics are counterbalanced in part, however,by the considerable risks detailed below.

Despite the somewhat more diverse economic base, coastal economic development isstrongly dependent on marine resources, which are vulnerable not only to natural phenomena(e.g., ocean currents), but also to industrial pollution, and may require substantial up-frontcapital investments.12 Therefore, a rational policy of environmental protection and resourceconservation is a key prerequisite for sustainable, long-term development of marineresources.

Furthermore, natural hazards, such as typhoons and storm surges, are not uncommon incoastal communities, particularly in the North-Central and Central Coastal macroregions.Over the period from 1954 to 1999, more than 200 typhoons have made landfall or otherwiseaffected Vietnam—an average of 4–6 per year with a mean annual death toll approaching250 (ADRC, 1999). All too often, such disasters threaten urban residential and commercialproperty and even destroy major elements of infrastructure, such as communication lines,roads, bridges, tunnels, and ships. Professional expertise and planning are critical in develop-ing preventive measures, more durable building materials, as well as building codes to miti-gate the damage caused by natural hazards. However, such planning itself requiresconsiderable capital investment.

Another phenomenon that has intensified in recent years is in-migration of young peoplefrom rural areas of the interior into more urbanized environments, typically in Vietnam’scoastal regions.13 These flows, motivated by the search for employment, have both positiveand negative effects for the destination regions. Skilled, well-trained workers, for whom atleast limited employment opportunities exist in the host regions, contribute to the economyand local community development. However, especially in more densely populated coastalcities, unemployment among unskilled workers poses serious social problems, such asincreased criminal activity. Furthermore, remittances sent back by migrant workers to rela-tives in the interior, while having a redistributive effect at the national scale, constitute a neg-ative income transfer for the host regions; in the North-Central, Southeast, and Mekong Deltaregions, remittances account for as much as 10 percent of total household income (VietnameseAcademy, 2006, p. 40).

The widening gap between “haves” and “have nots” discussed above is particularly evi-dent in coastal communities, where significant capital investment is required to establishlarge-scale marine-related industries. Although small, family-owned businesses occasionally

12An offshore fishing vessel alone may cost hundreds of millions of VND, an amount typically unaffordablefor all but the relatively wealthy, or enterprising fishermen who are able to obtain bank loans. For the latter, naturalhazards, as well as overfishing and diseases/parasites, may compromise resource production, thus jeopardizing theability to repay the loans.

13More specifically, during the 1994–1999 period, Hanoi in the north and Ho Chi Minh City in the southserved as the destinations for the largest rural to urban migration flows in the country (Phan and Coxhead, 2007, p.8). As expected from the gravity model, however, the greatest absolute attraction was exerted by these cities on theirimmediate rural hinterlands in the nearby Red River Delta and Southeast/Mekong River Delta regions.


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are modestly successful, the low economies of scale inherent in such operations do not typi-cally generate multiplier effects (even in the form of unskilled jobs) for those outside theimmediate family. Therefore, although poverty rates in coastal communities generally arelower than in the mountainous interior, the coastal regions’ increasing population, togetherwith high ratios of unemployed workers, will soon compound an already challenging eco-nomic situation.

Therefore, it seems appropriate to argue that the government seek solutions that areunique to these communities in terms of strategies for job creation, resource protection, andensuring sustainable growth.14 Given that the coastal provinces are home to ca. 60 percent ofthe country’s population, contain the bulk of the country’s infrastructure, have the mostdiversified economic base, and appear to be relatively better situated in terms of their attrac-tiveness to foreign investment (see below), continued progress in poverty reduction therewill advance the country’s goal of attaining middle-income-country status by 2010 (WorldBank, 2007a). Achieving this goal, however, not only will require continued rapid economicgrowth, but also a commitment to further institution-building (e.g., in banking, health care,and the legal system) so that the widening income gap accompanying growth in these regionsdoes not expand to the point of generating instability and political and social upheaval.

Given the aggregate nature of the socioeconomic data compiled for Vietnam’s macrore-gions, additional insight into the nature of poverty in coastal Vietnam can be gained byfocusing the scale of analysis more precisely on a particular coastal province. Such analysisis undertaken in the following section of this paper.

POVERTY IN KHANHHOA PROVINCE

Khanhhoa Province, in the Coastal Central region of Vietnam (Fig. 2), has a total landarea of 5,197 km2 and a population of 1.1 million (2005). Its eight administrative units areshown in Figure 3, and consist of Nhatrang City (the provincial capital), Camranh Town, andsix districts (Vanninh, Ninhhoa, Dienkhanh, Truongsa, Khanhson and Khanhvinh).15

Because of its abundant marine resources alone, Khanhhoa’s economy is relatively devel-oped in comparison with other provinces of the region. In addition to fisheries and aquacul-ture, however, the provincial economy is increasingly based on the industrial sector (includingfood processing, construction, and transportation) and services (especially tourism) (Fig. 4).Khanhhoa is the tourist center of Vietnam because of its beautiful beaches, sunny and warmclimate, and several offshore islands on which many international tourist complexes havebeen constructed. Khanhhoa’s three bays (Van Phong, Nha Trang, and Cam Ranh) provide asolid foundation for maritime trade, with Van Phong having an ideal location for an interna-tional container port.16 Reflecting this diversity, Khanhhoa’s economy grew at an average

14However, in 2003, the Vietnamese government’s Program 257/2003/QD-TTg (focused primarily on infra-structure development) failed to address the unique characteristics of the coastal regions.

15In 2007, a new district (Cam Lam) was established from part of Camranh Town and Dienkhanh District. Thisnew district is not included within the network of local administrative units utilized here, however, because theadministrative change took place after the field work and compilation of data for this study had been concluded.

16The bay is located at the easternmost point of the Indochinese Peninsula near international shipping routesconnecting Europe, South and Northeast Asia, Oceania, and Latin America. Together with Cam Ranh, it is one ofthe few bays that is well protected from the wind and relatively free from alluvial deposition. Plans for constructionof the international container port were approved by the Vietnamese government in 2006 and construction is plannedto begin in late 2007 (Vietnam’s Largest, 2007).


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annual rate of 9.2 percent from 1996 to 2004, compared with a Vietnamese average of 7.4 per-cent (Statistics Office of Khanhhoa, 2005).

The strong economic growth has had a positive effect on poverty alleviation in the prov-ince. Industrial and service-sector employment provides a more stable, higher income thanagricultural labor, formerly the primary source of livelihood. Higher incomes, in turn, havebolstered provincial budget revenues,17 a share of which is earmarked to support povertyreduction programs. The programs are administered by the provincial Department of Labor,Invalid, and Social Affairs (DOLISA) and include social security income for retirees, thesick, and the disabled; death benefits to survivors; emergency funds for disaster relief (repairand reconstruction); production and technical support (i.e., job training in fishing and aquac-ulture); infrastructure construction; and funding for health care and education.

As Table 2 indicates, clear progress toward poverty reduction has been made in recentyears, both over time and relative to the national average for Vietnam.18 According to themost recent 2005 National Poverty Standard, Khanhhoa’s poverty rate (15.19 percent) is sub-stantially below the national average (18.1 percent).19 As a result of the relatively healthy

17Khanhhoa Province’s budget in 2005 was 3300 billion VND ($220 million U.S.).18To facilitate comparison, Table 2 consistently uses the 2001 Poverty Standard.19Cf. 3.27 and 7.0 percent, respectively, based on the 2001 Poverty Standard (Table 2).

Fig. 2. Location of Khanhhoa Province within Vietnam.


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Table 2. Poverty Rate of Khanhhoa Province, 2001–2005a

Year Number of poor households

Poverty rate, percent

Khanhhoa Vietnam

2001 22,564 11.14 17.02002 19,487 9.46 14.72003 16,404 7.83 12.52004 11,040 5.21 8.32005 4,608 3.27 7.0

aBased on the 2001 Poverty Standard of Vietnam.Source: Compiled by author from Khanhhoa People’s Committee, 2005a.

Fig. 3. Administrative units of Khanhhoa Province. The Truongsa Islands (see Fig. 1) District liesbeyond the areal coverage of the map and is not shown.


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provincial economy, DOLISA has been able to elevate the income threshold used to definepoverty slightly above levels of the national 2005 Poverty Standard in many cases, so that agreater number of people are eligible for benefits.20

Not unexpectedly, the spatial distribution of poverty within Khanhhoa is uneven (Table3), with the more economically diverse areas situated immediately along the coast registeringsomewhat lower rates of poverty than the provincial mean, and particularly than for the threeupland districts (Khanhson, Khanhvinh, and Dienkhanh). However, because the four coastaldistricts have much larger absolute populations, they contain much larger numbers of house-holds in poverty, and thus account for a larger share of the total number of impoverished in

Table 3. Incidence of Poverty in Districts in Khanhhoa, in 2005a

District Number of poor households

Poverty rate(percent)

Percentage of all poor households in province

Nhatrang City 6,303 9.5 19.1Camranh Town 7,164 16.5 21.7Vanninh 3,255 13.0 9.8Ninhhoa 6,785 15.4 20.5Mountainous districtsb 9, 447 25.0 71.1Entire province 32,954 15.2 100

aBased on the 2005 Poverty Standard. Hoangsa Islands district is not included.bKhanhson, Khanhvinh, and Dienkhanh.Source: Compiled by author from Khanhhoa People’s Committee, 2005a.

20In other words, DOLISA supports those encompassed within the provincial definition but not by the 2005national standard. The provincial standard is 300,000 VND per month for urban residents, 250,000 VND for rurallowland areas, and 200,000 for rural highland areas (cf. Table 1).

Fig. 4. Structure of the economy of Khanhhoa Province. Source: compiled by author from Statis-tics Office of Khanhhoa (2005).


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Khanhhoa (71 percent). Even in Nhatrang, the capital and most affluent district of the prov-ince, the number of poor households exceeds 6000.

Statistical Analysis of Multiple Poverty Indicators

As noted above, surveys of poverty based solely on income fail to be informed by anumber of other aspects of daily life involved in this multifaceted phenomenon. To obtain amore comprehensive understanding of the situation in coastal areas of Vietnam, this authorclassified all 133 communes (wards) of Khanhhoa Province, using data from a generalDOLISA poverty survey (Khanhhoa People’s Committee, 2005a), according to the followingcriteria:21 (1) poverty; (2) illiteracy of population above 15 years of age; (3) unskilled labor;(4) unemployment; (5) households residing in temporary housing; (6) households with elec-tricity; (7) households with a television set; and (8) households with fresh (running) water.An automated classification procedure using SPSS software, yielded five groups shown inTable 4.

Group 1 includes most of the urban communes in the province as well as those on theexurban fringe. The poverty rate of that group is the lowest in the province, and other indica-tors (e.g., electricity use, television ownership, and water supply) are higher than those forthe four other groups. However, unemployment remains a significant problem.

Group 2, which includes the other coastal communes, has a mean poverty rate approxi-mating the provincial average and comparatively high values for other quality of life indica-tors, albeit with relatively high unemployment, as in Group 1. Nearly half of the total numberof households, however, reside in temporary housing, and infrastructure remains quite inade-quate. Consequently, prospects for developing the economy and improving living conditionsare limited.

The three other groups (Groups 3–5), consisting of communes in the interior and moun-tainous areas of the province, have poverty rates substantially higher than the province mean.Scores on the other indices also were much less favorable than those of Groups 1 and 2(Table 4).

Table 4. Classification of Wards in Khanhhoa Province Based on Poverty Indicators in 2005, in percent

IndicatorGroup

1 2 3 4 5

Poverty rate 10.52 17.25 47.89 64.58 79.92Illiteracy rate (people over 15 years old) 29.05 28.36 51.54 55.46 67.14Unskilled labor rate 89.71 95.65 93.94 96.05 96.19Unemployment rate 6.81 5.51 1.54 0.68 0.30Households living in temporary housing 17.01 42.50 80.84 90.29 95.43Households with electricity 94.91 81.08 69.28 23.44 5.11Households with television set 72.53 49.43 31.90 14.18 2.77Households with fresh water 92.76 80.62 42.08 53.06 3.60

21All criteria are expressed as percentages of the respective ward totals.


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The Survey

Although the commune-level statistical analysis sheds further light on the character ofcoastal poverty in Vietnam, there is no substitute for detailed field work. For this purpose, theauthor conducted a survey of more than 200 households in Camranh Town and Ninhhoa Dis-trict in August 2005.22 The outcome of this survey, while corroborating the results derived atcoarser spatial scales, yields interesting results: only 15 to 27 percent of households wereresorting to loans to purchase daily necessities, only ca. 20 percent of adult residents hadobtained even a secondary education, and over a quarter to nearly one-half lacked access toclean water (Table 5).

Differences between the two surveyed localities also appear to be instructive. The rela-tively less impoverished Camranh Bay is an important military base that receives stateinvestments to support naval operations. Investments in infrastructure have generated steadyeconomic growth, and in 2000, the administrative status of Camranh was upgraded from dis-trict to town.. Considerable diversity in employment exists: in addition to fisheries and alocal salt industry, jobs are available at the port, in fish-processing factories, and in the touristindustry. However, belying Camranh’s higher average income and more favorable livingindicators, a stark gap was revealed between rich and poor that is wider than that in Ninhhoa.Consequently, as shown in Table 3, Camranh’s official poverty rate (16.5 percent) is evenhigher than Ninhhoa’s (15.4 percent). Revelations such as these point to the need for moresophisticated approaches to the study of poverty.

IMPLICATIONS

Vietnam has now reached a unique point in its modern history, attaining some of themost rapid rates of economic growth in the world and securing a major tranche of interna-tional development funding. This impressive accomplishment progress has taken place at atime when one of the country’s most formidable economic competitors, China, may be start-ing to lose comparative advantage in the export of labor-intensive manufactured goods.Wages in China’s industries are rising, as the demand for 20- to 35-year-old workers willingto work long hours at low wages is tightening (Bradsher, 2007) and a new labor law

Table 5. Selected Results of Field Survey, August 2005

Indicator Camranh Town Ninhhoa District

Number of interviewed households 109 119Population of interviewed households 582 579Per capita income, thous. VND/year 317 244Number of households borrowing money for daily needs 16 32Percentage of population over 15 years old with secondary

school degree or lower, percent 77.5 82.9

Households using polluted water, percent 28.4 43.7Source: Author’s survey of 228 households, August 2005.

22The survey questionnaires were administered in six wards of Cam Ranh Town and eight communes ofNinhhoa District.


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scheduled to take force in 2008 contains some provisions that, foreign companies believe,might compromise China’s status as a leading low-wage manufacturing base (Kahn andBarboza, 2007). Indeed, some observers, such as the World Bank’s Country Director forChina and Mongolia, estimate that China’s wages already are two to three times higher thanthose in Vietnam (and in other populous Asian countries such as Bangladesh, India, andPakistan), shifting the comparative advantage in the most labor intensive production pro-cesses to the latter nations (Dollar, 2007, pp. 10–11).

Furthermore, Vietnam is rapidly gaining a reputation as good place to do business, par-ticularly among Chinese and American entrepreneurs,23 some of whom now tend to view thecountry’s business climate as more favorable than China’s (Bradsher, 2006) . Corruption andbureaucratic inertia continue to present obstacles, but the focus of the World Bank’s newfive-year plan for Vietnam envisages strategies for attacking these and other impedimentsthrough institution-building. As the Bank’s outgoing Country Director for Vietnam, KlausRohland, noted, “. . . we need to make sure that the gap between a full-fledged market econ-omy and institutions that are needed to rein in the excesses of a market economy is narrowedas much as possible” (World Bank, 2007a). Consequently, the focus of the World Bank’s2007–2011 Country Partnership Agreement is on supporting banking reform and financialsector development, state enterprise reform, further private-sector development, anti-corruption measures, and improved public financial management, accountability, and trans-parency.

There are thus reasons to believe that conditions for business could become even moreattractive in the near future. To envisage what this might mean for economic growth and pov-erty reduction in Vietnam’s coastal regions, and Khanhhoa Province in particular, one needgo no farther than the Van Phong port development project described above. The containerport is planned to anchor a much broader development initiative (Van Phong is Vietnam’slargest [special] economic zone)—encompassing industry, tourism, aquaculture, electricitygeneration, and residential construction—that will serve as a pole for priority development ofthe entire southern Coastal Central region (Vietnam’s Largest, 2007; see also Khanhhoa Peo-ple’s Committee, 2005b). Japanese and Korean firms already are exploring the potential forcontracts involving construction of container port infrastructure, a shipyard, a thermoelectricpower plant, and blocks of new housing.

Vietnam thus appears poised to continue progress in reducing the poverty of its citizens,led both by a renewed focus on institutional reform and specific development projects in theports and cities of its coastal regions. What may signify a departure from the recent past isthat economic growth, much of it generated internally as a result of structural reform, willnow increasingly be augmented by an FDI-led boom based on revealed comparative advan-tage.

REFERENCES

Aasen, Berit, Nguyen Viet Thinh, and Do Thi Minh Duc, Regional Development, Coastal ResourceManagement and Poverty Reduction in Vietnam. Oslo, Norway: Norwegian Institute for Urbanand Regional Research, October 2003.

23Two-way trade between the U.S. and Vietnam rose eightfold between 2001 and 2005; Intel, Canon, andFujitsu are all in the process of establishing a major manufacturing presence in the country; and Vietnam acceded tothe World Trade Organization in early 2007 (e.g., see Perlez, 2006; Mydans, 2006; Vietnam, 2007).


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Documents

Vietnam's Coastal Communities: An Assessment of Poverty