CHAPTER 1: COUNTRY DEMOGRAPHICS

A. Location

Cong Hoa Xa Hoi Chu Nghia Viet Nam, more popularly known as Socialist

Republic of Vietnam is located in Southeast Asia particularly on the southern and

eastern portion of the Indochinese peninsula. Its borders are China in the north, Laos

and Cambodia in the west, and the eastern part of the country, consisting of over 3000

kilometers coastline is facing the South China Sea.

B. Land Area

Vietnam is the 66th largest country in the world. It has a total area of 331,231

square kilometers based on the latest 2018 survey where the density per person is

estimated to be about 308 square kilometers. Its total land area is 310,070 square

kilometers and its total water area is 21,140 square kilometers. About 40% of the total

land area of Vietnam consists of mountains while 42% are tropical forests.

C. Number of Provinces, Cities, States and Prefectures

Vietnam is divided into 58 provinces (in Vietnamese: tính) and there are 5

centrally-controlled municipalities existing as the same level as the provinces; these are

Hanoi, Ho Chi Minh City, Can Tho, Da Nang and Hai Phong. It has a total of 87 cities
where 2 of these have more than a million people, 33 cities with 100,000 to 1 million

people and 52 cities have between 10,000 to 100,000 people.

D. Population and Gender Profile

Vietnam's April 2020 population has risen to 97,338,579 which ranks 15th

globally and has a global share of 1.25%. Its population changes annually by an

average of +0.91%. This current population consists of 48,085,258 males (49.4%) and

49,253,321 females (50.6%).

CHAPTER 3: ECONOMIC PROBLEMS AND ISSUES

A. Poverty, Inequality and Development

Vietnam has a plausible record in its eradication of poverty. The national poverty

line dropped dramatically from 50 percent in 1980 to 9.8 percent in 2016. It is estimated

that there are only 2 percent of the population who are experiencing extreme poverty.

Almost three quarters of the population are considered to have enough to cater for their

basic needs where some are able to have additional income at their own discretion.

(Pimhidzai 2018)

Despite the success story, poverty reduction remains an issue in Vietnam. By the

start of the 21st century, poverty rates continue to drop, however in a slower pace.
Growth became to be less inclusive and it is said that some are living in a much worse

condition that is not reflected in the poverty line.

According to the United Nations Development Program (UNDP), there are a lot of

factors that can characterize the poor such as large size of household, low education

and skills, dependency in agriculture, remoteness in rural mountainous areas and lack

of supporting infrastructure. The Vietnamese poor nowadays are specifically associated

by those living in mountainous areas rather than urban migrants. It is estimated that

there are 6.6 million from the 9 million people who are considered poor are from ethnic

minority heritage eventhough they only account about 15 percent of the population in

Vietnam.

Despite that the poor in Vietnam are characterized by those living in the

mountains, it can be seen in the table below that there is a significant disparity in the

situation between majority (Kinh and Hoa people) and minority people living in the

region. Further, the poverty incidence of the Kinh and Hoa people in high mountains is

10.4 percent and the ethnic minorities has an incidence of about six times larger. Thus,

it can be inferred that the high poverty incidence of the ethnic minorities does not simply

correlate with their living place but with their difference to the majority.

Table 1. Poverty rate and population distribution by topography, 2016

 There are various factors that are considered hindrances for the eradication of

poverty in Vietnam. According to Pimhidzai, “The poor is constrained by lack of human,

physical and financial capital.” He said that these constraints were identified decades

ago but were not properly tackled.

(1) Lack of education

A survey disclosed that in 1998, household whose heads completed primary

school or less constituted 55 percent of the poor population. The figure increased to 75

percent in 2010. Because of the reforms that the Vietnamese government implemented,

the figure declined to 57 percent in 2016. But this has still no improvement in

comparison to 20 years ago. Hence, it can be construed that the relationship between

poorness and education in Vietnam has always been reversed and shows no

improvement overtime. This is also true for ethnic minority groups who are living in

mountainous areas where the percentage of who cannot read nor write is 20.8 percent

in 2015 which is four times larger than the national average of about 5.3 percent.

Figure 1. Net school enrollment by welfare status and by ethnicity, 2016

 The table above shows that the dropout rate in secondary schools are higher for

students living in communes at farther distance to the district center (Badian 2013). This

is because secondary schools in mountainous areas are scarce and located

inconveniently in remote households. With this, students need to board rather than

travel from home to school. For poor households, the costs of school boarding

outweighs the benefits that it can generate. As a result, it is no surprise that a lot of

them choose to drop out and start working at a very young age.

The decision may make sense in the short run but this would limit their non-

farming opportunities for the rest of their lives. Their lack of education reduces their

access to better employment and high income.

Research also showed that the poor's limited education does not only hinder their

non-farm opportunities but also in agricultural sector. Poor households are less likely to

grow perennial crops which require specific knowledge and skills and opt to grow cereal

crops which in the long run, the average profitability of cereal crops per hectare would

decrease with the slope of the cultivated land, oppositely with perennial crops which

favors mountainous areas. The low level of education explains the sub-optimal crop

choice, which is one underlying reason for their poverty.

Pimhidzai also stated that not only do poor households plant sub-optimal crops

but their yield is less than non-poor households can produce. This can be explained

through the lack of education which can be a hindrance to trainings on farm

management and skills.

(2) Lack of financial capital

The poor have limited financial investments because of their limited access to

credit. If they opt to plant perennial crops, this would need a large amount for its

intermediate inputs. This lack of access to credit generally stems from their lack of

assets and land user certificates which are needed by financing institutions as collateral.

This constrains the poor for crops that have little investment eventhough it is more

profitable for them to grow perennial crops.

(3) High opportunity cost without proper social protection

A survey in 2012 depicted that social protection for poor people in Vietnam was

very limited. Only half of the poor population were included in the social protection

program in which the government provides subsidies enough for their basic necessities.

As a result, these poor people have relatively high risk aversion. It is said that the

government could have helped them in changing from cereal crops to perennial crops

by enhancing their skills through trainings, but if their daily subsistence is not

guaranteed, they would defy any of such help.

This is in conformance to what the commune official shared in Bac Lieu in 2019

which states that, “We offer vocational training for women and encourage everybody to

join. But people from ethnic group refuse to come. They thought that it is time-

consuming. They would rather save time to go to work and earn money for living. No

time to learn.”
 B. Population Growth

Vietnam's population has grown dramatically over the years after the Vietnam

War. From 1979 to 1989, it is estimated that the country's population increased by 22.7

percent, but in 1989 to 1999 the growth declined to 18.5 percent. Furthermore, from

1979 to 1999, the population in Vietnam was added by 24 million people making it as

the 13th most populous country at that time. The decrease in the growth rate in 1990's

can be traced from the desire of every family to have only two children.

In 1979, Vietnam’s age and sex distribution exhibited the classic broad base of a

country with a history of high fertility. The three widest bars at the base of the pyramid in

Figure 2, representing the youngest age groups of 0-14 years, accounted for 43 percent

of the population, a very young age distribution. About 20 years later, that proportion

had dropped to 32 percent, still a comparatively young population. A very striking

feature of Vietnam’s age structure in 2000 is the fact that the two “youngest” bars are

smaller than the ones just above. As a result, the age structure itself virtually assures

slower future population growth as these younger people move up the pyramid,

reducing the number of potential parents.

Figure 2. Population by Age and Sex, Vietnam 2000

Source: Ministry of Health, Health Statistical Yearbook 2000.

By the start of the 21st century, the population grew at a constant rate of more or

less 1% and changes yearly by about 1 million. As of April 2020, Vietnam's population

has gone 97,338,579 people.

Table 2. Population of Vietnam (2020 and historical)

Source: Worldometer

The population density in Vietnam is 308 per Km2 (813 people per mi2) and 37.7

% of the population is urban (36,727,248 people in 2020). The median age in Vietnam is

32.5 years.
Figure 3. Life Expectancy in Vietnam from 1955 to present

The table above shows the life expectancy rate in Vietnam which is increasing

over time since 1950's. As per record, currently, the life expectancy of male Vietnamese

is 71.7 years while the female Vietnamese expects to live for 79.9 years.

Figure 4. Total Fertility Rate in Vietnam, 1955 - Present

 The fertility rate in Vietnam has been declining through the years. Research

suggests that this is because families in Vietnam practice family planning since early

2000 limiting their children to only two. As a result, the total fertility rate in Vietnam

decreased and by 2020, the rate is 2.1 births per woman.

The continuing increase, though in a much slower pace compared to previous decades

of Vietnam's population poses several problems in its development as a country.

(1) Rising Rate of Unemployment

As the population continues to grow, Vietnam is challenged on how to provide

employment to its people particularly the youth. The current unemployment rate in

Vietnam is 1.89%, this number is not quite large compared to other countries but about

two-thirds of it constitutes unemployed youth. According to Pham Thi Thanh Tam, the

executive director of REACH, a Vietnam-based non-profit organization, this problem

arises because the education in Vietnam is becoming more expensive. As a result, a lot

of people cannot afford to incur these costs and choose not to go to school. This

scenario is more prevalent in rural and mountainous areas where people have lower

income compared to those who are in the cities. He further said that, "When young

people don't have skills, they can't compete to enter the labor market."

It is also emphasized that education and training in Vietnam is not that good. The

lack of facilities and technologies is one of the hindrances that it is currently being

experienced that is why it cannot cope up with the training provided with other countries
especially the industrialized ones. With that stated, unemployment is still high even for

graduates from universities and colleges. A survey conducted states that a lot of people

who graduated from universities work in labor-related jobs that do not need university

degrees. Hence, it would be even more difficult to people who have no formal education

to be employed.

Moreover, there are about 1.4 million people every year who enter the labor

market but only 27 to 30 percent of this have skilled training. As a result, a large

proportion of them are not trained to do jobs that are in high demand.

(2) Aging Population

The population growth in Vietnam has been declining through the years because

of the sharp reductions in its fertility and mortality rates resulting to increase in its life

expectancy at birth. In the present situation, the elderly population in Vietnam is

increasing rapidly in both absolute and relative numbers. The share of the population

older than 65 years old in Vietnam is 8.1% in 2020 and it is predicted that this

percentage will continue to grow in the years to come.

The large elderly population in Vietnam raises concerns about healthcare,

welfare and pensions for the elderly at a time where Vietnam is focusing on economic

integration and requires a large labor force.

C. Urbanization and Rural-Urban Migration

 The speed of urbanization in Vietnam increased after reaching an urban

proportion of the population at 10 percent in 1950 and by 1975, the population living in

urban areas increased to 21.5 percent. However, in that period, there was a large divide

between the North and South. The level of urbanization has increased substantially in

the South but decreased slightly in the North. After the Vietnam war, the country was

reunified and there was a substantial decline in the urban proportion of the population

throughout the country when it had fallen to 18.4 percent. Since then, the level of

urbanization in Vietnam gradually increased to 20 percent and that in 2009 it reached to

29.6 percent. A survey conducted in 2016 stated that the level of urbanization is now 34

percent in Vietnam. (Ibid, 2016)

As urbanization tend to grow over time, the agricultural sector become less

prominent. In 2008, almost half of the population of Vietnam is engaged in agriculture

but ten years later, this has lowered as people migrate from rural areas to the cities. As

a result, the population working in the service sector has grown which represents 1/3 of

the population of Vietnam and the industry sector has grown to a quarter. Though

agriculture has long had the most workers, the service and industry sectors accounted

for larger shares of Vietnam’s GDP from 2007 to 2017.

There are various characteristics that represent the rural-urban migrants in

Vietnam. First of which, the proportion of female migrants has grown over time that in

2016 it represented 52.4 percent of all migrants aged 15-59. Second, the majority of

migrants are young individuals; 85 percent are aged 15-39 with an average age of 29.2.

Third, Kinh and Hoa people migrate more than other ethnic groups. This is because

most ethnic groups live in remote areas which limit their opportunities for information
and they lack the capability to afford migration costs. Fourth, migrants are educated

people; most of them have professional or technical qualifications. Fifth, migrants mainly

move alone which represent 61.7 percent while those moving with family members

represent 31.4 percent. A survey conducted states that their social networks are their

primary source of assistance and information - 46.7 percent learn their migration

destination from family and friends and a very few of them receive information from

official sources such as job centers or employers.

Both male and female migrants consider employment-related purposes the main

reason for migration (34.7%), followed by family-related reasons (25.5%) and education

(23.4%) (General Statistics Office 2016; World Bank Group 2015). Men are more likely

to migrate for work purposes and women for non-work purposes, such as family or

study (General Statistics Office 2016).

A survey conducted by the General Statistics Office revealed that most migrants

which is about 74.8 percent whose age ranges from 15-59 are employed. The majority

for those unemployed moved for education purposes. Moreover, female migrants

dominantly work in the garment sector or as domestic workers, and male migrants in the

production and construction sectors or as taxi/motorbike taxi drivers. Among both male

and female migrants, the proportion employed in leadership positions is low (2.3% and

0.4% respectively). Despite a rise in migrants’ average incomes after migration, they

remain lower than those of non-migrants. Male migrants earn more than female

migrants, and migrants to Hanoi and Ho Chi Minh City earn the highest mean income.

Approximately 30% of migrants have found themselves facing difficulties in their

new place of residence. This percentage is highest for female migrants and migrants
from rural areas. The issues include housing problems (experienced by 42%), receiving

no income (38.9%), being unable to find a job (34.3%), and being unable to adapt to a

new environment (22.7%). These problems experienced by migrants contribute to some

economic issues that Vietnam faces at present.

(1) Underdevelopment of Rural Areas

In its latest survey, the average growth rate of urban population is about 3.4%

per year while that in rural areas is only 0.4%. The main reason was the expansion of

the migrant flow from rural to urban areas for industrial activities. Urban population

tends to rise in all urban levels. In general, there are three main flows of migrant in

Vietnam. The first is from Mekong River Delta and surrounding provinces to the South

East region. The second is from North Mountainous and North Coastal areas to Red

River Delta. The third one is from the provinces in the North to the South mainly to

South East region. Besides that there are also some small migrants to Central Highland.

In terms of migration flow, the percentage of migrants to Southeast was the

highest at 50.9% because its economic development motivated to attract more migrants

from other regions. The migrants were young and mostly between ages of 15 and 34.

The migration flow from rural to urban of Red River Delta ranked the second (18.1% of

total migrants). The rate was quite low compared to the Southeast.

The significantly increasing immigration from rural to urban brings about

pressures in all social aspects such as the inadequacy of accommodation, water,

hygiene, and medical care. The main reason for their migration is the unbalance of
investment beacuse the majority of investments were focused in the big urban or in the

industrial zone. It is the major factor leading to the trend of urban immigration in

Vietnam.

These massive internal migrations pose several problems. First of all, they empty

poor rural areas of valuable resources such as human capital or even investment

capacity that are necessary for their development. It left businesses in rural areas not

prospering. Moreover, as investments are more focused in urban areas, there is a lack

of infrastructures in rural areas hampering the transport of goods. Additionally, there is a

tremendous lack of facilities and technologies in rural and mountainous areas as

compared to urban areas.

(2) Population Density and Pollution

As people migrate from rural areas to urban areas, the population become

congested. By 2020, the population density in Vietnam is 308 people per square

kilometer of land area and currently, Vietnam's total urban population reached to

approximately 36.7 million. As a result, environmental degradation is one of the

pressing problems that Vietnam faces today.

Poor air and water quality, insufficient water availability, waste-disposal

problems, and high energy consumption are exacerbated by the increasing population

density and demands of urban environments. Particularly, concentrated energy use

leads to greater air pollution with significant impact on human health and automobile

exhaust produces elevated lead levels in urban air. Moreover, large volumes of
uncollected waste create multiple health hazards. Urban development can also magnify

the risk of environmental hazards such as flash flooding. And lastly, pollution and

physical barriers to root growth promote loss of urban tree cover.

CHAPTER 4: SUGGESTIONS FOR FURTHER DEVELOPMENT

A. Poverty, Inequality and Development

As of 2019, Vietnam has about 9 million people living under the poverty line. This

remaining group is even harder to reach than the group ten to twenty years ago. They

rely on agriculture, live in remote mountainous areas with very limited access to modern

infrastructure, education and government and international aids, and have low

education level and skills. Their chance getting out of poverty is even worse than the

past as Vietnam continues to modernize the economy and thus they will be left even

further behind.

In order to eradicate poverty in Vietnam, the following solutions can be feasible.

(1) Improve labor productivity

Nguyễn Bích Lâm, Director-General of the General Department of Statistics has

examined why Vietnamese labour productivity is so low. According to him, there are

many different reasons, including the slow switching of the national economy; low
application of science and technology; poor working conditions; poor human resources

management and others.

Vietnam’s economic scope and scale is still small. Vietnam’s current GDP, if it is

based on Purchasing Power Parity, is only equal to that of India in 1973; China in 1978;

Indonesia in 1982; and Thailand in 2001.

In order for Vietnam to raise its labor productivity, it should pursue sustainable

economic development while implementing measures on institutions, policies and find

solutions for the national economy and the enterprises. Furthermore, it is recommended

that the government must establish a National Productivity Commission. This

commission will exercise technical and administrative supervision over enterprises

which implement the wages, incomes and productivity policies and programs.

Meanwhile, Vietnam should learn from the miracle countries such as Singapore, Japan

and South Korea and then apply their findings in their actual conditions. In addition, the

government should adopt policies to help economic entities to approach advanced

science and technology and to restructure their organization to gain high labor

productivity.

(2) Keep investing in infrastructure to create more and better jobs

One of the government's aims should be to create areas where a well-functioning

infrastructure becomes a magnet for domestic and foreign investors, and for industries

in particular, who are looking for the right place to open their headquarters. It must pick

out zones where it will focus the largest investments, all of them located on the coast,
especially for the export-oriented manufacturing industries particularly agricultural crops.

This will enable farmers who constitute the most vulnerable sector sell their harvest in a

larger market. As a result, they will be encouraged to increase their supply and improve

productivity so as to help them enhance their way of living. This development, in turn,

shall be part of a larger plan by the government to improve Vietnam’s infrastructure

across the country, to enable it to compete with the other economies of South East

Asia.

(3) Target poor households more intensively with a combination of changing farm land

use towards profitable crops, strengthening land user rights, providing microfinance,

improving skills while at the same time securing their subsistence.

(4) Reform the education system for equal opportunity of poor and non-poor, preparing

the young generations for off-farm opportunities which offer more stable income.

B. Population Growth

Vietnam is currently experiencing rapid demographic and social change. Serious

issues have risen as its population continues to thrive and such must be taken into

consideration as soon as possible. The following are the suggestions.

(1) Create more jobs to reduce unemployment

 Evidently, in order to reduce unemployment, Vietnam must offer jobs to its

citizens. To achieve this, three recommendations can be implemented.

First, the most cost effective solution is building mass transit and other

infrastructures. The University of Massachusetts' study found that 1 billion dollars spent

on building infrastructures creates 19,795 construction jobs. This would be very

beneficial in the situation of Vietnam as this will create a double effect - infrastructure

development and decrease in unemployment.

Second, provide unemployment benefits. This is what the US Government did as

they provided unemployment insurance to its citizens resulting to the creation of 1.6

million jobs on average each quarter from 2008 to 2010. This is because the

unemployed are most likely to spend every dong that they get. As a result, every dong

spent on unemployment benefits stimulates demand. As in the case in the US, every $1

of unemployment benefits increases demand by $1.64. How can $1 create $1.64? It

does it through the ripple effect. For example, a dollar spent at the grocery store pays

for the food. It also helps pay the clerk's salary, the truckers who haul the food, and

even the farmers who grow it. The clerks, truckers, and farmers then buy groceries. This

ripple effect keeps demand strong, creating added benefit. Stores keep their employees

and hire even more to supply the goods and services to cater the demand.

Third, fund education particularly vocational training system. In its recent survey,

the youth constitutes about two-thirds of the unemployed people. Most of them are

college graduates but unable to find jobs because of the mismatch in the labor market.

The job that is in high demand does not correlate to the skills or degrees of the available

workforce. This is because a lot of colleges and universities keep their curriculum for
five to ten years while the labor market keeps changing from time to time. Thus, the

Vietnam government must support in the development of vocational trainings to cope

with the demands in the market.

(2) Improving the health quality of the elderly and encouraging economic activities

suitable to their skills and physical capabilities

In Vietnam, 80 percent of the elderly live with their children and 70 percent live

with little savings or pension, especially in rural areas. And the proportion of healthy

elderly in Vietnam is comparatively low - only around 5 percent are in good health,

whereas more than 70 percent are reported to be in very weak physical condition.

Vietnam should appropriate sufficient funds for an action plan to drive bottom-up

age in the lives of the elderly. Bottom-up change is only possible if there are enough

community organizations, services, volunteer centers and senior research centers for

the elderly to participate based on their willingness and interest. Dealing with Vietnam’s

aging population is both a public policy challenge and a cultural challenge. Hence,

Vietnam should loosen their long standing ideology that children should take care of

their parents in their retirement because this is not always the case.

C. Urbanization and Rural-Urban Migration

The migration of people from rural to urban areas raises several problems that

must be taken into account as these would have a great effect in the development of
Vietnam as a whole. No one can blame these migrants because what they are up to is

just to look for a greener pasture for themselves and their loved ones which they cannot

find in their rural hometowns. Poverty and unemployment are a few of their

circumstances. To aid such issues, the following can be of help.

(1) Investment in rural areas to support infrastructures and services, along with large-

scale active labor market policies

Building infrastructures is one of the several ways to develop the situation in rural

areas. Heavy-duty roads and other ways of transit can help boost businesses as it will

aid the transport of the products and services from rural areas to urban places. This will

also promote exports of agricultural products from rural areas. If businesses prosper

and grow, they will provide more opportunities by hiring more employees. This will aid

most of the migrants' circumstances as they will be getting opportunities to get

employed.

As what Gerd Müller, Germany's federal minister for economic cooperation and

development said, "Only strong rural areas will be able to prevent hunger crises in the

future and offer truly good prospects to young people." This was his statement on his

speech in the implementation of the goals of Germany's current G20 presidency where

creating jobs and improving the long-term outlook for young people in rural areas is one

of the goals. He further stated that, “The future of humankind will be decided in the

world’s rural areas.” This is a general statement that is not only applicable to Germany's
development but also to other countries who have problems in boosting rural areas like

Vietnam.

Then it can be construed that it is possible to eradicate poverty and hunger,

reduce the exodus from rural areas and safeguard sufficient food supply for a growing

world population if rural areas get innovation and new impetus. To make globalization

fair, policymakers must ensure that rural areas do not lose out.

(2) Improve agricultural capacities of the rural populations

This is a feasible solution since the primary source of livelihood in rural areas is

agriculture. If their agricultural capacities are improved, it will translate to increased

agricultural produce and ultimately reduce the dependency of the rural households on

remittances for survival.

Economic reforms have generated impressive results in the Vietnamese

agricultural sector, as farm production more than tripled over the 1990-2013 period,

lifting rural incomes, reducing poverty, combatting under-nourishment and sending

agro-food exports soaring. Parallel to this accomplishment, Vietnam radically boosted

its place in global agro-food markets, becoming the world’s largest exporter of cashews

and black pepper, the second largest exporter of coffee and cassava and the third

largest exporter of rice and fisheries.

Vietnam’s agricultural transformation over the past two decades has been

nothing short of remarkable but a recent analysis from the Organization of Economic

Cooperation Development (OECD) states that going forward, Vietnam needs to improve
its policy environment, to enable investments that will allow the farm sector to continue

to adapt to the opportunities created by rising demand and the challenges of climate

change and limited resources. This is because rising labor costs will open opportunities

to adapt new technologies and encourage larger farms, but they may also reduce the

sector’s overall competiveness, particularly if newer labor-saving techniques are not

readily accessible or adaptable to the dominant small-scale farming.

Thus, Vietnam must implement policies that reduce constraints on private

investment, including land fragmentation, which limits economies of scale, and various

restrictions on land use rights, which raise costs.