Vietnam: The Greatest Poverty Reduction Success Story

Vietnam has undergone 30 years of Renovation with profound and comprehensive reforms. The renovation process has brought about great development achievements of historical significance.

Vietnam has emerged from the socio-economic crisis and underdevelopment, joining the group of lower middle-income countries.

Ethnic people in Ha Giang take care of corn on the mountainside.

To have a more objective view of the achievements of 30 years of Doi Moi, VNA reporters interviewed Mr. Eric Sidgwick, Country Director of the Asian Development Bank (ADB) in Vietnam and Ms. Victoria Kwa Kwa, Country Director of the World Bank (WB) in Vietnam.

Mr. Eric Sidgwick, Country Director of the Asian Development Bank (ADB) in Vietnam: The greatest success story in poverty reduction

Vietnam’s achievements over nearly three decades are remarkable. Vietnam has become one of the world’s greatest poverty reduction success stories.

Mr. Eric Sidgwick

We are pleased with the tremendous progress Vietnam has made, particularly in ensuring that rapid economic growth is accompanied by support for poverty reduction.

In the 30 years of Doi Moi, Vietnam's GDP per capita has increased sixfold, while the poverty rate has dropped from over 58% in 1993 to only about 3% today. In just a few decades, Vietnam has transformed from one of the poorest countries in the world to a lower middle-income country.

Impressive economic improvements have contributed to continued progress in social development, and enabled Vietnam to achieve the Millennium Development Goals on poverty reduction well ahead of the global deadline. This dramatic economic and social transformation is the result of a policy shift from central planning to market mechanisms, and ever-stronger progress in global and regional economic integration.

When talking about Doi Moi, it is impossible not to mention the policy reforms that Vietnam has implemented. In just over a quarter of a century, these reforms have helped Vietnam completely change and move the economy rapidly towards a market economy. Vietnam has carried out important economic and institutional reforms to improve weak production capacity, create growth, and improve the living standards of its people.

If we look back at the economic achievements since the 1986 Renovation, I believe that everyone agrees that creating a favorable business environment and encouraging the private sector is an important driving force for growth; in which, reforming state-owned enterprises (SOEs), deepening the reform of the banking and financial sector, and improving competitiveness have always been at the heart of the overall strategy.

Ms. Victoria Kwa Kwa, WB Country Director in Vietnam: People's consensus is a successful lesson

After 30 years of reform, Vietnam is a dynamic economy and has become a lower middle-income economy. Vietnam has achieved high growth and good social policies have brought about significant improvements in social security.

With the application of the new poverty line, Vietnam's poverty rate has dropped from more than 50% in the early 1990s to the current single digits. Extreme poverty, measured at $1.25/day, has almost disappeared in Vietnam.

Not only is income higher, but Vietnam's rate of access to education is also higher than in most countries with the same per capita income.

In addition, access to basic infrastructure services has also improved. Currently, 96% of Vietnam’s population has access to electricity, up from nearly 50% in 1993. Meanwhile, access to clean water and sanitation has increased significantly from less than 78% of households in 1993 to over 98% today.

Vietnam's comprehensive development has been widely recognized as a model for other developing countries. The results of 30 years of Doi Moi have created a solid foundation for Vietnam to enter a new stage of development as a middle-income country.

We can draw some successful lessons from Vietnam's reform process.

Firstly, Vietnam has chosen a pragmatic approach in the reform process. Accordingly, the reform process is carried out in a certain order and at a reasonable pace. In particular, Vietnam has built a broad consensus at all levels in the reform process.

Second, Vietnam has learned to use its strengths by focusing on labor-intensive manufacturing and agriculture rather than engaging in high-tech control systems.

Third, the early establishment of abundant human resources is also an effective highlight of Vietnam. Vietnam has built a young workforce with potential and relatively high educational levels. Through the Doi Moi process, human resources have also been expanded, thereby promoting economic innovation towards the market.

And finally, Vietnam has achieved consensus from all walks of life, which is the strength that helps Vietnam have effective strategies in implementing the commitments of international trade agreements that Vietnam has signed, especially in the field of reforming some complex business areas.

These four important highlights have helped Vietnam succeed in the Doi Moi process over the past 30 years and will continue to play a huge role in the next reform process.

Vietnam’s biggest goal is to become an industrialized and modernized country. In the long term, Vietnam needs to focus on innovation in a number of key areas such as: developing the private economic sector, urban development, promoting reform and improving education.

Some market factors, especially those that ensure competition and protect property rights, are not yet fully developed. This makes the process of resource allocation inefficient in the process of structural transformation. This hinders the competitiveness of the domestic private economic sector.

Vietnam needs to identify these gaps early, thereby promoting the development of supporting enterprises and creating connections with foreign direct investment (FDI) enterprises. If Vietnam can build a connection between these two economic sectors, it will contribute to increasing the benefits of participants in the global value chain.

Vietnam also needs to strengthen its education and innovation agendas to ensure continued high growth in the future, which will help Vietnam increase its productive resources.

In addition, Vietnam also needs to develop a dynamic private economic sector, reform to effectively use human resources. In general, Vietnam needs to build a more open society with new ideas, improved technology and the ability to cope with risky situations well.

In addition, Vietnam also needs to promote urbanization as another driving force of development. Large cities such as Ho Chi Minh City and Hanoi have developed strongly in the past two decades, but the scale and scope of urbanization of the entire Vietnamese economy have not received much attention.

According to News