Contribution of Forestry to Poverty Alleviation - APFNet

The Contribution of Viet Nam Forest Corporation (Industrial Forestry) to
Poverty Alleviation in Mong Hoa Commune, Ky Son District, Hoa Binh
Province
Field site
The Viet Nam Forest Corporation (VINAFOR) was selected as the site for understanding the impacts
of industrial forestry in a local community. VINAFOR is a State-owned company under the MARD
and operates under the Enterprise Law of 2010. The company is mainly focused on forestry trade
from afforestation to processing, export and import of wood products, including household wood
products and plywood.
Hoa Binh Forestry One-member Limited Liability Company is a subsidiary directly under VINAFOR,
located in Mong Hoa Commune, Ky Son District, Hoa Binh Province. It was established in 1998 after the
implementation of the policy on re-arranging State-owned forestry enterprises according to Decision
187/CP. This brought about the introduction of activities related to forestry development and provided
materials for the Thai Nguyen plywood factory and other wood processing factories.
Planting in the company’s plantations is done through contracts with villagers of Mong Hoa Commune.
The Hoa Binh Forestry One-member Limited Liability Company enters into contracts with the villagers
of Mong Hoa commune to plant in the company’s plantation according to the cycle of planted tree that
lasts six to seven years. Villagers are provided the inputs, such as seedlings, fertilizer, and fees for labor
days and forest protection. In return, villagers are responsible for forest plantation and protection for
the entire contract duration. During the contract lifetime, the forest is considered the villagers’ asset
and therefore they have the responsibility to manage and protect the forest and have autonomy to either
find markets for their timber themselves or sell it to the company at the market price. Over 70% of the
population belongs to the Muong ethnic minority and more than 60% of the households rely on forestry
for their main source of income. Income generated from the plantations contributes to over 80% of the
total income of households in the commune.
While the forest is primarily used for production, it also plays a vital role in protecting the Da River
Basin, which is only three km away from the Song Da hydroelectric plant.
Mong Hoa is a northern, mountainous commune of Viet Nam, three kilometers from the center of Ky
Son district. The transport system is good as the commune is along National Road 6A. It covers an area
of 1,866 ha, in which forestland accounts for over 70%. Mong Hoa commune has 17 villages with 1,196
households and 5,091 inhabitants belonging to various ethnic minorities: Muong (73%), Kinh (27%),
and other ethnic groups (0.3 %).
The main source of income in the commune is through contracting with Hoa Binh Forestry Company
to afforest state land leased for 50 years. This accounts for more than 80% of the total household
income of 1,196 households. However, under the new national poverty line 14 , around 30% of households
in the commune are still considered poor.
Contribution of the community forest to the wellbeing of villagers
Before 1998, the state owned and managed all forestry land in the commune, though this proved to
be ineffective as land was left bare. In 1998, the Hoa Binh Forestry Company was established under
the guidelines of the government and Decision No. 187/CP. It reorganized the systems, merging
forestry farms into the State Forestry Company to operate as a limited liability company under the
Enterprise Law.
14 The Prime Minister approved a higher poverty threshold for the period 2011 to 2015. In urban areas, the poverty
line is VND 500,000 (US$ 25) per person per month. In rural areas, it is now VND 400,000 (US$ 20) per
person per month.
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