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Impacts of Price Hikes on the
Lives and Livelihoods
of Poor People in Viet Nam
In 2000 investment in agriculture accounted for 11.4 percent of total investment in the economy, falling to
5.5 percent in 2006. The percentage of public investment in agriculture also declined from 10.3 percent in
2000 to 6.2 percent in 2006. Of the total public investment between 1997 and 2002 the share of
agriculture was only six percent, of which investment in irrigation accounted for as much as 60 percent.
Government expenditures on research and development in agriculture which are expected to yield the
greatest returns is less than two percent, mostly to cover salary and overheads costs. Less than one percent
of the country’s domestic enterprises invest in agriculture. FDI in agriculture also represents less than five
percent of total FDI. 18
2.4 Government Policies in Response to Inflation
Since the beginning of 2008 curbing inflation has become the Government’s top priority. Eight broad
solutions have been proposed: 19
1. Tightening of monetary policy
2. Close control and improvement of the use of public expenditures
3. Further development of industrial and agricultural production and services in order to secure
equilibrium between supply and demand of commodities
4. Further promotion of exports, close control of imports and reduction of surplus imports
5. Strengthening economical production and consumption practices
6. Enhancing market management to prevent speculation, smuggling and trade frauds; supervision
of the implementation of Government pricing regulations
7. Enhance support measures to stabilize daily living and producing conditions of the people;
expansion of social security policy implementation
8. Strengthen information dissemination and propaganda activities
Related to the seventh group the Government has issued a series of measures in response to rising prices:
• Maintain prices of essential goods and services until the end of June 2008 and continue to curb
price rises;
• Provide free rice to people affected by natural disasters and food shortage; extension of due loan
payments for households suffering from crop failures caused by diseases and bad weather conditions;
• Provide cash assistance (equivalent of five litres of kerosene oil/year) to ethnic minority and poor
households in areas with no electricity supply and groups entitled to special assistance benefits;
• Provide support to fishermen for purchase/building of ships, replacement of engines, ship
insurance and supply of oil for fishing boats;
• Increase the health insurance premium for the poor (from 80,000 VND/person/year to 130,000
VND/person/year); finance 50 percent of the cost of health insurance cards for members of nearpoor
households who participate in voluntary health insurance schemes;
• Provide free textbooks to students entitled to special assistance benefits and subsidize costs of text
books for children of poor households;
• Increase scholarships for ethnic minority students;
• Provide more capital to the Policy Bank; strengthen concessional loan schemes for poor households
and students; provide loans for trading of rice and cat fish with preferential interest rates;
• Remove fees and charges related to irrigation, security, natural disaster control, land planning,
household registration and the first time issuance of ID cards;
• Assign ministries/agencies to study and propose to the Government a new poverty line (likely to be
50 percent higher than the current poverty line); improved pension and social assistance packages;
22
18 www.Viet Namnet.vn/kinhte/2008/06/789913
19 Resolution 10/2008/NQ-CP of the Government dated April 17, 2008.