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Impacts of Price Hikes on the
Lives and Livelihoods
of Poor People in Viet Nam
the municipal government has introduced a policy to provide 200,000 VND/month for three
months (until June 2008) to poor households with an annual income of less than 4.5 million VND.
What may be even more important than the revision of the poverty line and pension and social benefit payments
is the need to establish a mechanism that allows for regular and timely adjustments of standards and norms.
The poor/near-poor, low income earners and social assistance recipients are the most to price fluctuations and
other risks. They are in need of timely support policies in order to minimize life’s “ups and downs”.
Hai Phong and HCMC recommend relating the poverty line to the minimum wage level applied annually by
enterprises and agencies (which means adjusting the minimum wage level and the poverty line at the same
time): “While the minimum wage level was increased by 20 percent at the beginning of 2008 the poverty
line remains unchanged”. However there may be a lapse between the timing of the revision of the minimum
wage level which often takes place at the beginning of the year and the revision of the poverty line which
is often at the end of the year when the review of poor households is conducted.
The health insurance policy has been improved with a 50 percent subsidy for purchase of health
insurance cards for the poor people. Provisions in relation to voluntary health insurance have been
simplified. However, the coverage of voluntary health insurance at all the study sites, both urban and rural,
is still limited as people continue to “seek treatment only when falling sick” and the practice of paying for
health services out of their own pocket which is common in both urban and suburban areas because of
gaps in institutional arrangements for application of health insurance services at hospitals and health care
facilities. As the current near-poor group will be classed as poor at the beginning of 2009 when the poverty
line is revised, the Government should consider continuing to subsidize the cost of voluntary health
insurance cards for the poor (or provide subsidy for all farmers when budget becomes available). If it does
then more attention should be paid to the survey and review of both poor and near-poor households in each
of the localities at the end of 2008.
Other support policies need to be reviewed in the context of rising prices. A good example is the policy to
“remove temporary residence”. In An Thái commune, An Lao district, Hai Phong, there are a number of
households who are still living in temporary housing and cannot afford to build a solid house even with 4
million VND assistance (which has now been increased to 6-8 million VND) provided by local government and
mass organizations. When interviewed the poor households said: “Both construction materials and labour have
become more costly now. So we need at least 10 million VND to be able to just build a small house”. The local
government has had to remove them from the list so the commune can claim that it has completed the
“remove temporary residence” programme. Only 134 out of 152 temporary houses have been upgraded to
solid houses. The remaining 18 have been removed from the list and these households will commit in writing
that they will not request assistance from the local government in the future for house construction.
Sources of budget. A frequently asked question is where the funds comes from to implement social security
policies of increasing scope and cost. In addition to existing policies on improving State budget revenues,
savings and waste reduction there needs to be consideration of policy choice between universal social
assistance and dedicated social assistance to the poor and near-poor groups. A good example is the policy
on petrol price subsidy which has cost thousands of billions of VND. The Government has now decided not
to continue to finance losses from the petrol business (i.e. to shift to a market-regulated price) and instead
invest more in social security schemes. This move should be encouraged.
5.2.3 Review fee reductions to the poor
Recently the Government eliminated a number of mandatory fees such as “public labour contribution”,
“irrigation fees”, “public security and defense fees” and “flood and storm prevention fees” in order to reduce
the burden on people in the context of rising prices. However at the study sites there still exist various forms
of contributions mobilized by the different “funds” such as the “academic promotion fund”, “for the poor
fund”, “gratitude fund”, “local security fund” and others in the rural areas including “internal irrigation
fund”, “local fund”, “remove temporary residence fund” and “socio-cultural fund” (paid in paddy units per
farmer head, often according to the timing of harvests).
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