1 / 22

Presenter: Dr. Chu Tien Quang Institute of central economics management

The policies of investment in developing infrastructure for the purpose of economic growth, hunger eradication and poverty alleviation in the rural of Vietnam. Presenter: Dr. Chu Tien Quang Institute of central economics management. Outline.

baird
Download Presentation

Presenter: Dr. Chu Tien Quang Institute of central economics management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The policies of investment in developing infrastructure for the purpose of economic growth, hunger eradication and poverty alleviation in the rural of Vietnam. Presenter: Dr. Chu Tien Quang Institute of central economics management

  2. Outline • The role of infrastructure toward economic growth and poverty reduction in Vietnamese rural area. • The policies of investment in developing infrastructure in rural area. • Primary results of developing several types of fundamental infrastructure in the rural and some limitations. • The orientations for the policies of investment in developing infrastructure in rural area.

  3. I. The role of infrastructure toward economic growth and poverty reduction in rural area. Rural infrastructure includes: Roads, irrigational system, electricity system, information system, heath care centers, schools and market system. These types of infrastructure play an important part in developing economy and reducing poverty for the following reasons: a. Set up a foundation and offer opportunities to promote the development of running business in many sectors in the rural such as agriculture, forestry, aqua culture, industry, commerce and services. b. Give necessary conditions for changing the living standards and the lifestyle in rural area. c. Create a socio-economic link between the rural and the urban. d. Play an important part in allocating the labor force and capital resources, thereby promoting economic development and poverty reduction in rural area.

  4. II. The policies of investment in developing infrastructure in rural area. 2.1. The content of the policies is considered on 2 angles: a. Call on financial resources to invest in setting up and preserving the infrastructure system in the long term. b. Turning these resources into infrastructure to make socio-economic activities suitable with the developing requirements. 2.2. The results of calling up capital for infrastructure in rural area in the past few years.

  5. II. (continue) • Comparison between investment in agriculture, forestry and aqua culture with the total investment in the whole economy. • Table 1- The proportion of social investment in agriculture, forestry and aqua culture in comparison with the total social investment in the whole economy, period 2000 – 2003 ( at 1994 prices and current prices) – Currency: Billion VND: % Source: Statistics yearbook-2003, section Investment capital in Development, page 289,290

  6. b. Comparison between state investment in agriculture, forestry and aqua culture with the total state investment in the whole economy. Table 2- The proportion of state investment capital in agriculture, forestry and aqua culture in comparison with the total state investment in the whole economy according to the market prices of 1994 and current prices– Currency: Billion VND: % II. (cont ) Source: Statistics yearbook - 2003; section Investment of Public economic sector – page 295, 296

  7. II. (cont) c. The situation of investment in developing infrastructure in poor areas in some national target programs. First: The project of hunger eradication and poverty alleviation and creation of employment (Decision No 133 TTg and 143 TTg of Prime Minister) Table 3 – Creation of omponents, financial resources and agencies responsible for launching the program of poverty reduction in 2 periods 1998-2001 and 2001- 2005 ComponentsFinancial resources(Billion VND)relevant organizations and agencies Of the programfor the period 1998-2001 for the period 2001-2005 I. Policies 1. Health care investment 800 500 Ministry of Heath Care 2. Education investment 834 - Ministry of education 3. Manufacturing tools support - - 4. Ethnic minorities aids 262 150 Commision of vietnamese ethnics 5. Housing construction support - 250 6.Special supports for vulnerable residents - 700 Ministry of labor II. Projects of poverty reduction 1. Credits 6000 (loans) 750 (to compensate interest rate) Vietnamese agriculture bank 2. Agriculture extension services 200 100 Ministry of agriculture and rural development 3. Modelling poverty reduction - 100 Ministry of labor III. Projects of poverty reduction in villages beyond CT135 1. Infrastructure building 3825 [1] 1400 Ministry of agriculture and rural development 2. Manufacturing support 200 90 Ministry of agriculture and rural development 3. Training 100 100 Ministry of labor 4. Stablizing new economic zones - 1400 Ministry of agriculture and rural development 5. Resettlement 1200 700 Ministry of agriculture and rural development Total 6240 billion VND Source: The report on evaluating the national target program of poverty reduction and the program No 135, made by Ministry of Labor and social war invalid- project VIE/02/001;11/2004 In fact, capital disbursement in the period 2001-2005 is only 2,700 billion VND

  8. II. (cont) Secondly: The program of economic development in extremely disadvantaged communes and remote areas (approved by the government with the decision 135, 31th, July 1998) • - The government supports capital, material and means to set up infrastructure at villages level (roads, health care centers, schools, irrigational system, water supply, market system. etc) • The government supports capital, material and means to set up infrastructure in communes (roads, health care centers and market system) • Government implements the program of resettlement for ethnic minorities. • Government encourages agriculture. • Government supports personnel training (improving management ability and works supervision) Content Allocating capital - Resettlement for ethnic minorities and agricultural extension services: 3,5% - Training : 1% - Setting up infrastructure: 95,5% (thus the program mainly invests in infrastructure ) Some conclusions - The programs have been solving the problem - The programs have been being implemented as scheduled. - The programs help improving living standards in poor areas. Limitations - The capital allocation remains disperse so the government can not control and check the quantity and quality of works. - Capital allocation is equal to poor areas, creating the equality in gaining benefits. Still, the allocation is proved unreasonable in provinces with different number of residents. - The government set criteria for capital allocation but they can not tell whether these criteria are followed. - There remains a difference in capital allocation to provinces (poorer provinces receive less capital than the others) - Contributions of local households have not been made public. - The programs do not help reducing poverty, poverty reduction rate is not sustainable. - Accounting and auditing system have not been in place. - There are many limitations in checking and monitoring the implementation of the program.

  9. II. (cont) d. Investment by credit methods Table 4 – State credit investment in agriculture, forestry and aqua culture over the total state investment credit. Year2001200220032004 The whole economy 26.930 27.999 33.252 29.000 Agriculture, forestry and aqua culture 2.720 3.714 5.597 6.273 Proportion 10,1 13,3 16,8 21,6 Source: statisticsbook-2003 and the report on Vietnamese economy 2004, Institute of central economics research and management (figures on investment credit in the whole economy), Ministry of planning and investment (figures on investment credit in agriculture, forestry and aqua culture ) e. Investment of individuals and private enterprises in rural areas. Increasing from 6900 billion VND (2001) up to (9500) billion VND (2004), expectedly up to 11500 billion VND by 2005; the proportion is about 35% of the total social investment in rural areas in 5 years 2001 - 2005 f. Foreign direct investment (FDI) in rural area. Increase from $900 million up to $1,5 billion in 5 years 2001 – 2005, made up 5% of the total social investment in rural areas.

  10. III. Results of developing several types of fundamental infrastructure in rural area and some limitations. • 3.1. The road system. • - Results: The rural road system made up 80% of the road system nationwide. • + 94,5% of provinces has motorway to the center. • + 32,9% of provinces has concrete roads. • + 3,1% of provinces has modern roads. • limitations: • + The quality of roads in the highlands remains poor and it is difficult to travel, especially in rainy season. • + The demand of capital investment in developing road system in rural area is high but the local capital resource remains low and the country has not attracted enough foreign investment capital. • + The quality of roads remains poor , they are easily degraded due to storms and floods, making the rural traffics unstable.

  11. III. (cont) 3.2. Electricity supply + The number of provinces which has been provided with electricity accounts for 89,6% , the number of household using electricity accounts for 79% + The biggest number of household using electricity is in the area of Red river delta (98,8%) and in the northern central (88,4%), the lowest in the North West (51%) and Central highlands (51,5%). - Problems of electricity supply in rural area nowadays: + The set-forth target for developing rural electricity was so high that it is difficult to achieve this target. + Because of the diversified topography of highlands, large area and scattered resident, it is very expensive to carry out this program. + Electricity industry has not launched the program that guides people and cooperatives who manage a system of electricity supply, the management and technical knowledge on the system of transformers and electricity transmission. + In some areas, electricity industry is taking over the electricity system of cooperatives, then selling electricity to every household as in the urban are, but this work has been faced with the reaction of cooperatives.

  12. III. (cont) 3.3. Irrigational system - The agricultural land actively irrigated made up 36,2%, in which the land for rice cultivation actively irrigated made up 62,0%, the area for annual plants cultivation made up 48,1% - The problems of irrigational system nowadays: + The planning for using water sources is not satisfactory. The targets are mainly focused on cereal plants (investment in irrigation for rice cultivation often accounts for 79-80% of the total investment in irrigation.) + The old irrigational system is degrading while the irrigation fees can not cover expenditure. The apparatus managing the whole irrigational system is big (nowadays 172 enterprises has more than 20 thousand technical specialists and workers.) + The operation mechanism of irrigational companies remains unclear. They are on the one hand self-accounting units, on the other hand have to provide public services for agricultural production and other economic activities. + Users still do not know that water is not an unlimited resource, it is becoming scare.

  13. III. (cont) + Water quality is low and water is likely to be polluted because of chemical fertilizers and untreated industrial waste. + Managers have not focused on developing small and medium size irrigational works that can present floods in rainy reason and serve as reservoires for dry seasons, especially in areas with erosion. + the policy of investment in irrigational system is unequal in different areas. Red river delta (71%), the Mekong Delta (59%), northern central(36%), the middle coastal area (31%), North east (23%), South east (13%), Central highlands (6%) and north west (7,7%). + The investment level is low, production capacity only amounts to 60-65% design capacity. + Irrigational system project is mainly invested by the state funds, it lacks the mechanism of mobilizing foreign capital. + There remains limitations on the public contribution to water management because their knowledge is poor .

  14. III. (cont) 3.4. Clean water supply for rural area Table 5 – The proportion of people with access to clean water by region and by income group Source: The report on the development of Vietnam 2004 (WB) limitations: + Lack of a master plan on clean water supply and rural environment protection on large scale. + Have not supervised the quantity and the quality of water supplying for people. + The localities often focus on building up works for exploring and supplying water, but hardly pay attention to sustainability issues and the impact on long term water resources . + Attention has not been paid to water pollution prevention. + A mechanism of lending credit and encouraging farmers to build up clean water company has not been set up. .

  15. III. (cont) 3.5. Market system - The number of provinces having markets made up 56,12% + The Mekong Delta : nearly 72% + The south east 70% +The middle coastal area 65% + The Red river delta 63% + The north west 28,4% - Limitations: + Nearly 50% of towns and provinces has no markets. + The rural market system remains unsettled, market is only the place for exchanging goods. + Have no big trading centers.

  16. IV. Orientations for the policies of investment in developing infrastructure in rural area 4.1. Adjusting the policies of investment in rural areas a. Calling up investment capital for rural area. Firstly: The government should adjust increasing the proportion of spending budget on agriculture, forestry and aqua culture as well as rural area to gain the proportion of 20-22% of the total spending of government budget on the whole economy. Secondly: The government should make a clearer policy of land and taxation, and investment guarantee to draw capital of Vietnamese enterprises, FDI to manufacturing, notably attracting FDI toward sectors with many advantages and high competitiveness such as sea products, coffee, some fruit plants and milch cows raising .etc.

  17. IV. (cont) Thirdly: For export- oriented areas set up for the past few years, besides state investment in infrastructure, the government should make agricultural enterprises and manufacturers responsible for investing in fundamental infrastructure of the manufacturing area such as roads system, electricity transmission, water supply .etc. Fourthly: The locality should actively promote and launch the models BT, BOT, BOO8 in developing rural infrastructure. Accordingly, authorities at provincial and district levels should quickly allocate land for infrastructure development.

  18. IV. (cont) b. Allocating and using state investment in rural areas Firstly : The state budget. - The goal for using this capital source lies in focusing investment in infrastructure, helping farmers restructure their production and expand industrial production and services. - “A unified program which develops the rural infrastructure”. - The unified program: “Development of the rural infrastructure” should be set up in the long term, with reference to national targets for developing agriculture and the rural area (by 2020 and in the farther future) Secondly : State investment credit The goal for using this capital source is to support local investment via credit provision, thereby encouraging localities to use this capital resource to invest. But it is necessary to complete the rules of using and returning the loans.

  19. IV. (cont) • 4.2. Improving the mechanism of investment in developing the rural infrastructure • a. The rural roads system • - Clarify the capital for supporting to develop roads system in each communes of the province. • Give the capital for building up roads at provincial and district level directly to the local authorities. • For the roads system belonging to communes, give capital to local authorities based on the project passed by local residents. • - b. Electricity supply • - Socialize the management of low-tension electricity in the areas supplied with the national electricity. • - Encourage people to use the manufacture form which consumes less electricity such as small irrigational system, small generator and other generators using solar energy in areas supplied with electricity but fail to expand to supply electricity for their neighborhood.

  20. IV. (cont) • c. Irrigational system • - Spend a considerable amount of investment capital in building up small reservoires to preserve water in areas suffering from flash flood in rainy season and drought in dry season. • - Pay attention to the irrigational system in areas planting industrial plants, exported plants, or the areas raising cattle to reclaim new lands. • - Invest in building up and reinforcing the levee system and strengthening sea water preventing system. • Develop the irrigational system in areas with advantages in producing sea products, especially in the Mekong Delta. • Reinforce the canal system. • d. Clean water supply for rural area • - Invest in the propaganda campaign that call people for using clean water and to take part in building up the clean water supply system. • - Protect water resource from being polluted. • Invest in exploring under ground water replacing clean water. • Encourage private investors to invest in clean water supply sector.

  21. IV. (cont) đ. Market system - Take into account the opinion of the public on the location, scale, the model as well as their contribution to the market system before the construction. - Assign locality to manage the market system under clear regulations on the their responsibilities and duties. e. Other issues - Set up a cooperative mechanism of responsibilities and benefits among economic entities in constructing, managing and using infrastructure in the rural area. - Pay attention to train professional workers in order to improve the effectiveness of using infrastructure. - Make new investment, manage and preserve together the infrastructure. Spend a reasonable amount of capital on using and exploring infrastructure. Clarify rights and responsibilities of people when using and gaining benefits from the infrastructure works.

  22. The policies of investment in developing infrastructure for the purpose of economic growth and hunger eradication and poverty alleviation in the rural of Vietnam. Presenter: Dr. Chu Tien Quang Institute of central economics management

More Related