The Doi Moi policy and its impact on the poor

Tran Thi Que; To Xuan Phuc
Centre for Gender, Environment and Sustainable Development Studies (GENDCEN)

In December 1986, the government mandated the Doi Moi (open door) policy, shifting from a centrally planned economy to a market oriented one. The current trend shows growing inequality between the rural and urban population, and between the rich and the poor. Privatisation and liberalisation increased the social gap in the access to basic social services in general and to education and health in particular, and increased the vulnerability of the rural poor.

InDecember 1986, the government mandated the DoiMoi (open door) policy, shifting from a centrally planned economy to amarket oriented one, inside the framework of state regulations. The main thrustof the Doi Moi is to promote amulti-sector economic system, emphasising the state sector while encouraging theprivate sector. To achieve economic integration, the open door would beimplemented gradually in order to stabilise the political and social situation.

Increasedvulnerability among the rural poor

Povertyis still mainly a rural problem in a country where some 80% of the populationlive in rural areas, and two-thirds of them remain largely dependent onagriculture for a living. Geographical remoteness, seasonality, periodic healthcrises and natural disasters worsen the situation of the rural poor.Furthermore, formal non-farm rural employment has failed to grow, and the safetynet formerly provided by the collective system—a system that hinderedproductivity and income growth—has disappeared, increasing the vulnerabilityof the rural poor (World Bank, 1998).

Inaddition, the gap in income between rural and urban areas has widened somewhat,as has the income gap within rural communities among people of different ages,genders, ethnicities, and assets. Per capita income in the richest region is 4.5times higher than that of the poorest (Viet Nam Living Standard Survey, 2000).

BeforeDoi Moi, although the number of people living in poverty was high,the inequality in economic development and basic social services was low becauseof the government’s “sharing food, sharing clothes” policy. Afterprivatisation and liberalisation, there is greater disparity between the accessof the rich and the poor to basic social services in general and to educationand health in particular.

Basicsocial services: widening the gap

DoiMoihas brought about a significant change in managing basic social services: usershave to pay a service charge. While rich people can afford these fees, the pooroften cannot. By encouraging private and foreign actors to play roles inproviding basic services, the government created new opportunities that the poorare not able to seize. As the private sector is profit oriented, they provideservices mostly in the urban areas. As a result, the rural poor have no accessto the services.

Educationand the poor: low income, low education

Datafrom the Viet Nam Living Standard Survey in 1993 and 1998 show that illiteracyrates vary according to region and affluence. The rate is high in poor regionsand among those in the lowest expenditure quintile.[1]From 1993 to 1998, the literacy rate was declining in the first two quintiles(VLSS, 2000). As early as the 1990s, the literacy rate is similar in incomegroups 2, 3 and 4 while the rate of the first group is lower and of the fifthgroup is higher than that of the country as a whole. However, data for 1997-1998showed that there was a bigger inequality among groups, and a concentration ofilliteracy in the lower expenditure groups. People with poor educationalbackgrounds have fallen into low expenditure groups and people with bettereducation are able to seize new income-producing opportunities.

Thequality of education for the children from poor families has worsened. Thenumber of adequately trained teachers has decreased and the poor suffer from ashortage of textbooks, while children from rich families have access totextbooks, tutoring and extra classes.

Educationfees are high, and they limit the number of children going to school. Eventhough primary education is free in public schools, other fees such as the feefor school construction and fees for textbooks and clothes are relatively high.Data in 1998 show that the costs for primary education account for 4.4% of thetotal expenditures of low-income groups. The numbers for secondary and highereducation are 9% and 21% respectively (Nguyen Nguyet Nga, 1998). For a familywith two children, the annual education fee could be about 15 -30% of the totalfamily expenditure (Tran Thi Van Anh, 2001), which is very expensive for manyhouseholds.

Healthcareservices for the poor: low quality, distant, unaffordable

Privatisationof health care has reduced the availability of services in many rural areas. Asdata collected from VLSS in 1992 and 1998, the infant mortality rate in poorhouseholds decreased 14.72%, from 39.4 per thousand in 1992 to 33.6 perthousand in 1998. The rate in non-poor households fell almost twice as much,28.78%, from 34.4 per thousand in 1992 to 24.5 per thousand in 1998.

Thegap in access to healthcare services between the rich and the poor hasincreased, due to income disparities and geographical proximity to healthcentres, as shown in Table 1. The poor have difficulties in accessing healthservices although they need them the most.

Table1. Access to healthcare services by income quintiles

Indicators of access to healthcare services

First quintile (poorest)




Fifth quintile (richest)

Access to healthcare service/person (number of visits)






Access to government hospital (number of visits)






Access to private health care clinics (number of visits)






Annual rate of hospitalised people per 1,000 people






Source:Dullop 1999, cited in ADB, WHO 2001.

Annually,total expenses (other than food) per person from the first quintile are aboutUSD 81 and for each person from the fifth quintile are about USD 417. If aperson from the first group goes to hospital, she or he could pay 22% of theirtotal annual expenses for the hospital fee. The proportion of a person from thefifth group is only 4.6%. If service users have health insurance, this ismuch lower, but only 6.2% of people in the first group have health insurance,while 28.7% of the fifth group do (Dullop, 1999 cited in Asian Development Bank,World Health Organisation, 2001). The rich benefit from government healthcareservices much more than the poor.

Itis important to note the differences in the use of healthcare services betweenthe rich and the poor. The poor seek healthcare services only when they areseverely ill. They often find cheap places such as retail medicine sellersand/or community healthcare centres—where the quality of service is poor. Bycontrast, the rich can afford state hospitals and private healthcare clinics.

Thegovernment also provides subsidies for a certain number of the poor who are sickby giving access to medicine and hospitals free of charge. However, the numberof people who receive subsidies has decreased. In 1994, 57% of people receivedthe subsidies; in 1998 only 42% did (ADB, WHO 2001). Consequently, the number ofpoor people who suffer from sickness but do nothing about it has increased.

Thelandless new phenomenon

DoiMoihas shifted the agricultural production system from a centralised, collectivemodel to the private ownership of land. This change has transformed people'slives in many ways. These reforms, enshrined most recently in the 1993 land law,guaranteed individual farmers five crucial rights over their lands: exchange,mortgage, transfer, rent, and inheritance. The reforms have been credited withincreasing production, as well as giving agricultural households greatersecurity of tenure. Farmers are now free to make their own commercial decisions,but also to bear the consequences of poor decisions.

Insome regions, privatisation of land, implemented via land allocation policies,has resulted in landlessness. The Mekong Delta region, where most rice forexport is grown, has seen the greatest increase in landlessness. A 1997 study,carried out by the Centre for Agricultural and Rural Development Consultationreveals that the number of landless households in the Mekong River Delta hasincreased from 12,250 in 1994 to 83,650 in 1997 (Mauny and Hong, 1998).

Manyhouseholds sell all or part of their land, merely to survive, or to pay offdebts. This was not allowed during the cooperative period. In a country wherethere are very few income-generating opportunities in the rural areas besidesfarming, this is placing these households under considerable strain.

Akey constraint for landless and near-landless households is the fact that theyneed their children to help earn income. As a result, children often quit schoolvery young. At the same time, some parents who work as hired labourers do notwant to leave their children at home, so they bring their children with them tothe fields, thus depriving them of their education.

Commercialisingagriculture: the poor at risk

Sincethe Doi Moi, Viet Nam has been intransition from subsistence to commercialised agriculture. Large areas of landhave been used for commercial agricultural production. Within a decade, Viet Namhas become the second largest rice exporter in the world. Tea and coffee are twomajor exports. Benefits gained from exporting products have significantlyimproved the livelihoods of many farmers.[2]

However,the poor are at risk in this transition period due to fluctuating agriculturalprices. In general, agricultural production is risky because success greatlydepends on weather and market price. To secure agricultural production forproducers, the government provides protections for certain products (rice, forexample) by establishing a minimum price to ensure producers a profit. However,many agricultural products such as coffee, tea, and rubber are not protected.The lack of a safety net has put millions of farmers at risk.


Implementationof Doi Moi has brought aboutsignificant changes in the socio-economic situation of the country during thelast 15 years. The current trend shows growing inequality between the rural andurban population, and between the rich and the poor. If this trend continues,most of the more than one million people who enter Viet Nam's labour force eachyear will be squeezed into poorly paid, part-time employment in the alreadyovercrowded rural sector or into low-income jobs in informal services. The landwill be brought into unsustainable cultivation, and environmental degradationwill worsen.

Progressin poverty reduction is under threat, as is access to health and educationservices by the poor. But, as the World Bank indicated in 1998, byreinvigorating rural reforms without neglecting safety nets, Viet Nam should beable to ride out the current crisis and be well placed to thrive when it ends.


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[1] The survey divides Viet Nam’s population into five quintiles according to household expenditures. The first quintile is the lowest and the fifth one is the highest.

[2] The last decade witnessed two bitter experiences negatively affecting the livelihood of millions of agricultural producers. The first was the removal from production of thousands of hectares of mulberry because of disadvantages in a competitive market. The second was the dropping price of coffee, which led to the removal of thousands of hectares of coffee.

Tran Thi Que is Vice Director of the Centre for Gender, Environment and Sustainable Development Studies. To Xuan Phuc is a researcher at the Centre for Agricultural Research and Environmental Studies, Hanoi Agricultural University.