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Current problems related to land policy
Current problems related to land policy in Vietnam are dealt with by Prof. Đào Thế Tuấn, President of the Vietnam Rural Development Association, in a paper prepared for a VPDF-sponsored research project on the issue of Agriculture, Rural Areas and the Peasantry. Prof. Tuấn  wrote notably:
Present problems
According to the World Bank, land is the main asset of the poor, the basis of economic activities and of the functioning of the market. Land policies should have two objectives: efficiency and social equity. In Asian countries land inequity has been the main constraint of development. Land property right has an important impact on growth and should be recognized. Land policies should be simple because their complexity would lead to a heavy bureaucratic system and corruption.
Currently, the following issues related to land policy are currently in discussion in Vietnam:
- According to the Vietnamese constitution, land is the property of the State. Somebody has asked for land privatization. This it is not a necessity, because there is no great difference between these  two notions. In the opinion of many foreign specialists, the Vietnamese land use right is larger than property right in many other countries.
- Others have asked for raising the land ceiling of the farm in order to facilitate the increase of land concentration and the farm size. This is in contradiction with the equity objective, and ignores the fact that an economy of scale can be resolved by the organization of cooperatives.
- Liberalization of the land market following advices of foreign advisors would create a crisis in the change of land purpose during urbanization and industrialization, because land is reimbursed to farmers at a price decided by the government, but after the change it is sold at a market price many times higher. This could lead to peasant protests. The high price of land in the market is not accessible to low-income people even after a reduction by 2-3 times. The country now is in an estate crisis because many  houses built by estate companies cannot be sold, and companies  cannot repay debts to the banks.      
So the agrarian reform and the return to the peasant household economy helped our country ensure food security and a commercial agriculture during the Renewal period. But liberalization of the land market is creating a land-related crisis and will lead to the danger of losing food security and the commercial agriculture.  

Transition with a socialist-oriented market economy
After reunification in 1975, Vietnam shifted its focus to reconstruction and socio-economic development. Failure in economic development following the centrally planned model forced Vietnam to undertake microeconomic reforms in the early 1980s. Faced with a severe shortage of food and basic consumer goods, a high budget deficit, three-digit inflation, chronic trade imbalance, and deteriorating living standards, the Sixth National Congress of the Communist Party of Vietnam, held in December 1986, initiated an overall economic reform popularly known as “Đổi Mới” (Renewal).
The main measure of the reform was return to market economy with trade liberalization. Prices and domestic trade were liberalized, and the “dual-track” pricing system abolished. Prices are now determined by the market. However, in the domestic market, there remain resources and products subject to government control in determining price levels, brackets and ceilings. These currently include land, natural resources, water surface, and air space under collective ownership, and monopoly-based goods and services such as electricity, water, telecommunications, gasoline and seaports.
In the field of external trade, import and export restrictions have been largely reduced. Vietnam has been moving from state monopoly on foreign trade to free trade and from import-substitution to export-oriented policies…
As a result, despite adverse impacts of the regional economic crisis that broke out in 1997, the country’s GDP increased by an average of 7% per year during the 1994-2004 period. The growth rate was 8.4% in 2005. 
The shares of GDP by economic sectors have been changing positively. As a proportion of the economy, agriculture dropped to 21.8% in 2004 from 40.8% in 1990. Industry (including construction) made up 40.1% of the economy, up from 22.8% in 1990, while the share of services increased slightly from 36.4% to 38.1% during the same period…
Goods export grew averagely nearly 20% annually from 1990 to 2000. The annual export growth rate in 2004 and 2005 were 31.5% and 21.6% respectively.
 Vietnam has gone a long way from a food importer to the world’s second largest rice exporter in 2005. The country has also emerged as the world’s largest exporter of pepper, the second largest exporter of coffee, and the third largest exporter of cashew nut.
But the development process of the last 20 years have some tendencies capable of reducing its sustainability. Problems that are now in discussion are:
The Renewal has led to a strong increase of urban-rural disparity; this is an unsustainable development. The export of raw agricultural products has a low added value. The state processing enterprises have a low efficiency. The development of small and medium-sized enterprises in agricultural processing is not supported by the state. The small scale of the economy is the cause of high production costs and low labor productivity. The  development of cooperatives for the improvement of scale is not encouraged.
A quality management system is still lacking. The elaboration of Trademarks and of safe products responding to sanitary standards remains at the experimental stage. There are no specific institutions to combat fraud.
Peasants don’t have the bargaining power on the market, and are exploited by enterprises and intermediate merchants. Agricultural trade is unfair.
Environment in the rural area is more and more polluted by enterprises. Environmental protection doesn’t involve local communities, and is not considered an economic activity creating employment and income to peasants.
This situation leads to rural exodus in order to resolve the employment problem in rural areas, and creates difficulties to agricultural development: labor shortage, feminization of agriculture, and the shift from intensive to extensive cultivation.
The network of social security and social insurance is not developed. The motto “socialization of education and health services” has been abused for their privatization and marketization. Peasants have benefited little from social security, and are not insured against natural disasters and market risks. Despite poverty reduction efforts, Vietnamese peasants remain very poor…
In the industralization process, the share of agriculture in GDP will be reduced, but the role of agriculture will remain important. Two big industrial countries, the United States and France, are also big agricultural countries. East Asian countries which almost lost their agriculture in the industraliztion process could not be industrialization models for our country. A model developed by our research organization shows that by 2020 the share of agriculture in GDP would be 9.6 %; that of agricultural labor, 35 % and the rural population, which would by then exceed 50 % of the total population.
In a context of shortage of land and excess of labor, the problem is to increase labor productivity. Industrialization could not be based on such comparative advantages like cheap prices of labor, land and  environment. A strategy based on technologies and internal forces is needed.
Disparities between urban and rural areas, and differences in labor productivity between them, should be reduced through a strategy on industrialization and urbanization. New industries will be more and more capital intensive, leaving much excess labor in rural areas. We need to realize together the industrialization and urbanization of cities and rural areas alike. (In Vietnam, there are rural localities where population density is higher than that of cities).
The urban–rural disparity is also determined by the separation of economic and social development.
Economic structural shifts in rural areas are not linked with the urbanization process. The projection of cities is conducted by the Ministry of Construction, while that of rural areas is done by the Ministry of Agriculture and Rural Development, with no coordination between them. The city-region approach can resolve the integration of city and rural area development.
The development of cities go to the development of megapoles with the construction of infrastructures. This model increases the disparity between cities and rural areas, and  causes difficulties to development. The model based on decentralized urbanization linked with rural development, or Desakota (desa = city, kota = rural), can resolve the problem.
Sustainable development needs an economic development linked with social development. This is all the more important in the context of rural development. While agricultural development is economic in character, rural development is social. People usually believe that agricultural development leads to improvement of peasant income. But in reality we have seen that in such regions where agriculture is very developed like the Mekong delta or the Central Highlands, solutions to social problems are less developed.
Economic development needs specialization while rural development requires diversification.
For the development of a commercial agriculture, we don’t have to destroy the family economy, but can develop cooperatives and help family households turn into family farms or̉ small family enterprises. Cooperatives must help family enterprises develop the processing and marketing of agricultural products. The creation of cooperatives must begin with the formation of cooperative groups, a school for collective action.
Family farms are small agricultural enterprises; they need help from SME programs.
Parallelly, we need to develop small industrial enterprises (of craft villages) and small service enterprises (including commercial enterprises) to push up economic structural change in rural areas.
Peasants form a weakest social layer of society. They need organizations for the defense of their rights. (In many countries there exist peasant syndicates). The first right of peasants is the bargaining power on the market to ensure a fair trade. After that comes the right to have land to assure family need, and social security is important.
Peasants in general are considered passive, waiting support from projects. But in reality there are areas where peasants are very dynamic, developing activities that the State could not do. We are studying this dynamism and the social capital of these areas, expecting to propagate this dynamism to other areas. We are also observing regions where peasants are developing industrial clusters very dynamically with rich social capital…
After Vietnm’s entry into WTO, with the increasing flow of FDI, there has been a high rate of inflation. The food crisis has raised the prices of animal feed, and meat imports has created difficulties to the development of animal husbandry. Many animal farms are in danger of bankruptcy. Despite rice price increases in the market, the price received by farmers in the Mekong delta cannot recover spendings on inputs, which have become more expensive following inflation.
As regards international agricultural trade policies, we agree with the Institute of Agricultural Trade Policy (IATP, 2008) that there are 7 reasons why the Doha Round of the WTO will not solve the food crisis:
1.    The Doha Round will increase dependence of poor countries on food;
2.    The Doha Round will increase volatility of food and agriculture prices;
3.    The Doha Round will strengthen the power of transnational agribusiness;
4.    The Doha Round will not discipline financial speculation in commodity markets;
5.    The Doha Round will not address the environmental crisis/climate change;
6.    The Doha Round will not reduce oil prices;
7.    The Doha Round will not regulate international trade in biofuels.
Thus, three trade measures should be taken by governments:
1. Review the Uruguay Round Agreement on Agriculture (AoA) and the Doha mandate;
2. Reestablish public stocks at national and regional levels to address volatility in food and agricultural prices;
3. Establish global competition rules; international trade rules can no longer ignore the distorting levels of market power held by a few transnational companies in global commodity and food markets./.
 
 

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