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Vietnam Development Report 2011

Natural ResourcesManagement

Photos by:

Joint Development Partner Report to the Vietnam Consultative Group MeetingHanoi, December 7-8, 2010

VIETNAM GOVERNMENT FISCAL YEARJanuary 1 to December 31

CURRENCY EQUIVALENTS(Exchange Rate Effective September 20, 2010)

Currency Unit = Vietnamese Dong (VND)US$ 1.00 = VND 19, 495.00

Weights and MeasuresMetric System

ABBREVIATIONS ANDACRONYMS

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ADB Asian Development BankAOM Air Quality ManagementBTNMT Vietnamese abbreviation for Ministry of Natural Resources and EnvironmentAusAID Australian Agency for International DevelopmentCAI Clean Air InitiativeCAIT Climate Analysis Indicators ToolCBDRM Community Based Disaster Risk ManagementCDA Community Development AgreementCECOD Center for Environmental and Community DevelopmentCEPF Critical Ecosystem Partnership FundCFM Community Forest ManagementCIEM Central Institute for Economic ManagementCO2 Carbon DioxideCO2e Carbon Dioxide EquivalentCSR Country Synthesis Report CSR Corporate Social Responsibility DANIDA Danish International Development AgencyDECAFIREP Department of Capture Fisheries Exploitation and Protection EC European CommissionEEZ Exclusive Economic ZoneEIA Environmental Impact Assessment EIA Environment Investigation AgencyEITI Extractive Industries Transparency InitiativeEIU Economist Intelligence UnitEPI Environmental Performance IndexEU European UnionFAO Food and Agriculture OrganizationFoE Friends of the Earth International

FLEGT Forestry Law Enforcement, Governance and TradeFOMIS Forest Information Management SystemFSC Forest Stewardship CouncilFSPS Fisheries Sector Programme SupportGDLA General Department of Land AdministrationGDP Gross Domestic ProductGHG Green House GasesGNI Gross National IncomeGOV Government of VietnamGSO General Statistics OfficeGTZ German Agency for Technical CooperationICZM Integrated Coastal Zone Management ICEM International Centre for Environmental Management IDMC Irrigation and Drainage Management companies IPCC Intergovernmental Panel on Climate Change ISF Irrigation Service FeeISPONRE Institute of Strategy and Policy on Natural Resources and EnvironmentITTO International Tropical Timber OrganizationIUU Illegal, Unreported and Unregulated IWRM Integrated Water Resource ManagementJICA Japan International Cooperation AgencyKECO Korean Environment CorporationKIET Korean Institute for Industrial Economics and TradeLASUCO Lam Son Sugar Joint Stock Corporation.LROs Land Registration OfficesLURCs Land Use Right CertificatesMARD Ministry of Agriculture and Rural DevelopmentMEY Maximum Economic YieldMoH Ministry of Health MoIT Ministry of Industry and TradeMoNRE Ministry of Natural Resources and EnvironmentMoST Ministry of Science and Technology MPA Marine Protected AreasMPI Ministry of Planning and InvestmentMQI Mining and Quarry Industry MRC Mekong River CommissionMRV Monitoring, Reporting and Verification MSC Marine Stewardship Council

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MSY Maximum Sustainable Yield NFI National Forest Inventory NFIMP National Forest Inventory and Monitoring ProgramNPOA National Plan of Action NORAD Norwegian Agency for Development CooperationNTP National Target ProgramNTP-RCC National Target Program to Respond to Climate Change PEMSEA Partnership in Environmental Management for Seas of East Asia PFES Payment For Forest Environment ServicePPPs Public Private PartnershipsQCVN Quy Chuan Viet Nam or National Regulation of VietnamREDD Reduced Emissions from Deforestation and Forest Degradation SEA Strategic Environmental Assessment SEDP Socio-Economic Development PlanSFEs State Forest EnterprisesSFCs State Forest CompaniesSOE State Owned EnterprisesSUF Special-Use ForestUN United NationsUNESCAP UN Economic and Social Commission for Asia and the PacificUNEP United Nations Environmental Programme UNFCCC United Nations Framework Convention on Climate ChangeUNDP United Nations Development ProgrammeUNICEF United Nations Children’s FundVDR Vietnam Development ReportVIMICO Vietnam National Minerals CorporationVINACOAL Vietnam National Coal CorporationVINACOMIN Vietnam National Coal-Minerals Industries CorporationVINAFOR Vietnam Forest CorporationVHLSS Vietnam Household Living Standards SurveyVIFEP Vietnam Institute of Fisheries Economic and Planning VND Vietnamese DongVPA Voluntary Partnership AgreementWCMC World Conservation Monitoring CenterWSR Water Sector ReviewWTO World Trade Organization WWF World Wide Fund for Nature

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ACKNOWLEDGEMENTS

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This report has been prepared in a participatory process and in partnership between the World Bankand many development partners, as indicated on the back cover. Development partners havecontributed by providing documents and comments on draft chapters at various stages of theprocess. A meeting to discuss the Concept Note for the VDR was held on April 1, 2010. A half-dayworkshop on May 25 discussed chapter drafts, and a full-day workshop on August 23 reviewed thefull chapters. All participants are thanked for their contributions. Special thanks are due to CIDA fortheir financial support to research underpinning the mineral resources chapter and to GTZ for thesame with respect to the forestry chapter.

Valuable written comments and contributions were also received from a large number ofdevelopment partner staff: Dennis Ellingson (ADB); Dirk Deprez and Martin Junker (BelgianDevelopment Agency); Jacqueline DeLima Baril, Son Van Le, and Andrew Smith (CIDA); Nguyen VanKien (DFID); Hong Viet Tran (Embassy of Denmark); Thierry Facon, Simon Funge-Smith, Akiko Inoguchi,and Rebecca Metzner (FAO); Evelyn Ebert, Elke Foerster, Juergen Hess, and To Thi Thu Huong (GTZ);Toru Arai, Egashira Eiji, Nguyen Thanh Ha, Taro Katsurai, and Murase Noriaki (JICA); Thuy Nguyen (NewZealand Embassy); Vu Minh Duc (Royal Norwegian Embassy); Hoang My Lan (SDC); Timothy Boyle,Patrick Van Laake, and Koos Neefjes (UNDP); Andrei Barranik (USAID); Sameer Akbar, Dean Cira, QuangHong Doan, Maria Delfina Alcaide Garrido, Keiko Kubota, Lan Thi Thu Nguyen, Cuong Hung Pham, HoaThi Mong Pham, Martin Rama, Federica Ranghieri, John Roome, Ulrich Schmitt, Neelesh Shrestha,Richard Spencer, Giuseppe Topa, and Phuong Thi Thanh Tran (World Bank).

The nongovernmental organization (NGO) community in Vietnam has also contributed withdocuments and advice. NGO network meetings were held on May 21 and August 25. Mai Thi HongBo and the staff of the Vietnam Development Information Center facilitated this dialogue.Helpful written comments and documents were received from a large number of NGO, project, andresearch institute staff: Jonathan Eames (BirdLife International); Ute Bartels (Bread for the World);Nguyen Van Anh, Morten Fauerby Thomsen, and Vu Thai Truong (CARE); Vu Thi Hien (CERDA); LutzLeman (CIM); Christian Aschenbach (EPMNR Project); Felise Hai-Ly Nguyen (European Forest Institute);Mark Infield and Steve Swan (FFI); Tomas Jonsson, Anders Pedersen, and Bjoern Wode (FLITCH); TapioLeppänen (FORMIS Project); Richard Rastall (FRR); Fernando Potess (FSDP Project); Daniel Valenghi(Helvetas); Jake Brunner (IUCN); Vu Hai Nam (KfW 4 Project); Steve Hunt (KfW 7 Project); Wil de Jong(Kyoto University); Michael Akester and Paul Nichols (MARD advisors); Steve Price-Thomas (OxfamGB); Richard McNally (SNV); Tom Osborn (TRAFFIC); Simon McCoy (University of Copenhagen), DuongAnh Tuyen (VietDHRRA); Christopher Turtle (Vietnam Conservation Fund); Robert Pomeroy(WorldFish); and Sebastian Schrader and Le Cong Uan (WWF).

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A number of Vietnamese experts were consulted in their capacity as individuals rather than asrepresentatives of particular institutions and contributed generously from their knowledge. Theyinclude Le Khac Coi, Pham Manh Cuong, Le Dang Doanh, Minh Hoang, Tuong Phi Lai, Nguyen ThiPhuong Lam, Nguyen Ngoc Lung, Vo Chi My, Bui Xuan Nam, Nguyen Ba Ngai, Nguyen Van Tai, Bui TatThang, Nguyen Van Thong, and Dang Hung Vo.

The preparation of this VDR was led by Jan Bojö (World Bank). Lead authors of the draft chapters thatformed the “building blocks” of the VDR were: Jan Bojö (Overview); Dzung The Nguyen (Land, WorldBank); Des Cleary (Water, consultant); Tim Dawson (Forests, consultant); Keith Symington (MarineResources, consultant); and Craig Andrews (Mineral Resources, World Bank). The chapters were editedinto a consolidated report by Jan Bojö with the assistance of Linda Starke (consultant). Viet Tuan Dinh(World Bank) prepared the statistical annex.

Major contributions to various VDR chapters were provided by Koos Nefjees (UNDP); JamesAnderson, Boubacar Bocoum, Douglas J. Graham, Dzung The Nguyen, Steven Jaffee, and HuongThi Lan Tran (World Bank); Tran Ngoc Anh and other staff of ACC consulting; and Vu Xuan NguyetHong (consultant). Lourdes Anducta, Dung Thi Thuy Dao, Jeff Lecksell, Ngozi Blessing Malife,Ngan Hong Nguyen, and Chi Kim Tran (World Bank) provided essential administrative support.Peer reviewers from the World Bank were Milan Brahmbhatt, Tuuka Castren, Peter Dewees, andSeverin Kodderitzsch. Overall guidance was provided by Hoonae Kim, Victoria Kwakwa, MagdaLovei, and Jennifer Sara (World Bank).

Translation from English into Vietnamese was undertaken by Huong Thi Thu Hoang and wasproofread by Cao Thang Binh, Pham Hung Cuong, Vu Xuan Nguyet Hong, Dzung The Nguyen, and LanThi Thu Nguyen. Typesetting and printing was done by Le Bros Company Ltd.

Appreciation is due to all who contributed to this broad-based and inclusive process. However, thefinal report is an institutional product with no claims of individual authorship.

TABLE OF CONTENTS

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EXECUTIVE SUMMARY 5

CHAPTER 1 : 18NATURAL RESOURCES MANAGEMENT—AN OVERVIEW

Sustainable Use of Natural Resources 23Climate Change 25Natural Resource Management for Sustainable Growth 26Environmental Sustainability 28A Reform Agenda 30

References 31

CHAPTER 2 34LAND MANAGEMENT

Land Resources and Dynamics 35Policy and Institution Settings 37

Land Policy 37Institutional Setting 37Issues 39

Efficiency Reforms 41Enhancing Land Use Rights 41Developing Land Markets 42Modernizing Land Administration 43Strengthening Land and Property Taxation 45

Environmental Sustainability Reforms 47Advancing Land Use Planning 47

Equity Reforms 49Improving Land Acquisition and Compensation 51

References 52

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CHAPTER 3 54WATER RESOURCES

Water Resources in Vietnam 55Provision of Water Services 57Use of Water for Economic Production 57Major Issues Concerning Water Resources Management 60

Institutional, Legal, and Policy Context 60Water Security 61Sustainable Water Supply and Sanitation Services 61Sustainable Agriculture and Irrigation Services 61Financing and Assets 62Pollution and Degradation 62Storms and Floods 62Climate Change 63The Reform Agenda 62

Efficient Water Use 63Environmental Sustainability 65Equity 67Measures to Support the Reform Agenda 67

References 68

CHAPTER 4 70FOREST MANAGEMENT

Institutional Perspectives 73Policy Perspectives 73Economic Perspectives 73Social Perspectives 76Biodiversity Perspectives 77

Major Issues in the Forestry Sector 79The Reform Agenda 80

Governance and Institutional Reforms 81Efficiency Reforms 83Equity Reforms 85Environmental Sustainability Reforms 86

References 88

CHAPTER 5 92MARINE RESOURCES

Major Issues for the Marine Sector 95Fishing Overcapacity and Resource Inefficiency 97Illegal, Unreported, and Unregulated Fishing 97

Lack of Data and Formal Reference Points 97Vulnerability and Equity 97Supply Chain Inadequacies 98Sustainable Fisheries 98

The Way Forward 99Sustainable Use of Marine Biodiversity 103

References 105

CHAPTER 6 109MINERAL RESOURCES

Efficiencies in Providing Access to Resources 110Commodity “Master Plans” 110Granting of Mine Titles and Concessions 112

Effective Sector Administration and Environmental Sustainability 114Theory versus Practice: The Environmental and Social Impact 116Physical Environmental and Social Impacts 117

Equitable Development and Distribution of Benefit Streams 119Annex. Case Study: Coal 200

References 123Statistical Appendix 125Notes 151

BoxesBox 2.1. Climate change and agriculture 40Box 2.2. Using auctions to sell public land 43Box 2.3. Low-cost and participatory approach in land administration 41Box 2.4. Transparency and corruption in land management 46Box 2.5. Seven principles for efficient, equitable, and environmentally 47

sustainable land managementBox 2.6. Case study: Competing land uses, impacts, and repercussions for 48

more-integrated natural resource management in Dak Lak ProvinceBox 3.1. Inland fisheries and aquaculture 58

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Box 3.2. The Vedan water pollution case 62Box 3.3. Improving urban water services: A case study from the Philippines 64Box 4.1. New rules for woods-based exports: EU Partnership Agreements 75

and the US Lacey ActBox 4.2. Responsibilities for protected area management 79Box 4.3. National REDD + Programme 80Box 4.4. Evolution of forest sector institutions 81Box 4.5. Forest information management 82Box 4.6. The Forest Carbon Partnership Facility (FCPF) in Vietnam 83Box 4.7. Smallholder group management scheme 84Box 4.8. Community-based mangrove management 86Box 4.9. Climate change and forestry in Vietnam 88Box 5.1. Key issues and constraints for Vietnam’s marine capture fisheries 96Box 5.2. Low on the food chain but high on the value chain? 100Box 5.3. Successful examples of fisheries co-management in Vietnam 101Box 5.4. Key recommendations for the reprioritization of fisheries subsidies 103Box 5.5. Lessons learned for MPA planning and management to support 104

sustainable use of marine biodiversity in VietnamBox 6.1. Contributions of a mining project: The case of Ban Phuc Nickel 113Box 6.2. Mining concessions: The case of bauxite 115Box 6.3. Community social responsibility: The case of Talisman Energy 119

FiguresFigure 1.1. Intensities of resource use, 1990–2007 20Figure 1.2. GDP and absolute resource use indexes (1990 =1) 20Figure 1.3. Pollution intensity, 1990–2007 20Figure 1.4. GDP growth and absolute air pollution indexes (1990 =1) 21Figure 1.5. Vietnam: Gross and net savings, 1999–2008 24Figure 2.1. Vietnam: Land use, 1993 and 2008 36Figure 2.2. Progress of land allocation and issuance of LURCs 37

in total and by category, December 2009Figure 2.3. Difficulties when applying for land use rights certificates 44Figure 3.1. Major river basins 56Figure 3.2. National surface water allocation (percent) 58Figure 4.1. Area of forest by type, 2005 71Figure 4.2. Vietnam forest cover, 1983 and 2004 72Figure 4.3. Turnover of forest sector enterprises, by type of activity 74

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Figure 4.4. Forest tenure change in Vietnam between 1995 and 2009 77Figure 5.1. Total catch and engine power in Vietnam’s marine fisheries, 1981–2009 94Figure 5.2. Total engine power and yield in Vietnam’s marine fisheries, 1981–2009 95Figure 6.1. Evolution of Vietnam’s coal industry, 2000–2008 121

TablesTable 2.1. Vietnam’s land policy evolution, 1945–2007 38Table 4.1. Species richness and threat status in Vietnam in 2005 78

The Vietnam Development Report (VDR) is a joint development partner report. It aims toinform the reform agenda of the government of Vietnam and to harmonize developmentpartner support for this framework. Therefore the emphasis is not so much on backgrounddescription as it is on a discussion of the way forward.

The current VDR is one in a long series of annual reports addressing the most importantdevelopment topics of Vietnam. They do so against the backdrop of the Socio-EconomicDevelopment Plan, which lays out the government’s broad development agenda.

The theme of this VDR is natural resources management. The main question that the VDR posesis: How can natural resources be used efficiently to promote robust economic growth and alleviatepoverty in a manner that is environmentally and socially sustainable? An examination of thatquestion entails addressing several subthemes that run through the different chapters. The report isorganized to address the lead themes of efficiency, environmental sustainability, and equity insectoral chapters on land, water, forests, marine resources, and mineral resources. The first chapterprovides a broad overview connecting the sectoral chapters. A statistical annex provides further datain support of the text.

The VDR is the result of a consultative process involving not only development partners but alsonongovernmental organizations, academics, researchers, and independent consultants. The processhas been coordinated by the World Bank.

The Big PictureVietnam has enjoyed two decades of strong economic growth, and the nation reached thestatus of “lower-middle-income country” in 2009. Aligned with that economic growth is a sharplydeclining poverty rate. Government policy provides for a transition from a centrally planned economytoward one that is increasingly market-oriented, with a socialist orientation. Part of this is a processof devolution of decision making to lower levels of government. Aggregate population growth is nothigh, but people are moving rapidly into urban centers and leaving agriculture for industry andservices.

Much of the economic growth has been fueled by intense exploitation of natural resources.Utilization of land has intensified, water resources are increasingly stretched, natural forests havebeen logged, capture fisheries have depleted their resource base, and mineral resources are

EXECUTIVE SUMMARY

increasingly exploited. There is nothing wrong with using natural resources for economic growth.But sustainable development requires that renewable resources be harvested at a level that allowsfor replenishment, and that the proceeds from exploitation of nonrenewable resources are investedin other forms of capital. More-intense utilization will also bring about more competition and evenconflict over resources. This will increase the need for clear property rights, rules of transactions, andconflict resolution.

The overall growth of the economy, population growth, urbanization, and industrialization areall combining to increase water pollution, urban air pollution, and the extraction of naturalresources. To some extent this is counterbalanced by increasing efficiency in the use of naturalresources and technological progress. But the net result is increasing pressures on the resource baseand pollution. In many cases the benefits will be registered by way of economic growth but the costswill be “hidden” as poor human health, longer-term losses of ecosystem productivity, and reducedenvironmental quality.

Climate change stresses require adaptation measures. Much about the long-term impacts ofclimate change is uncertain. But enough is known already to prompt action: temperatures willincrease, the sea level is rising, and saltwater intrusion will increase further. Precipitation is likely toexacerbate droughts and floods, and it is likely that extreme climate events will become morefrequent and intense, while the current level of impact is quite significant and warrantscountermeasures.

Vietnam operates in an international context. The entire economy is increasingly integrated intothe global system, particularly since joining the World Trade Organization in 2006. Most of Vietnam’ssurface water resources come from outside the country. Vietnam will be affected by the massivehydropower plants being planned in the Mekong River. The wood processing industry of Vietnam isquite strongly import-dependent for raw material. Many of its products are intended for export, andnew legislation in those markets is placing new demands on Vietnam. The marine fisheries andaquaculture industries are also very export-oriented, and the former competes with foreign fleets ininternational waters. Some important marine products export markets will require proof ofsustainable resource management in Vietnam. The mining industry is also strongly export-oriented.All these situations strongly affect the reform agenda.

Conclusions on the Reform AgendaVietnam is already engaged in a dynamic reform process. This report makes suggestions forreinforcing that momentum. Vietnam’s recent history is one of successful economic reform.Sometimes the goals of efficiency, environmental sustainability, and equity are quite compatible—witness the growth pattern combined with poverty alleviation. But there are also trade-offs betweenthese goals. In particular, economic growth that puts a “zero price” on environmental impacts willsend markets and decision makers the wrong signals and therefore undermine the benefits ofdevelopment. Efficient markets may not produce results that are acceptable from an equityperspective, and so on. Thus reforms have to be pursued with an eye to multiple and sometimescompeting goals. There are also important gaps between theory and practice that need to beaddressed. Good policies require adequate resources for successful implementation.

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In very broad terms, the reform agenda for natural resources management suggested by theVDR involves:

A focus within public management on enhanced data gathering, analysis, and publicdissemination to support functioning markets as well as efficient public decision making andcoordination. This will contribute to efficiency, environmental sustainability, and equity.Priorities in the short term include: enhanced public transparency in land markets; improvedwater data collection to underpin rational watershed management under increasingcompetition for water; stringent data standards in forestry to allow for international transfers insupport of carbon sequestration, sustainable forestry, and biodiversity conservation; animproved database to determine the status of marine fisheries and hence reasonable catchlevels; and public disclosure of the results of environmental assessments of the impacts ofmineral exploitation.

Assignment of clear and more-secure long-term property rights and an increase in the use ofmarket prices to provide incentives for investment, growth, and decentralized solutions. This isfundamental for greater efficiency. Short-term priorities to enhance efficiency include:modernizing land administration to lower transaction costs, improving irrigation efficiency,raising the yield in forest plantations, reforming marine subsidies so as not to encourageoverexploitation of these resources, and creating more enabling conditions for the private sectorto pursue opportunities in the minerals sector.

Enhancing environmental regulatory implementation to close the gap between theory andpractice; assigning values to the environment where markets fail to do so; scaling up of co-management schemes in forestry and marine resources and of payments for environmentalservices; and integrating climate change into public planning. These are fundamental toenvironmental sustainability. Short-term priorities from an environmental perspective include:land use planning to protect critical habitat; vigorous implementation of regulations to combatwater pollution; scaling up of systems for payments for forestry protection and expansion incoastal areas; expansion of the Marine Protected Area system in combination with community-based protection schemes; and enforcement of environmental regulations related to mining.

Community benefits sharing schemes, fair-market value compensation for propertyexpropriation, improved information access, transparency in governance, and publicparticipation. These are fundamental measures to ensure equity in natural resourcesmanagement. Short-term priorities include: efficiently and fairly addressing grievancesoccurring in land markets; targeted improvements in water services for the poor; scaling up ofthe promising pilots in both community forestry management and marine resources; andprovisions for communities to benefit directly from minerals exploitation in theirneighborhoods.

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NATURAL RESOURCESMANAGEMENT—AN OVERVIEW

CHAPTER 1

Vietnam has enjoyed two decades of strong economic growth, and the nation reached thestatus of “lower-middle-income country” in 2009. Aligned with that economic growth isa sharply declining poverty rate. Government policy provides for a transition from acentrally planned socialist economy toward one that is increasingly market-oriented. Part

of this is a process of devolution of decision making to lower levels of government. Aggregatepopulation growth is not high, but the population is rapidly moving into urban centers and leavingagriculture for industry and services.

The overall growth of the economy, population growth, urbanization, and industrialization are allcombining to increase air and water pollution and the extraction of natural resources. To someextent this is counterbalanced by increasing efficiency in the use of natural resource andtechnological progress. But the net result is increasing pressures on the natural resources base andpollution. In addition, climate change will increasingly add the need for adaptation to sea levelrise, salt water intrusion, and changes in precipitation and temperature.

These issues prompt a reform agenda that is outlined in the following chapters, with a focus onthree themes: economic efficiency, environmental sustainability, and social equity (“the threeEs”).Vietnam is already engaged in a dynamic reform process. This report aims to build on andreinforce that momentum. In very broad terms, this reform agenda for natural resourcesmanagement involves:

A public management focuses on better administrative coordination and enhanced datagathering, analysis, and public dissemination to support functioning markets and efficientpublic decision making. This will contribute to all of “the three Es.”

The assignment of clear and more secure long-term property rights and an increase in the useof market prices to provide incentives for investment, growth, and decentralized solutions.This is fundamental for greater efficiency.

Enhancement of environmental regulatory implementation to close the gap between theoryand practice; assigning values to the environment where markets fail to do so; scaling up ofco-management schemes in forestry and marine resources and of payments forenvironmental services; and the integration of climate change in public planning. These arefundamental to environmental sustainability.

Community benefits sharing schemes, fair-market value compensation for propertyexpropriation, improved information access, transparency in governance, and publicparticipation. These are fundamental measures to ensure equity in natural resourcesmanagement.

Vietnam’s economic growth has beenspectacular in the last couple of decades,reaching more than $1,000 per capita in 2009.1Real growth in the gross domestic product (GDP)was about 8 percent in 2005–08, and thisweakened only somewhat in 2009 in spite of therecession. For 2010–11 GDP growth is forecast to6–7 percent.2 Along with GDP growth, povertyhas fallen drastically—from almost 60 percent in

1993 to about 14 percent in 2008.3 Inequalityincreased only moderately during this time.4

Along with the impressive economic growth, theintensity of use of some basic natural resourcessuch as land, water, and energy to produce oneunit of economic output in Vietnam tended todecrease during 1990–2007. In other words, thecountry tended to use fewer resources to

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Figure 1.1. Intensities of resource use, 1990–2007

Source: UNESCAP & CIEM 2009.

Figure 1.2. GDP and absolute resource use indexes (1990 =1)



Figure 1.3. Pollution intensity, 1990–2007


Figure 1.4. GDP growth and absolute air pollution indexes (1990 =1)


generate $1 million of GDP (Figure 1.1). This ispartially explained by a structural shift fromagriculture toward industry and services.5

Notwithstanding these signs of increasedresource use efficiency, the absolute level ofresource use continued to increase (Figure 1.2).

Measures of air pollution intensity show a mixedpicture during 1990-2007, but the rapid growth ofthe economy implies that the absolute levels ofpollution are rapidly increasing (Figures 1.3 and 1.4).

The government’s Socio-Economic DevelopmentPlan (SEDP) 2006–2010 and the draft SEDP 2011–20156 detail the transition toward a middle-income country, based on a market economywith a socialist orientation. This developmentbuilds on the successes of the renovation processinitiated in the late 1980s (doi moi) while alsopreserving the strong poverty-reduction focus.The SEDP sets out four broad objectives: toimprove the business environment; socialinclusion; natural resources and environmentmanagement; and governance. Since the turn ofthe century, there has been increased reliance onmarket mechanisms, development of a multi-stakeholder economy, and further integrationwith the region and the world. For example,Vietnam joined the World Trade Organization(WTO) in 2006. The role of the state sector inmanufacturing has declined from more than halfin 1995 to about one-third in 2006, as privatesector growth has outpaced the state sector.7

The population in 2008 stood at about 86 millionpeople, growing at slightly more than1 percenta year.8 Behind this aggregate are rapid changesin the location and employment of thepopulation. The definition of “rural” and “urban”is somewhat arbitrary and subject to dispute.However, it seems clear that urbanization isprogressing rapidly. Official figures show agrowth in urban population from 30 percenttoday to a projected 50 percent by 2025, at anannual growth rate of more than 3 percent, witha likely total of more than 50 million urban

residents in 2025.9 The share of agriculture in GDPdeclined to 22 percent in 2008, while industry’sshare reached 40 percent, and servicesaccounted for almost the same share.10

Another important social dynamic isdecentralization of decision making. The VietnamDevelopment Report 2010: Modern Institutionsfocused on devolution and accountability—andthe reader is referred to that report for an in-depth treatment of this subject.11 However, itbears recalling here that this process has involveddecentralization of decision-making powers toprovincial and lower levels of government,administrative and service delivery units, thecourts and elected bodies, the media and civilsociety, and all the way down to firms andfarmers. This implies that people who are closerto facts on the ground, and who can adjust withmore flexibility to opportunities and changingcircumstance, are more empowered. However,there are important counterpoints to theadvantages of decentralization. First, lower levelsof government may not be able to capture thebenefits of, for example, the larger river-basinperspective on efficient allocation of waterresources. Second, lower levels of governmentmay come to subsidize an over establishment of,for instance, fishing capacity or a fisheriesprocessing industry based on their local interests.Hence while the overall tendency of allowingmore decentralized decision making is beneficial,there are cases where the national interestsrequire centralized management.

Taken together, population growth, urbanization,and industrialization have had significantimpacts on the natural environment. The mostserious pollution problems arise in and aroundHo Chi Minh City and Hanoi. By sector, the mostserious water pollution—measured as biologicaloxygen demand—emanates from theproduction of textiles and food. Total suspendedsolids are mainly a product of the furniture andfood industries.12 The pressures on naturalresources—agricultural land, natural forests,fisheries, and mineral resources—are also


increasing.13 This development is alsothreatening biodiversity in a country withglobally significant amounts of it, as nearly 10percent of the world’s mammal and bird speciesare found in Vietnam.14

It should be recalled that Vietnam operates in aninternational context. The entire economy isincreasingly integrated into the global system,particularly since joining the WTO. The links arealso quite strong in terms of natural resourcesmanagement. Most of Vietnam’s surface waterresources emanate in foreign territory. Vietnamwill be affected by the massive hydropower plansunder way in the Mekong River. The woodprocessing industry of Vietnam is quite stronglyimport-dependent for raw material. In addition,many of its products are intended for export, andnew legislation in those markets is placing newdemands on Vietnam. The marine fisheries andaquaculture industries are also very export-oriented, and the former competes with foreignfleets in international waters. Again, someimportant marine products export markets willrequire proof of sustainable resourcemanagement in Vietnam. The mining industry isalso strongly export-oriented. As shown in detailin the statistical appendix to this VDR, crude oil—the export value of which swings considerablyfrom year to year—fell to a second place inexports after textiles and garments in 2009.Marine products occupied the third place,followed by footwear, handicraft and electronics.Not far behind were rice and wood products.15

Sustainable Use of NaturalResources“Sustainable development” has many definitions.An often quoted interpretation is from the WorldCommission on Environment and Developmentin 1987, as “… development that meets the needsof the present without compromising the abilityof future generations to meet their own needs.”16

But general definitions need to becomplemented by specifics on measurements tobe of operational use. Is Vietnam’s development

sustainable? There are several approaches toresponding to that question. One is to take an“adjusted net savings” approach.17 Figure 1.5summarizes the overall picture by adjusting thetraditional savings measure in several ways. Itadds the investment of resources in education (asrecurrent expenditure), but subtracts for costs forair pollution (the cost of particulate matterdamaging human health) and the generation ofcarbon dioxide that contributes to climatechange. It also subtracts the depletion ofminerals and forest resources above sustainableyield. The income from them represents thedepletion of a resource, not sustainable income.

The result is a large differential between thetraditional savings measure (gross savings aspercentage of the gross national income (GNI))and the adjusted savings. Still, net savings arestrongly positive at about a 10–17 percent rate ofGNI in the last decade. But this can be comparedwith the level of more than 22 percent for theentire group of lower-middle-income countriesto which Vietnam now belongs. The East Asia &Pacific Group shows an even higher adjusted netsavings rate, of almost 29 percent. Comparisonscan also be made for 2008 with China (35percent), Indonesia (minus 2 percent, due mainlyto considerable energy resources depletion), and22 percent for the Philippines. Comparisons canalso be made with high-income countries forcontext. For example, the USA shows an adjustednet savings rate of about 1 percent of GNI in 2008(mainly due to low gross savings), while Franceregisters about 10 percent.18 The conclusion istherefore that Vietnam does meet this type of“sustainability test” but does not compare wellwith several other countries in its own incomegroup. However, this picture omits certainaspects, such as depletion of marine resources,degradation in the quality of non-timber forestresources, and the impacts of water pollution.The appropriate adjustments for these factorswould vary considerably across countries.

Another approach to measuring environmentalsustainability is the Environmental Performance


Index (EPI).19 This measures countries’performance level relative to their establishedenvironmental policies targets. There are twocore objectives of environmental policy:environmental public health and ecosystemvitality. Under these core objectives, the EPI isbased on the weighted scores for 10 policy goalsbased on their underlying indicators: theenvironmental burden of disease, waterresources for human health, air quality for humanhealth, air quality for ecosystems, water resourcesfor ecosystems, biodiversity, forestry, fisheries,agriculture, and climate change.

Vietnam is ranked eighty-fifth among 163countries in the 2010 EPI rankings, with a scoreof 59. Some of the highest-ranking countries areIceland, Switzerland, and Costa Rica, indecreasing rank order, with 94 being the highestscore. Countries with the worst environmentalperformance are Sierra Leone, Central AfricanRepublic, and Mauritania, in increasing rankorder, with the lowest score being 32. Regionalcomparisons can be made with the Philippines(66), Thailand (62), Lao PDR (60), China (49),Indonesia (45), PNG 44), Mongolia (43), andCambodia (42). Hence, in that comparison,Vietnam does reasonably well.

Vietnam has high scores in some areas likeforestry and agriculture. In the former, the scoreis related to forest cover change and growingstock change, and as discussed in the forestrychapter, Vietnam has invested heavily inreforestation. However, this does not prevent thequality of natural forests from degrading. Inagriculture, the score is related to water useintensity in agriculture, subsidies, and pesticideregulations. Vietnam receives much lower EPIratings in sectors like fisheries, climate change(carbon dioxide (CO2) emissions per kilowatt-hour, industrial greenhouse gas (GHG) emissionsintensity), air pollution effects on ecosystem, andmarine protection.

Against this backdrop of overall sustainabilityconcerns and the targets set in the SEDP, thespecific theme of this VDR is natural resourcesmanagement. As documented in prior VDRs,there is much progress to note by way of growthand poverty alleviation, but there are alsoremaining institutional weaknesses that hamperdevelopment and diminish the quality of growth.The main question that the VDR poses istherefore: How can natural resources be usedefficiently to alleviate poverty in a manner thatis environmentally and socially sustainable? An


Figure 1.5. Vietnam: Gross and net savings, 1999–2008

Source: Adapted from World Bank 2010g.

examination of that question entails addressingseveral sub-themes that will run through thedifferent chapters (“the three Es”):

incentives for efficient utilization topromote economic growth

holistic management for environmentalsustainability

community rights, participation, andbenefit sharing for social equity.

Addressing such broad issues requires a clearstructure for the report. This report is focused ona subset of the EPI—natural resources—ratherthan environmental health, which is dealt withonly marginally. The remainder of the report isorganized in the three main themes justidentified. These are further broken down intofive sectoral chapters on land, water, forests,marine, and mineral resources. The choice ofsectors is pragmatic: our counterpart institutionstend to be organized along sectoral lines, as is thecompetence of resource persons. Furthermore,the resources available for the report are limited,and so is the time we have to prepare the report.Not explicitly shown in the figure are somethemes that cut across chapters, such as climatechange, governance, and institutional analysis.

Several potential topics are not addressed inchapter format, if at all. There is no dedicatedchapter on coastal zone management, althoughthe substantive issues pertaining to it—land useplanning, sea level rise, salt intrusion, mangroverestoration, and so forth—are discussed in therelevant sectoral chapters. Solid waste is nottreated in its own chapter, but it clearly hasimplications for water pollution, which isdiscussed as part of the water chapter. Urban airpollution is not yet reaching the same level ofconcern as water pollution, but it is documentedthat urban air quality in Vietnam is characterizedby high levels of particulate matter, oftenexceeding annual Vietnam standards and WorldHealth Organization guidelines.20 The availableinformation about indoor air pollution isinsufficient for a treatment here.21

Climate ChangeA cross-cutting theme that is of relevancethroughout this report is climate change. All thechapters include some mention of its relevance.This theme has attracted an enormous amountof attention, and there is an impressive body ofrecent publications that deal with it.22 Hence, thisreport provides only a very succinct overview.

It has been estimated that the cost fordeveloping countries of adaption to climatechange is on the order of $75–100 billion per yearfrom 2010 to 2050.23 This is a large sum, but smallin comparison to the size of the economy. More-significant impacts in the very long term cannotbe ruled out. But these would have to be viewedin the larger perspective of fundamental socialand economic change over such time periods.For Vietnam, a recent national study concludedthat the impact of climate change on real GDP by2050 would be on the order of a 1–3 percent losscompared with the baseline of no climatechange. 24

Climate change will add another complication tonatural resource management, increasing overtime and involving aspects of mitigation andadaptation. Much is uncertain about the long-term impacts of climate change, but clearlytemperatures will rise, perhaps by 2–4°C by theend of this century. The mean sea level rise by2100 is projected by different sources to be about18–70 centimeters, and 100 centimeters or moreis conceivable in a high-emissions scenario andwhen considering the effects of land ice melting.Precipitation forecasts differ considerably amongmodels, but annual totals are expected toincrease everywhere in Vietnam, with a tendencyfor drier weather in the dry season in the southand wetter weather in the wet seasons in thenorth. It is not clear from localized models if thefrequency and intensity of cyclones in Vietnamwill change, but global analysis suggests thatwarmer seas are likely25 to fuel more-intensivetyphoons. 26


Vietnam is not a significant emitter ofgreenhouse gases in the global perspective.According to the World Resources Institute,Vietnam emitted about 177 million tons of CO2equivalents (CO2e) in 2005, the latest year forwhich internationally comparable data areavailable.27 That put Vietnam at rank 35 inabsolute emissions in the world, with about 0.5percent of the global total. The emissions percapita stood at about 2 tons of CO2e, whichranked Vietnam one hundred and eleventh in theworld. The GHG emissions are expected toincrease considerably over time. 28

Even small emitters can contribute to globalefforts to stem climate change through cost-effective mitigation measures that have domesticco-benefits as well, for example due to lowerenergy costs and reduced air pollution. Theglobal cost of addressing climate change willdecrease substantially if all countries join handsin seeking out the least costly investments.However, this will also require very significanttransfers from industrial countries to the lower-income countries implementing such measures.The relevance of mitigation in relation to naturalresources management lies primarily in the forestsector. The system of REDD, reduceddeforestation and forest degradation, couldpotentially generate significant income ifinternational agreements are reached. Thepotential contribution from mitigation inagriculture is expected to be limited. Thepotential in other sectors is outside the scope ofthis report.29

The natural resources management climatechange agenda for Vietnam is primarily one ofadaptation, with the most relevant sectors beingagriculture and water management—includingurban flood management. Sea level rise andsalinity intrusion are happening and areincreasing, with a significant impact likely by2050, particularly on rice-growing land and alsoon important lowland and coastal towns andcities. Changes of rainfall and temperature as well

as atmospheric CO2 concentration will affect cropproductivity in ways that could be both positiveand negative. In the absence of adaptationmeasures, yields will likely be reduced for rice,maize, cassava, sugarcane, coffee, and vegetables.All predictions are quite sensitive to climatechange projections, and as these currently varysignificantly, crop yield estimates similarly needto be considered as very tentative.30

This information needs to be interpreted in alarger context. This includes considering changesin diets and consumer preferences with fallingdemand for rice, market liberalization, trade(which will expose Vietnam to lower-costcompetition), and conversion opportunities toaquaculture and more salt-tolerant varieties.These forces are likely to be of more importancein the next few decades in determining thedevelopment of Vietnamese agriculture. Similararguments can be raised for water managementand urban planning. This is not to dismiss theclimate change concerns, which are real andlegitimate. Investments in long-livedinfrastructure—ports, major roads, hydropower,irrigation systems, and flood protection, as wellas in mangrove rehabilitation, climate-resilientmarine protected areas, and agriculturalresearch—all need to incorporate long-termprojections for climate change. Land useplanning needs to consider suitable locations forurban expansion. Even in the short run, there aregains to be made from investing in resilience tocounter climate variability and extreme events.Strengthening of disaster risk management is anatural entry point for long-term adaptation.31

Natural ResourceManagement forSustainable GrowthSome common threads in this VDR are efficiency,environmental sustainability, and equity. Thissection highlights how these themes tie thechapters together.


EfficiencyEconomic theory teaches us that economicefficiency is dependent on complete, exclusive,transferable, and enforced property rights. These“model conditions” are of course not fulfilled inreal world economies, but a movement towardthem is generally helpful in enhancing efficiency.Vietnam is clearly on its way toward definingprivate property rights and allowing markets todetermine prices for the exchange of property,goods, and services. Each chapter in this reportaddresses reforms that could enhance efficiency.

The land chapter documents importantprogress in creating more-efficient land markets.However, it also points to significant challengesthat remain in providing Land Use RightsCertificates (LURCs) to all stakeholders. Thegovernment is preparing a new Land Law, whichpresents an opportunity to address conditionsthat affect tenure security. Agricultural landwould benefit from more secure tenure toencourage investment and enhance productivity.Allocation across land uses could also be moreefficient if the current restrictions regarding ricecultivation were lifted. For urban land, thechapter discusses improvements in managementto reduce the high number of disputes and toenhance transparency. Clarification andrefinement of the state’s recovery powers foreconomic development purposes could alsoprovide greater security. Land prices based onmarket signals rather than administrativedecisions would guide land allocations towardsits highest value use. All these measures cancontribute to enhancing the efficient use of land.

The water chapter points to the ongoing work ona new National Target Program for watermanagement and the revision of the Water Law astwo strategic opportunities to enhance watermanagement. From an efficiency perspective,there is a need to better define user rights to waterthrough a licensing system. This would create amore secure situation for water users and mitigatethe tendency for the over extraction of water.

Water is sometimes considered a “free” good or agift of nature. While rain falls without charge,nature does not unfortunately provide thestorage, canals, pipes, and taps for free. Hence,prices of irrigation water and urban waterservices need to gradually reflect the economiccost of provision. Otherwise, operation,maintenance, and future capital investment willnot be undertaken. A vicious circle of poorservice and low willingness to pay will remain.Private investors who could provide efficientservices will shy away if they cannot cover theircosts. But as such services will have a naturalmonopoly, they will also have to be carefullyregulated by the public sector. Vietnam needs astrategic development plan for urban watersupply with priorities clearly established forreducing non-revenue water and the provision ofnew infrastructure. Greater priority should beprovided to towns under district control.

Integrated planning based on improved datacollection also has an important role to play. Theaccess of competing interests to water is bestaddressed at the river basin scale. The waterchapter points out that river basin planning canbe a very powerful integrating measure for watermanagement. It can break down theadministrative divisions between governmentsand between sectors.

As for forest management, the chapter pointsto the need for reforms to enhance the efficiencyof plantations through more consolidatedleasing arrangements. Furthermore, the potentialof forests held by State Forest Enterprises couldbe more efficiently used by allocation of foreststo communities or leasing to investors withresources to enhance productivity. There isconsiderable room for improving plantationproductivity through better plant material andspecies-sitting. It is recommended that the forestextension system and nursery advisory centersshould be strengthened in support of thesereforms. The forest chapter also highlights aconcrete example of a successful smallholdergroup management scheme.


The marine chapter deals with the fact thatcapture fisheries are based on a fugitive,common property resource, where exclusiveproperty rights are difficult to define and enforce.This also relates to marine biodiversity.Nevertheless, the chapter provides hopefulexamples of co-management schemes wherecommunities have been given defined propertyrights. This has provided incentives for more-efficient management that limits overfishing andthe associated dissipation of rents in fisheries. Inthis context, it is important that governmentsubsidies are reformed not to further increase thepressure on this resource but rather to providealternative means of supporting the families offisherfolk. Making more-efficient use of marineresources also entails moving up the value chainby gradually improving the entire chain ofcapture, storage, processing, packaging, andmarketing. Vietnam has been very successful inthis regard so far and needs to build on thatexperience.

The mineral resource chapter documents therich mineral endowment of Vietnam and thedominance of oil, gas, and coal in currentexploitation. It argues that the mineral wealth ofthe country could be used more efficiently undera regime with flexible “resource assessments”rather than the current model of prescriptiveMaster Plans. The former would be more open tomarket-driven exploration and adjustments tolocalized information. In finalizing the newMineral Law, the government could strengthensecurity of tenure and establish objective criteriafor evaluation of mine title applications. Vietnamcould do more to mobilize private sectorinvolvement in mineral exploration. Clarifyinginstitutional mandates in the minerals sector isalso a step in the right direction.

EnvironmentalSustainability Using imperfect measures of efficiency such asfinancial profits and GDP growth does not tell usanything about the sustainability of the economy

in the long run or about the environmental costsof growth. An economy can achieve high growthrates and profits while liquidating its naturalcapital and polluting the environment. The realcosts do not show up in the traditional system ofnational accounts, and the environmentaldamage may not have (a direct) market price. Butultimately such costs show up in the economy aswell, as human health is damaged and long-termresources are exhausted. For example, theeconomic burden of indoor and outdoor airpollution and of poor water, sanitation andhygiene amounted to 1–4 percent of GDP in asample of 11 developing countries.32 Asustainable economy requires that pollutiondoes not exceed the absorptive capacity of theenvironment, that renewable resources (fish,forests, and so on) are harvested at no more thantheir reproductive level, and that the profits fromnonrenewable resources are invested in otherforms of resources (such as human capital).

The land chapter points out that the basicprinciples of the environment impact assessment(EIA) should be applied to all planningdevelopment proposals, as an integral part of thebasis for approval at higher levels. A strategicenvironmental assessment (SEA) should be donefor the national and sectoral land use plans for2011–15 and in line with the Law forEnvironment Protection 2005.33 Vietnam hasprogressive legislation on EIA and SEA, butfurther efforts are needed to strengthenimplementation capacity. These assessmentsoffer an opportunity to take into account theexpected impacts of climate change on landresources. The land chapter illustrates theconflicting projections with respect toagricultural impacts, but the downside riskdominates. It argues in favor of planning forgreater resilience through investment in cropresearch and water management.

The water chapter illustrates that waterpollution has reached serious levels. To addressthis, current laws and regulations—which areoften progressive—need to be properly


enforced. The already existing SEA and EIAsystem needs to be more effectivelyimplemented to close the gap between theoryand practice.34 The same applies for the use offinancial instruments to encourage moreeffective treatment of polluted water. Effectiveenforcement of these provisions will also createincentives for investment in cleaner technologyover time. Vietnam’s water management isclosely linked to that of other Mekong Riverstates, as a major part of its water enters into thecountry from them. The threats to delta sedimentdeposition in the Mekong River from the massivehydropower expansion plans upstream will haveto be carefully studied and discussed within theMekong River Commission.

Much of terrestrial biodiversity is harbored in thenation’s forests. The forest chapter argues forreform of the current strict forest classificationsystem into one where “protection” objectivescould be integrated into “production” forests. It isalso recommended to consolidate the currentlyfragmented management of the Protected Areassystem. The piloting of payments for forestenvironmental services needs to be scaled up toprovide further incentives for conservation. Thepotential to tap into new and possibly significantfinancing through Reduced Emissions fromDeforestation and Forest Degradation Plus(REDD+)35 needs to be captured. However, thiswill require improved data capture and analysis,along with monitoring of the forest resource tomeet international requirements. Long-termclimate change impacts on forest biodiversityalso need to be considered to counter habitatchanges that will affect biodiversity, increasedforest fires in drought-prone areas, and forestpests.

The marine resources chapter highlights aseries of reforms required to project fisheries andmarine biodiversity. Improved data collectionand capacity for analysis are needed to enhanceplanning in this sector. But the overall picturethat emerges is that the pressure on the fisheriesresource needs to diminish, and subsidies

contributing to such pressure need to beremoved. The efforts to secure export markets formarine products are linked to the quality ofenvironmental management. This includesefforts to extend eco-certification through theMarine Resources Council and other certificationavenues. Expanding and funding the emergingsystem of Marine Protected Areas that is underway is an important initiative that deserves fullsupport from the international community. Near-shore mariculture may also provide an attractiveoption to combine environmental protectionwith private and community-level incentives. Thechapter also highlights a few priority species thatare particularly worthy of protection, such as seaturtles, dugongs, sharks, and marine species thatare attractive in the international aquarium trade.

With respect to environmental sustainability, themineral resources chapter notes that Vietnamhas had best-practice legislation on the bookssince 2005. For example, all mineral Master Plansrequire a strategic environmental assessment.However, there is a need to close the gapbetween good theory and insufficient practice inthis area through capacity building programs forgovernment staff and logistical support formining inspections. Capacity building is inparticular needed for provincial authoritieswhere mining activities are strong. Theapplication of fees charged to mining operatorsfor environmental damage also requires moreeffective implementation.

EquityEquity is not only about income distribution—which is relatively equal in Vietnam—but alsoabout equal access to information, services,participation in decision making, economicopportunity and benefit sharing.

As the land chapter discusses, progress in landmanagement has provided an equitablereallocation of agricultural land fromcooperatives to farmer households. Vietnam hasconducted one of the largest land titlingprograms in the world. However, unequal access


to information can have a critical impact on theability to make good use of land markets. Animportant aspect of gender equity is the LandLaw provision of registering both spouses’ nameson the LURC. It will be important to bring allLURCs into compliance with this provision. It isrecommended to develop a national policy oncompensation and resettlement based on theprinciple of market price compensation.

The water chapter highlights that access toclean water and improved sanitation is highlyunequal. Concerted efforts are needed to raisethe standards of water supply and sanitationfacilities, especially in rural communities. Notonly investments in hardware are required; thechapter points to the need for raising awarenessabout environmental health to ensure behavioralchange to match the investments. It alsohighlights that integrated water resourcemanagement provides the opportunity forcommunities to participate. It can provide theintegrating framework for water-dependentsocioeconomic development planning and forpoverty reduction interventions. There isconsiderable scope to increase food production,enhance livelihoods, and reduce poverty inexisting irrigated areas. The preparation of along-term irrigation subsector reform andfinancing plan is important and could contributeto participatory planning and implementation.

The forest chapter advocates reforms to furtherstrengthen community involvement in forestry.This entails a particular focus on mountainousareas where some of the poorest people inVietnam live. Coastal zones, with their potentialto rehabilitate and expand mangrove forests, alsodeserve focus. Co-management arrangementsrequire a clear policy framework and theformalization of the role of communityrepresentatives. Longer-term leasingarrangements, when appropriately coupled withpayments for forest environmental services,should be encouraged. Cooperation between theMinistry of Agriculture and Rural Developmentand the Ministry of Natural Resources and

Environment could be strengthened to providea single consistent process with respect toallocation and planning of forestland.

Marine resources are under severe pressure inVietnam, and relatively poor in-shore fishers areparticularly vulnerable in the increasinglycompetitive hunt for fish catch. This is yetanother argument for strengthening theirproperty rights. The marine chapter providessome examples of successful co-management infisheries. Equitable sharing of benefits is animportant feature of this approach, and legalreform is needed to support this development.

The chapter on mineral resources proposes theestablishment of community developmentagreements, with reference to successfulinternational experience. These can ensure localcommunities of appropriate benefit sharing.Addressing the insufficient database on miningwould also contribute to efforts to enhance thesocial impacts of mining. Finally, joining theExtractive Industries Transparency Initiativeprovides an opportunity to demonstrate publiclyhow the mining sector is contributing to the taxbase of the country and therefore to the benefitsof the national population.

A Reform AgendaVietnam is already engaged in a dynamic reformprocess, and much of what is proposed here iswell in line with the directions set out by theMoNRE 2010 Plan of Action.36 This report aims tobuild on and reinforce that momentum. In verybroad summary, this reform agenda for naturalresources management involves:

A public management focuses on betteradministrative coordination and enhanceddata gathering, analysis, and publicdissemination to support functioningmarkets and efficient public decisionmaking. This will contribute to economicefficiency, environmental sustainability,and social equity.


The assignment of clear and more securelong-term property rights and an increasein the use of market prices to provideincentives for investment, growth, anddecentralized solutions. This is fundamentalfor greater efficiency.

Enhancement of environmental regulatoryimplementation to close the gap betweentheory and practice; assigning values to theenvironment where markets fail to do so;scaling up of co-management schemes inforestry and marine resources and ofpayments for environmental services; andthe integration of climate change in publicplanning. These are fundamental toenvironmental sustainability.

Community benefit-sharing schemes, fair-market value compensation for propertyexpropriation, improved informationaccess, transparency in governance, andpublic participation. These are fundamentalmeasures to ensure equity in naturalresources management.

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LAND MANAGEMENT

CHAPTER 2

Land management37 in Vietnam has gone through dramatic changes since the start of theeconomic reform process in mid-1980s. The equitable reallocation of agricultural land fromcooperatives to farmer households in early stages of the on-going economic reform processestablished a solid foundation for rapid economic growth and poverty reduction. This has

been followed by one of the largest land titling programs in the world. The fundamentals havebeen put in place for land management in a transition economy, and progress has been impressive.

However, the land reform policy remains incomplete and there are still considerable gaps betweenthe land policies and their implementation in localities. Furthermore, the future challenge is howVietnam can stimulate a more-efficient use of scarce land resources, promote an environmentallysustainable land management—especially in the face of climate change—while paying dueattention to social equity. This is a formidable agenda, and this chapter focuses largely only onmatters of efficiency, with secondary treatment of environmental sustainability and equity. Climatechange is addressed more holistically as part of the strategic overview in Chapter 1.

To address future challenges, a reform agenda is proposed as a contribution to the ongoing policyand institution development efforts led by the Vietnamese government. The proposed five reformareas do not fall perfectly into the three categories of efficiency, environmental sustainability, andequity, as each reform area may contribute to more than one category. The efficiency reformagenda includes enhancing land use rights and modernizing land administration as the basis formore-efficient land markets. Strengthening land and property taxation is also necessary asincentives for more efficient land use and instruments of fiscal improvement. Environmentalsustainability will require improving land use planning to regulate environmental impacts fromvarious forms of land use and to integrate climate change concerns. Finally, there is an importantequity agenda in community land allocation and titling, and improving land acquisition andcompensation.

Vietnam’s rapid and sustained economic growthand poverty reduction in the last two decadeshave been rooted in land management reforms.In rural areas which account for three-quarters ofthe total population and the vast majority of thepoor, agriculture is the main livelihood for morethan half of the country’s work force. In rapidlygrowing urban areas, greater tenure securityrepresents a prerequisite for sustainableimprovement of housing and environmentalconditions.

Land Resources andDynamics“Tấc đất tấc vàng” (an inch of land is worth an inchof gold) is a very popular Vietnamese proverbabout the value of land resources. With the total

area of about 33 million hectares and apopulation of 86 million (in 2009), Vietnam’s landendowment is one of the world’s lowest on a percapita basis. Less than 0.3 hectares of agriculturalland per person is available.38 However, high landfertility combined with favorable climaticconditions and labor abundance allows Vietnamto secure national food security and competesuccessfully in a number of importantagricultural commodities, including rice, cashew,coffee, rubber, and pepper.

The land use intensity in Vietnam tends to behigh, particularly in wetland rice agriculture andhuman settlement centers. The on-goingeconomic reforms since the early 1990s havebeen accompanied with further intensification ofland uses. First, most of suitable lands have beenput under utilization, raising the areas ofproduction and conservation forestland and

agricultural land in the expense of the so-calledunused land. This led to unprecedented changesamong land categories and subcategories assummarized in Figure 2.139). However, the totalland area devoted to rice has been topped at 4.1–4.2 million hectares since 1993 and anyconsiderable increase would be associated withlarge investments and environmental costs.Second, within each category land uses have alsointensified. For example, the average number ofpaddy crops has increased to almost 2 per plot-year. Average yield of paddy per hectare reached4.9 tons per hectare in 2006-7–higher than Asia’saverage yield of 4.2 tons per hectare accordingto the FAO. Third, there was also the acceleratingconversion of agricultural land into higher-valuenonagricultural land, especially at the urbanfringe. During 1993–2008 almost half a millionhectares of agricultural land was converted intourban, industrial, or commercial land.

Equitable access to land and secured land tenurehave been vital factors behind Vietnam’s rapidand sustained economic growth and povertyreduction in the last two decades. Access to landis obtained through land allocation by the state,family heritage or grant, land markettransactions, and land reclamation. The formermeans the assignment by an authority of theland usage(s) of specific land plot(s) to particularland user(s), often through an administration act.

Land allocation played the primary role inproviding farmers’ access to agricultural land inNorth and Central Vietnam, where collectivizedagricultural land was redistributed to farmerhouseholds in the late 1980s–early 1990s at thebeginning of the on-going economic reformprocess.40 State land allocation is still one of themost critical steps for firms and otherorganizations to get access to land.41

According to the General Statistics Office, 72percent of the total land area had been allocatedto land users by 2009. However, the progress wasuneven among land categories. Almost allagricultural and residential lands but only 78percent of forestland and 45 percent ofnonagricultural lands had been allocated orrented. The distinctive feature is that, comparedwith many other developing and transitioncountries, in Vietnam cropland has beenallocated quite equitably among farmerhouseholds.42

However, the state’s formal recognition of theland user’s rights through the issuance of LandUse Right Certificates (LURCs), which areabsolutely necessary for secured tenure andformal land transactions, including legalprotection of land use rights and access to formalcredits, is much slower. (See Figure 2.2.) By 2010,almost 31.3 million LURCs had been issued,

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Figure 2.1. Vietnam: Land use, 1993 and 2008

Source of data: GSO 1994 and 2009.

covering only half of the total land area (and thetotal number of land parcels), with the categoriesof nonagricultural land other than residentialland and forestland lagging behind. The issuanceof LURCs with both spouses’ names—animportant initiative to promote gender equity—also lags behind the government’s schedule.Hence, at this point only about 30 percent of theLURCs granted are with names of both spouses.Still, this marks significant progress.43

Policy and InstitutionSettingsLand PolicyThere has been a significant evolution in the landpolicy framework in Vietnam over the past 50years. (See Table 2.1.) A comprehensive policyframework for land management in a transitioneconomy was established in the last twodecades. Land Laws 1987 and 1993 paved theway for reallocating cooperative land to farmerhouseholds for their long-term use andrecognized a range of their land use rights. TheLand Law of 2003 supports the country’s

industrialization and the economictransformation into a market-oriented economy,covering comprehensively all the legal, land useplanning, land finance, and land administrationsystems. Decree 84 in 2007 helps address issuesassociated with the implementation of Land Law2003. The current land policy framework placesan emphasis on the role of state and pays lessattention to the promotion of the participationof other stakeholders in land management or toeffective and sustainable use of land.

Institutional SettingThe institutional arrangements for landmanagement are characterized by multipleinstitutional actors with segmented mandates.Land Law 2003 does separate the statemanagement and public service provision andestablish a unified and decentralized system ofstate land administration and management at alllevels, from central to commune. However, thesystem continues to evolve.

Concerning the state land management, the landpolicy formulation and implementation

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Figure 2.2. Progress of land allocation and issuance of LURCs in totaland by category, December 2009

Source of data: GSO 2009 and MoNRE report 2009.

supervision are concentrated at the central level.But this role is distributed among a large numberof central agencies (such as the administration ofnatural resources, justice, construction,agriculture, finance, and planning andinvestment) according to their general mandates.Among them, the Ministry of Natural Resourcesand Environment (MoNRE), established in 2002,represents the government’s designated focal

point for the administration of land resources, aswell as water and mineral resources. MoNRE’sGeneral Department of Land Administration,which was reestablished in 2009, is responsiblefor daily land resources management. The landpolicy implementation responsibilities have beengreatly delegated to provincial, district, andcommune people’s committees supported bytheir provincial/district departments for natural


Table 2.1. Vietnam’s land policy evolution, 1945–2007

Year of introduction and geography Main policy changes introduced

1952–58 in North and 1956–74 in South Redistribution of land from landlords to the poor and landless famers and reduction of land taxes

1958–1975 in North Collectivization and nationalization of land

1975–80 Gradual collectivization and nationalization in the South

1981–92 Establishing the whole nation’s ownership over land resources and reallocating cooperative land to farmer households for their long-term uses under contract arrangements

1993–98 Formalizing the longer-term land use rights (sale, transfer, lease, inheritance, and mortgage) and the right to receive compensation in the case of state land reacquisition; granting of LURCs

1999–2002 Extending land use rights to include renting and broadening rights for project investors

2003 Recognizing spouses’ equal land use rights; promoting development of property markets in urban areas; setting up unified and decentralized land management system, and establishing the principle of land compensation on the basis of “market-based price of land”

2007 Recognizing the land use rights of the users who do not have legal documents, promoting FDI in property development, setting up transparent procedures for compulsory land conversion and compensation, and settlement of land-related complaints and disputes

resources and environment and their communecadastral officers, respectively.

Land-related public services are provided byLand Registration Offices (LROs). By the end of2009, provincial LROs had been established in allprovinces, while district LROs had been set up inone-third of the districts. But there are nouniform organizational, staffing, and servicestandards set up for LROs. It has been also widelyrecognized that the land managementinstitutions lack the capacities to meet increasingdemands from land users and to govern thesector effectively. This leads to considerable gapsbetween land policy and its practicalimplementation.

IssuesThere are three strategic medium- to long-termdevelopment challenges facing landmanagement.

First, the rapid growth experienced in the pastwas based on an extensive use of naturalresources, including land. There is now little“unused” land. To support future growth, landmust be used more efficiently, and toaccommodate the pressures of urbanization andthe dynamics of the rural sector, efficient landmarkets will be essential.

Second, there is a need to put in place a moresustainable land management system,particularly for the most fragile ecosystems suchas sloping land in the Northern Mountains andmangrove forests. There is emerging evidence ofland degradation due to unsuitable agriculturaland land management practices. For example,water logging and nutrient imbalances arepreventing further land productivity gains inintensive irrigated rice plantation in the lowlandsof Vietnam. Forest clearing and arrested cropsuccession, particularly when it is associated withthe shift toward drier regeneration, lead to lossesof biodiversity in favor of Imperata grasslandsand to soil erosion in the Northern Mountains.

These tend to make any livelihood benefits thatfarmers gained short-lived unless they can switchto more suitable options.44 The environmentalchallenge is exacerbated by climate change. (SeeBox 2.1.) While we give some attention to this inthe current chapter, a more holistic perspectiveis provided in chapter 1.

Third, to maintain and enhance principles ofequity in land use, it is vital that the public hasfull access to relevant information and thatacquisition and compensation policies are fairand transparent.

There are also more specific, short-term issues tobe addressed urgently in three subsectors:

Agricultural LandThe agricultural land use rights are stilllimited due to the rigid land usedesignation predetermined by the state,relatively short tenure period (20 years),and land use ceilings (2-3 ha/household),inducing suboptimal use of agriculturalland.

Underdeveloped rural land markets poseobstacles for further agriculturalproductivity gains and inhibit labormobility toward the higher wage non-farmsector.

Increasing concerns among policy makersand a part of the public that land marketliberalization in rural areas leads toincreasing landlessness, negativelyaffecting the poor.

Forest Upland There are competing demands foragricultural and forest uses from existingusers (including ethnic minorities, localfarmers and dwellers, recent migrants, andState Forest Enterprises) and conservationneeds. Processes to resolve thesecompeting demands in economically,socially, and environmentally sound waysare underdeveloped. There are problems

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with interfaces between formal andcustomary land management. The existingpolicy framework constrains the allocationof land to communal groups such as ethnicminorities who have long histories ofcommunity occupation of certain areas.Illegal or quasi-legal occupation,displacement of long-term occupiers, andthe effect of new claimants in areastraditionally occupied by communities(often ethnic groups) are leading to anincrease in land disputes.

The centralized approach to land useplanning and land allocation/landclassification and fragmentation amongagencies in charge of various related issueslead to difficulties in the application ofefficient and equitable arrangements at thelocal level.

Urban LandVietnam faces the challenge of how tointegrate the widespread informal propertymarket in a formal framework withoutlosing the beneficial characteristics thathave made informality the preferredchannel. The informal sector plays thepredominant role in urban land andhousing provision. The widespreadinformal property market operatesrelatively well to allocate urban living spacebut fails to provide affordable housing forlow-income groups, upgrading of servicesand long-term urban expansion, andaddress of environment issues.

Increasing demand on urban and peri-urban land has created a speculative landprice boom in major cities that has notbeen met with sufficient development ofnew peri-urban areas or densification of

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Assessments of climate change impacts can be done using a set of models for changes in temperature,rainfall, river basin flows, and crops simulation, to estimate the impacts on crop yield. The mainconclusions were that:

Climate change impacts are region-specific and depend on which scenarios are chosen. Thescenario chosen by MoNRE implies little damage or even improvements in crop production.

Temperature increase is the main negative factor impacting crop yield.

Country-wide rice yield decreases are estimated to 10–20 percent without carbon dioxide (CO2)fertilization, but less than 10 percent accounting for this factor. The MoNRE scenario, however,results in rice yield increases when CO2 fertilization is considered.

Sea level rise and salinity intrusion could seriously affect about 500,000 hectares of ricecultivation area by 2050, affecting some 7 percent of the national production.

These results should be interpreted along with other factors influencing rice production (as discussedmore in Chapter 1). This study does not predict the impact for a specific year of extreme weather eventsand inundation. However, the study uses a baseline period of 1978–2007, so the impacts of historicalevents are implicit in the baseline. The policy conclusion is that Vietnam needs to prepare for a varietyof outcomes from climate change by planning for greater resilience in land management. This includesland use planning for sea level rise and saltwater intrusion; development of drought-, heat- and pest-resistant crop varieties; salt- and immersion-tolerant paddy varieties; improved conservation of water;irrigation; and better cyclone and flood forecasting.

Source: Adapted from Zhu 2010.

Box 2.1. Climate change and agriculture

existing areas. This is inhibiting provision ofaffordable housing and upgrading ofservices.

Poorly managed urban growth erodes thetax base and creates environmentalhazards. Stringent planning and buildingrequirements have encounteredwidespread evasion of the standards.

Ultimately these strategic challenges and short-term issues are interlinked in terms of causes,consequences, and/or potential actions. Anexhaustive treatment of them all is not possiblehere. To address the most immediately urgentissues and those that have a good prospect ofseeing successful solutions, a limited group ofissues has been chosen.

Efficiency ReformsGreater efficiency in land uses and land marketscan be supported by enhancing land use rights,allowing market forces to play a greater role inland resources allocation, improving landadministration, and enhancing land taxation.

Enhancing Land Use RightsSecuring complete and enforced land users’rights is critical for increasing economicefficiency of the land resources utilization andmanagement. Land law reforms havesignificantly broadened and strengthened the“bundle of rights” associated with land holdings,which, to extent, makes legal land users de factoowners, despite the formal land ownershipremaining in the state’s hands. But the rights arestill incomplete and not always enforceable. Thus,there is an important policy agenda on clarifyingand enhancing the rights, and simplifying howthey can be used and asserted.

First, raising the general public’s limitedawareness about land policies, completing thefirst land registration, and developing thecapacity of the legal support systems to addressland disputes all are vital for putting land use

rights in place and protecting private land rights.

Second, it is necessary to address significantlimitations in the current land use rights,including restrictions on land use purpose andduration, agricultural land use ceilings, right tocompensation, and the government’s recoverypowers. Although the current tenure period ofagricultural land is expected to finish in a coupleof years, unclear criteria and procedures forextending the duration of land use rightscontribute to a perception of insecurity. On theother hand, a simple mechanical extension of theexisting land tenure would not reflectconsiderable changes in the farmer households’characteristics (such as size and labor force andoccupation) which were the criteria for ensuringthe equitable outcome of the land reallocationprocess two decades ago.

The restrictions on land use by the government’spre-determined land use purpose (especially onriceland) and the maximum areas of agriculturalland that households can hold prevent themfrom responding effectively to market signals(such as switching from rice to higher-value cropsor productions such as aquaculture).46 Theexisting tenure types do not cater for the multi-purposes and functions of land resources as wellas complexities of a modern land market. Theseparation of land and property rights, governedby separate legislative regimes and institutionalsettings, is affecting the security and certainty of“rights” in the practice. Decision 88/2009/TTg onthe issuance of joint certifications of land userights and ownership of properties attached tothe land and the following implementationcirculars are a step in the right direction toaddress the latter issues.

The government is preparing a new Land Law fora more mature market economy to beconsidered in 2011–12. The opportunity toremove various restrictions that affect tenuresecurity should be pursued. This is related to thetype of user, type of use, duration of use,payment of fees, amount of land in possession,


year assigned, and so on. Agricultural land shouldbe converted to longer and more secure tenureto provide greater security and to encouragecapital investment, including investment inimproving land fertility. This concerns agriculturalproduction land, forestry production land,aquaculture land, and salt production land.Government should also consider removing thelimit in the size allowed per household. A validconcern here is that the labor market needs to beable to absorb the increasing number of landlesspeople. Hence, transformation needs to begradual. In urban land, it is essential to introducemore-appropriate condominium tenures, andtheir management regimes are required toprevent future disputes. Clarification andrefinement of the state’s recovery powers foreconomic development purposes will providegreater tenure security. To ensure the full securityof land tenure, it is recommended to eliminatethe provision in the Land Law 2003 that “thePeople’s Committees which have authorizationto issue LURCs also have right to revoke issuedLURCs.” The right to revoke LURCs could be putunder the authority of the court only.Furthermore, new tenure types, such as marineand infrastructure tenures, should be alsoconsidered as part of the development of thenew Land Law.

Developing Land MarketsThere is a notable evolution of the formalmechanisms providing access to land throughmarket transactions. Firms felt the risk of losingland to expropriation was considerably reducedin 2008 compared with 2006. However, surveysof firms continue to show that businesses facesignificant constraints in acquiring land assets.47

The lack of transparency represents the mainconstraint to the market efficient function as itimposes unnecessary risks and costs whilepreventing fair competition among actors.Although the country’s real estate transparencyindex shows gradual improvements, Vietnam hasremained one of the least transparent markets

over the world since 2006.48 The main reason isthat the urban land market is rapidly expandingbut slowly maturing. Efforts to extend the formalmarket for land have met with limited success,and the absolute majority of land transactionsremain outside the formal sector. The urban landmarket is more focused on investment in landand property for commercial purposes beingsupported by evolving government policy andlegislation. But until recently there has beenlimited public or private sector investmentoccurring in the construction of affordablehousing for the majority of people.

In contrast, the development of land markets inrural areas remains less intervened upon by thegovernment and fairly stable. Moreover, as ithelps address some inefficiencies created duringthe equitable cooperative land redistribution, therural land markets produce positive impacts interms of both efficiency and equity. This isdespite raising landlessness among the ruralpoor.49 Furthermore, poverty has been fallingamong the landless, and this is more profoundwhere there are higher returns to schooling,greater equality in land and non-land inputs, andmore opportunities for farm household to takeup new opportunities in the labor market. Ingeneral, the emerging land market appears to bea positive factor in rural poverty reduction, andthere is no proof that the rising rural landlessnesshas put a brake on overall poverty reduction. Infact, it is estimated that land market transactionsaccount for one-fifth of the rural povertyreduction in 1993–2004.50

The existing level of government control over theland and real estate markets is constraining theirmore-efficient operation. In particular,interventions in urban markets not only affectthe market transparency, they also limit theavailability and affordability of land forbusinesses and households. Tools to estimatefuture demand for land and housing are required,and the state would benefit from exploring howit can facilitate more-optimal use of land andhow to influence the current high price for real


estate. The criteria and method to help localauthorities and businesses identify locations ofpotential investment projects are still not clear,while procedures and conditions for landallocation and land rental by the state are verycomplex. In this respect, compulsory auction ofland resources, especially public land, has beenproved as an effective tool for more transparentallocation of land. (See Box 2.2.)

An appropriate road map to guide the

development of the real estate market and tomore clearly define the role of government andother stakeholders is a priority in this area. Inparallel, a unified Real Property RegistrationSystem capable of supporting secondarymarkets and new forms of tenure should bedeveloped with close links to the LandRegistration System under development. To treatland and property (including buildings) as oneentity, regulations to ensure the interoperabilityand data synchronization are critical. Next, the

Peru uses public auctions to sell public land with great success. The terms of the bidding are madepublic for at least 90 days. Bidders must prequalify, pay a deposit, and present a business plan for theuse of the property. These plans are also made public. Auctions of more than 200,000 hectares of publicland have brought in more than $50 million in investment. This has created a large number of jobs andcontributed to the Peru’s emergence as a major high-value agro-industry exporter in the last 15 years.

Source: World Bank 2010d.


Box 2.2. Using auctions to sell public land

government should consider the consolidationof all its land- and property-market-relatedpolicy, legislation, and institutional arrangementsinto one substantive area of responsibility ofeither an existing institution or a new one.

Modernizing LandAdministration Although remarkable improvements to the rulesand regulations governing land tenure havebeen achieved, large investments in landadministration are still needed urgently tocomplete the issuance and reissuance of LURCsor joint Property Ownership and Land Use RightCertificates and to update and digitize landprofiles to lay down the foundation for the policyimplementation. This requires allowing landusers to exercise their rights morecomprehensively but also improving theprovision of land administration services andstate management of land resources. It will alsoreduce land transaction costs, as many LURCswere issued without proper cadastral surveys

and subsequent updating changes. To helpexpedite the work and keep costs at a reasonablelevel, the government should consideralternative approaches and methods of cadastralsurvey and mapping, the most costly part of thework, in line with the actual need for cadastraldata accuracy. For example, the data accuracyapplied to agricultural land in vibrant peri-urbanareas is unlikely needed for agricultural land inremote areas where land market transactions aremuch less likely (see Box 2.3).51

In the long term, improvement of governanceand service delivery capacity of the landadministration is vital for its sustainability, as theacceptance of its clients remains low. Theincidence of registered transactions is estimatedat one-fourth of the total number of landtransactions at most. Concerning the issuance ofLURCs, the survey under the governance moduleof the Vietnam Household Living StandardsSurvey (VHLSS) 2008 found significant room forimprovement. (See Figure 2.3.)


Recent years have witnessed the emergence of low-cost and participatory tools, for exampleMozambique’s 1995 Land Policy, followed by the 1997 Land Law and 1998 Regulation and TechnicalAnnex on voluntary registration; and Tanzania’s 1999 Village Land Act,. These tools allow the landregistration to respond more effectively to local peoples’ perceptions of existing rights and needs. Inthis approach, land registration documents and secures existing rights by defining boundaries of areasof land belonging to a household or community and establishing an accountable and representativestructure for local administration. To take full benefit of this approach, the community should be ableto manage basic land administration processes; the boundaries should be recorded and the records beintegrated with the regular land administration system. A clear governance structure is required forinternal land management and interactions with outsiders, and relevant secondary rights (seasonalgrazing areas and watering sources) should be recorded and protected.

An advantage of this approach is that it can quickly cover large areas, be tailored with flexibility to localneeds and linked to local land use plans to provide documentary evidence on secondary rights. InMexico, more than 100 million ha of rural land (two thirds managed by communities and one third byindividuals) were titled in slightly more than a decade. Each household received a certificate to threetypes of land: the house plot, one or more parcels of individually cultivated land, and a proportionalshare of community land. This process also established an open and accountable internal villagestructure that entails a clear separation of powers, supervised by a specially formed office of theagrarian ombudsman.


Box 2.3. Low-cost and participatory approach in landadministration

Figure 2.3. Difficulties when applying for land use rights certificates

Source: Analysis of the Governance Module, VHLSS 2008, September 2009.

Further, despite some recognized improvementssince 2006, LURC issuance is still ranked amongthe top three public services with serious andvery serious corruption. The 2008 VHLSSindicated that 86 percent of households thinkthere is corruption in the issuance of LURCs.Companies seem to be experiencing lesscorruption with LURCs: 37 percent of enterprisesinterviewed under the 2009 World BankEnterprise Survey answered that informalpayments or gifts are expected or requestedwhen they apply for LURC.

While the severity of corruption remainsmoderate, several provinces are seemingly fallinginto a “corruption vicious circle” when the highestlevel of corruption is associated with the lowestpercentage of households believing thatcorruption has improved. As mentioned in the2010 Vietnam Development Report (VDR) onmodern institutions, this is linked to devolutionwithin the land administration, which has led tosignificant gaps between policy and localimplementation actions to be addressed. Thedecentralization provides local authorities,particularly Provincial People’s Committees, withgreater autonomy in land management withoutclear accountability. On the other hand,increasing land conversion, cumbersomemultistep land allocation and registrationprocedures, and double land pricing systemsapplied before and after land conversion createrent-seeking opportunities for some governmentofficials and land developers at the expense ofgenuine land users and the government.52

(See Box 2.4.)

MoNRE should address these issues in acomprehensive and systematic manner. Theministry may update the long-term Program forDevelopment and Modernization of LandAdministration and Management (2006–20) thatit developed in 2008 to provide insight into thegovernment’s views on the future of landadministration, as recommended in 2010 VDR. Interms of the sector’s governance, theaccountability of the land administration upward

to their supervising agencies and downward tothe people they serve should be strengthened.For the former, streamlining and optimizing landadministration processes and increasing theuniformity in working procedures and standardsacross vertical levels are both critical. For thelatter, it is essential to develop an effectivecapacity development program focusing onpromoting greater transparency through unifiedorganization, streamlining working procedures,carrying out staff training, and modernizingworking facilities, especially the landadministration information system, particularlyat district land registration offices. It is alsoimportant to outline creative communicationand awareness raising programs along withproactive community participation accompaniedby strengthened monitoring and evaluation andby complaint and dispute resolution. In thisrespect, special attention should be given todisadvantaged groups, particularly ethnicminorities, the poor, and women, to ensure thattheir concerns are heard and duly addressed andthat equitable access to land administrationinformation and services are provided.

Strengthening Land andProperty TaxationIn Vietnam, land and property taxes are still to bedeveloped. Recently the Law on Non-agriculturalLand Taxation was enacted by the NationalAssembly, but it will not be effective until 2012,and the preparation of its implementationguidelines is ongoing.

A significant tax base exists in the urban propertymarket, but effective tax rates and revenuecollection are low, as only a small proportion ofland transactions are being registered andtaxation is not applied to improvements, such asbuildings. There is no value-based propertytaxation system in place. Valuation is significantlyaffected by the lack of sales evidence, and thereis an emphasis on using land taxes as a bluntpolicy instrument to control speculation and theland market without fully considering the


implications on the overall land market or statefinances. The use of the state pricing frameworkfor taxation, land allocation, and compensationfor land recovery results in a high number ofdisputes. There is no tax payable on land used forinfrastructure, and the land rental price by thestate differs from the market rental price. Hence,a considerable share of local budget has to relyon land sales and rent instead of land and

property tax collection. Vietnam’s Non-agricultural Land Taxation Law ascurrently approved seems to reach its objectiveto enhance state management of land andhouses and to promote more-effective use ofland. In particular, it ensures that the state hasupdated and accurate recording and tax data,including land quotas on all housing units,residential land, nonresidential land, and exempt


Two forthcoming studies show how the procedures for granting LURCs and features of the systemof land allocation and land acquisition create conditions favorable to corruption. The first studyexamines the two sets of processes in a systematic way, following the “process flow” from thefirst availability of information through the various document filings and official decisions. Ateach stage it examines two sets of questions: Does the institutional setup create large economic“rents” or profit opportunities that would be available only to those with privileged access orinformation? And are the institutional arrangements in place to prevent or deter corruption? Thestudy argues that some rents are generated at several stages of the “process flow,” notably in thedifferences between prices paid by investors, official prices used for compensation, and the truemarket prices. In addition, in many stages of the “process flow” officials are permitted to makedecisions in ways that provide little recourse for those affected by the decisions. Whentransparency is in short supply, such a system opens the door wide for corrupt practices toflourish.

The second study focuses specifically on transparency and examines the degree to whichtransparency provisions already in Vietnamese law are being implemented in practice. Manyland-related documents are required to be public information, either on Web sites or in someother unspecified format. By visiting the Web sites of all provinces and key ministries, the studywas able to ascertain how the Web-based transparency provisions are implemented in practice.To understand the degree to which other information is made public, the research team visited12 provinces, 24 districts, and 117 communes and requested to see the information that isrequired to be public. The team also asked for information that, although considered importantfor transparent land management, is not currently required to be public information. Thesechecks were not intended to examine compliance with the law but rather to seek out proactiveoffices that seem to place a premium on transparency.

The results were very uneven. Although nearly 90 percent of the visited Web sites containinformation regarding “List of procedures and forms related to Certificates for Land Use Rights,”only about one in three had the required information a citizen would need to file a complaint. Theresults of the spot checks were still more uneven. At the province level, some mandatoryinformation such as detailed land use plans were only available at half of the provinces, andinformation was generally even harder to find at the commune level. On the positive side, thestudy found that some nonmandatory information such as criteria for land allocation or landallocation decisions was made available at some offices at all three levels of government.

Source: Embassy of Denmark, World Bank, and Embassy of Sweden 2010; Nguyen Ngoc Anh et al. 2010.

Box 2.4. Transparency and corruption in land management

categories. It gives government at each level theincentive to ensure this information is accurateand well maintained, although incomeredistribution appears not to be the mainobjective. The law’s approach is very simple toadminister and simple to explain, focusing onmaking a formula for the tax base as well asvaluation procedures that will be easy toadminister in a blanket fashion and that will havewidespread popular acceptance.

There may, however, be some potential foreconomic distortions due to the desire forsimplicity, particularly in the use of thegovernment-determined land prices as thevaluation metric for the tax. International practicewould suggest moving toward a system in whichvaluations are based on the market-based valuesof similar land parcels in similar locations on anannual basis instead of a five-year basis. Landmarkets and market values can shift significantlyin one year. It is also important to ensure that theuse of the tax revenues will be mostly localizedand visible in terms of local infrastructure andservices to improve the taxpayers’ incentives andpeoples’ political support of the tax policy.

In particular, to ensure effective implementationof the law, the relationship between land taxesand government finance at all levels and theongoing effectiveness and sustainability of theformal land market should be clarified andstrengthened. In the medium term, it is necessaryto explore the role of land taxation as a sustainable

foundation for financing local government andinfrastructure development, placing moreattention to the redistribution function of the tax.Viable options to rapidly establish land valuationservices throughout the country are needed. Inthe longer term, the possibility of removing allland and property transfer taxes and introducingannual land taxes should be considered, takinginto account its likely impacts on the formal landmarket and the benefits and costs.

EnvironmentalSustainability ReformsEven efficient land markets will requireregulation to safeguard environmentalsustainability concerns. A primary instrument inthis regards is land use planning. The long-termconsiderations of climate change are alsopertinent here.

Advancing Land Use PlanningCompared with other aspects of landmanagement, relatively few substantive changeshave been introduced in land use planning sincethe start of doi moi. Land use planning hasremained largely an internal governmentexercise, characterized by unclear relationships,hierarchy, timing, and linkages between differenttypes of plans such as the Socio-economicDevelopment Plan, Land Use Plans, UrbanDevelopment Masterplans, and various sectoralplans, especially at the provincial and district


1. Respecting existing land and resource rights2. Ensuring food security3. Ensuring transparency, good governance and proper enabling environment4. Consultation and participation5. Responsible agro-business investment6. Social sustainability7. Environmental sustainability


Box 2.5. Seven principles for efficient, equitable, andenvironmentally sustainable land management

level. First, to reach its ultimate objective, landuse planning and land management in generalshould follow the seven princes formulated byFAO, IFAD, UNCTAD and other developmentpartners (see Box 2.5).

Second, the current land use planningmethodology should be renovated to ensure due

attention is paid to economic, social, andenvironmental dimensions (see Box 2.6), withnecessary differentiations in terms of contentand purpose between the provincial, district, andcommune plans. To effectively reflect andrespond to conflicting demands for scarce landresources, public consultation during theplanning process is critical to ensure any decision


Buon Triet reservoir was built in Lak District, Dak Lak Province, in the late 1970s. It covers 125 hectares,holds around 19 million cubic meters of water, and 95 percent of its littoral area is covered by naturalforest in the Nam Ka “protected” forest reserve. The area’s land use plan has multiple purposes: forestconservation combined with irrigated rice farming, aquaculture, potable water supply, fishery, eco-tourism, and transport by boat.

But competing demands for agricultural and forest uses from existing users (including ethnic minorities,local farmers and dwellers, and recent migrants) and the management have resulted in illegal changesin the intended land uses. This led to extensive deforestation. Parts of the Nam Ka forest reserve alongthe reservoir shoreline are being burned to make way for coffee and maize production. The resultingland degradation was accompanied by the deterioration of water quality. In addition to food safetyissues, the forest destruction has driven away wildlife and potential eco-tourists.

Current efforts to resolve these competing demands focus on developing locally adapted solutionsand processes for a holistic management of the natural resources. This includes the establishment ofa fishers association to work closely with irrigation, fisheries, and forest sub-departments in theDepartment of Agricultural and Rural Development and a fisheries co-management group consistingof the Irrigation Department, the Commune People’s Committee, fishers, intermediaries, and localpolice, taking into account the ecological baseline survey in 2009 and 2010. However, it has also beenrecognized that poor households will continue to break the law as long as viable income generatingalternatives are not provided for them. Addressing this requires not only changes in the current landmanagement practice but also an in-depth revisit of the area’s existing socio-economic developmentstrategy and associated land use plan.

Source: Adapted from a contribution by Michael J. Akester.

Box 2.6. Case study: Competing land uses, impacts, andrepercussions for more-integrated natural resource managementin Dak Lak Province

is made when most people and stakeholders areaware of the changes being considered. This willalso help limit the situation when the “people inthe know” have more access to the land thanother people and can acquire the most valuableland. As unveiled through the survey under thegovernance module of VHLSS 2008, some 60percent of interviewees stated that they were notconsulted about their commune land use plans,while 77 percent said they had very little or noinformation about the plan.

In pursuit of national food security objectives, thegovernment has set a target of keeping 3.6-4.0million hectares under rice plantation until 2020.This target seems not to have been based onconsiderations of future (domestic andinternational) market demands and the possiblenegative impact of land use controls on farmers’welfare due to potential overproduction. In thisrespect, it is a critical to conduct an analysis offood security scenarios. The scenarios shouldtake into consideration the expected impacts ofclimate changes on land resources available forfood production, changing yields and risks, andthe costs and benefits of agricultural climaticchanges adaptations. Donors and thegovernment are collaborating in this respect withan analytical report to be delivered in the early2011 in support of the government’s preparationand finalization of its food security program andland use plan for 2011–15 and toward 2020. Amore flexible land use management regimeallowing farmers to convert their land from riceto other crops and vice versa—based on marketdemands and considerations of profitability,comparative advantage, and risk management—would also achieve national food securityobjectives with lower financial, economic, social,and environment costs.

Third, the basic principles of environment impactassessment should be applied to all planningdevelopment proposals, as an integral part of thebasis for approval at higher levels. In particular,the strategic environmental assessment shouldbe done for the national and sectoral land use

plans for 2011–15 and toward 2020, at least atthe “inter-provincial and inter-regional levels” asrequested by the Law for Environment Protection2005.53 Again, these plans and assessmentsshould take into account the expected impactsof climate changes on land resources.54

Finally, an effort should also be made to adopt anintegrated spatial planning approach thatprovides a more sustainable use of land andother resources linked to land. The frameworkshould incorporate broad zoning at theprovincial level, supported by a detailed land useplan at the district level and a hierarchical-basedland classification system. Such a planning toolwould include multi-stakeholder consultations,cross-sectoral economic, social, and environmentanalyses, and joint problem identification andsolving. Work is needed to provide a road mapthat identifies how to rationalize and align theexisting legislative, policy, and institutionalframeworks to support this new land useplanning approach. Further, integrated spatialplanning is impossible without making availabledata and maps derived from land administration,environmental management, urbandevelopment, agricultural and forestry practices,infrastructure and other services. In addition toMoNRE’s implementation of the Environmentand Land Information System, investing in abroader National Spatial Data Infrastructure(NSDI) will also help reduce duplication in datacollection and maintenance and improve dataconsistence and reliability across the sectors asshown in many countries. Under the NSDI,designated data custodians (for example MoNRE)produce and maintain key datasets such as thegeodetic/geospatial framework and the cadastralbase, and other agencies can access these coredatasets and utilize them to underpin their sectorapplications through assigned and acceptedprotocols.

Equity ReformsMore attention should also be given to equityconcerns. Concerning this as well asenvironmental sustainability, it is essential that the


new Land Law also recognize “community” as aneligible forestland user and thus bridge the gapbetween the current Land Law and the ForestProtection and Development Law.55 The longtradition of Vietnamese communities, particularlyethnic minorities, to manage their land—especially communal forestland and unusedland—has been confirmed by several pilots andgradually acknowledged in various legaldocuments (also discussed in the forest chapter ofthis report).56 Results so far indicate thatcommunities welcome the allocation of the landand forest resources to them and can managetheir forestland and forests well after theallocation. Facilitating titles to communities forland and forest utilization would help confirmtheir existing rights and alienate potential illegalor quasi-legal occupation or claimants. Allocationto communities is often socially more acceptableand economically more viable than allocation toindividuals. Clear allocation to communities andtheir management responsibilities lead to moreresponsible use of the economic andenvironmental potential of the forest areas by thecommunities and other stakeholders concerned,increases in investment, and thus greatereconomic benefits. For the state, theenvironmental functions of the land and forest aresecured with lower allocation costs than theallocation to individuals.

However, there are also risks associated withimproper community land titling, such ascontinuing and new conflicts, reduction in forestareas after the land allocation, and greater follow-up costs. There may be a number of policyoptions, depending on the extent the customarylaw is taken into account. Legalizing customaryclaims in full accordance with customary law islikely to ensure higher acceptance by customarygroups but might conflict with the state’sobjectives of land allocation (land mobilization,for example, or forest and biodiversityconservation). Other options follow customarypractices to a lesser extent and may result inlower acceptance but give the state a greaterchance to achieve its land allocation objectives

through direct interventions. Thus, the gapsbetween customary and statutory rights can benarrowed but always remain, as the rights arebased on different justifications.

In this respect, customary titling should becarried out with necessary precaution. Inparticular, it is proposed that customary titling isconducted for the communities alreadymanaging forest or “unused” land de facto firstbefore a wider implementation in new areas. Acareful policy design is also required. First, thelegal framework should be revised. Second,institutional setting, guidelines, and funding insupport of the community managementcapacity development are to be set up. Finally,lessons from existing pilots are to be distilledthrough impact assessment and disseminated tostakeholders.57

In addition, government needs to developmechanisms capable of providing greater accessto land for small and medium-size enterprisesand the poor and vulnerable. In the short term,priority can be given to the reallocation ofunderused land holdings by the state-ownedenterprises which control more than 4 million haof forest land. Their existing preferential access toland and continuing large-scale holdings limitthe availability of land while their leasing toprivate firms contributes to the amount of landheld under informal tenure. Unlocking theseimportant land resources is an effective way tomake their usage more efficient and equitable.58

In the longer term, equitable outcomes ofgovernment land allocation and land markets areimpossible without more proactive participationby all stakeholders involved. Stakeholderconsultations and research should beundertaken to assess what additional policymeasures, legislation, or operational changes arerequired to support the maturing market andencourage greater participation in the formalmarket. This work should focus on assisting thestate to achieve an appropriate balance betweenmanaging the land resource in support of the


whole society, and particular attention to thepoor and vulnerable.

Improving Land Acquisition andCompensationLand acquisition and compensation areimportant for equity. Administrative complaintsregarding land account for 70 percent of thedisputes, complaints, and denunciations thegovernment receives every year. The directreasons are related to the government’scompensation and resettlement (70 percent),violations of land legislation by government staffand organizations (10 percent), andadministrative decisions on land disputesettlement (9 percent). Overall, about half of thecomplaints or denunciations expresseddissatisfaction with the implementation of theland compensation policy and procedures.59

The current approaches to recovery andreallocation are slow, not transparent, andunpredictable, with rent-taking behaviorcommon, skewing the availability of urban landand frustrating investors. At the same time,existing constraints on the urban land market,along with the budgetary imperatives of localgovernments, stimulate excessive reliance onconversion as a way to open up new land,leading to inefficient forms of urban growth.Conversion relies heavily on smallholders orresidential households.

Decrees 84 in 2007 and 69 in 2009 set up quitetransparent procedures for compulsory landconversion and compensation. They provideguidance for compensation at market prices andcoverage of income recovery costs. MoNRE isworking with the donor community to considerseveral options and develop guidelines toimprove the Decree implementation.Furthermore, the development of a NationalPolicy on Compensation, Assistance, andResettlement is recommended and should bebased upon a more equitable distribution ofbenefits between current land users, the state,

and the investor, along with preparation of acompensation and resettlement plan andconsultation with affected land users before therecovery decision is made. The policy shouldaddress the case of compulsory acquisition beingdenied for investment projects that arenoncompliant with approved land use andidentify clearly in what cases the state can use itspower to acquire the land. Further, to put intoplace the principle of land compensation on thebasis of market prices, it is necessary to developlegal and institutional frameworks for theprovision of land valuation services throughindependent valuation services. The experiencegained in Ho Chi Minh City could be very relevantin this respect. The policy should also make therecovery process and dealings with public landsmore transparent and should work to identifytaxation and financial mechanisms to reduce thebudgetary reliance of local governments on landconversions and the sale of land.60

Further, there is a need to improve the currentland-compensation-related grievance redressmechanism. The ongoing efforts toward thepromulgation of the new Land Law and the Lawon Complaints and the Law on Denunciationsprovide an opportunity. Efforts in this directionshould focus on promoting people’s right toexpress their grievance, raising public awarenessabout the right, channels for grievance filing,redressing, review, investigation and resolution,and an effective grievance monitoring system . Itis also recommended to strengthen thenecessary implementation capacities of ProjectManagement Units of public investment projectswith large land acquisition and compensationworks through establishing their specializedGrievance Redress Unit and projectcomplementary grievance channels andmonitoring system and through allocatingsufficient funds to meet requirement of thegrievance redress process. In a broader context,setting up arbitration councils at district,province, and central levels with the participationof representatives from government authorities,professional agencies, and mass organizations


would provide potential parties with anopportunity to resolve complex administrativecomplaints in an independent manner. In thelong term, these can be replaced withadministrative tribunals, as done in many othercountries.61

EFERENCES Davidsen, Soren. 2010. Integrity in Land Management inVietnam: Report on a Joint Danida-WB-SIDA Study. (Tobe published.)

Embassy of Denmark, World Bank, and Embassy ofSweden. 2010. Assessing Risk Factors for Corruption inLand Management—A Process Flow Approach. Draft.Hanoi.

Foerster, E., and U. Apel. 2004. Customary Land Use inViet Nam. Report of a World Bank-commissioned study.World Bank in Vietnam.

General Statistics Office. 1994 and 2009. StatisticalYearbooks of Vietnam 1994 and 2008. Hanoi: StatisticalPublishing House.

General Statistics Office. 2010. Vietnam HouseholdLiving Standard Survey. Hanoi: Statistical PublishingHouse.

Government of Vietnam. 2004. Vietnam HouseholdLiving Standards Survey. Hanoi.

Jones Lang LaSalle. 2006 and 2010. Global Real EstateTransparency Index. Online Bi-annual Reports.

MoNRE (Ministry of Natural Resources andEnvironment). 2009 Statistics on Issuance of Land UseRight Certificates. Hanoi.

Nguyen Ngoc Anh, Nguyen Duc Nhat, Tran Thanh Thuy,and Kirby Prickett. 2010. Survey Report on InformationDisclosure of Land Management Regulations. DEPOCEN.Hanoi.

Nikolic, Nina, Rainer Schultze-Kraft, Miroslav Nikolic,Reinhard Böcker, and Ingo Holz. 2008. “LandDegradation on Barren Hills: A Case Study in NortheastVietnam.” Environmental Management 42 (1): 19–36.

Ravaillion, Martin, and Dominique van de Walle. 2001.Breaking Up the Farm: Welfare Outcomes of Vietnam’sMassive Land Privatization. Policy Research WorkingPaper 2710. Washington, DC: World Bank.

———. 2005. Does Rising Landlessness Signal Successor Failure for Vietnam’s Agrarian Transition? Washington,DC: World Bank.

Scherr, Sara J., and Satya Yadav. 1996. Land Degradationin the Developing World: Implications for Food,Agriculture, and the Environment to 2020. Food,Agriculture, and the Environment Discussion Paper 14.Washington, DC: International Food Policy ResearchInstitute.

Truong Thien Thu and Ranjith Perera. 2010.“Intermediate Level of Property Rights and theEmerging Housing Market in Ho Chi Minh City,Vietnam.” Land Use Policy. In press.

Wezel, A., A. Luibrand, and Le Quoc Thanh. 2002.“Temporal Changes of Resource Use, Soil Fertility andEconomic Situation in Upland Northwest Vietnam.”Land Degradation & Development 13 (1): 33–44.

World Bank. 2001. Vietnam: Delivering on its Promise -Vietnam Development Report 2002. Joint DonorReport to the Consultative Group Meeting Dec 2001.Hanoi.

———. 2009a. “Policy Note: Improving LandAcquisition and Voluntary Land Conversion in Vietnam.”Hanoi.

———. 2009b. Vietnam Development Report 2010:Modern Institutions. Joint Donor Report to theConsultative Group Meeting, December, Hanoi.

———. 2010a. “Climate-Resilient Development inVietnam: Strategic Directions for the World Bank.”Discussion Paper. Washington, DC.

———. 2010b. Report on measures of land pricedetermination for compensation and resettlement inVietnam (Draft). Hanoi. June 2010.

———. 2010c. Report on improving the grievanceredress mechanism in compensation and resettlement inVietnam (Draft). Hanoi. June 2010.

———. 2010d. Rising Global Interest in Farmland:Can it Yield Sustainable and Equitable Benefits?Washington, DC.

Zhu, Tingju. 2010e. Climate Change Impacts andAdaptation in Vietnam: Agriculture and Water.International Food Policy Research Institute.Washington, D.C


WATER RESOURCES

CHAPTER 3

Vietnam is not secure in its water resources: more than 60 percent of water flow comes fromother countries, shortages now occur in many rivers over the long dry season, and someaquifers have a limited life. In the short wet season, many people are killed and enormousdamage inflicted. Water pollution continues to get more severe. In the face of the pressures

from the economic boom, Vietnam needs further reform to achieve greater efficiency in water use,improved environmental sustainability, and enhanced equity in access to water services. Waterresources development has provided many benefits for human life, health, and environment. Butinstitutional and legal arrangements need greater clarity. Despite great efforts, about half thepopulation does not have an adequate water supply. Sanitation coverage is worse. Newapproaches will be required to meet future food security and to effectively maintain infrastructurethat is dilapidated. Water rights are not defined, leading to inefficient and unsustainableinvestments and to stress on water sources. Climate change is adding to these already seriouschallenges.

Approval and implementation of a new National Target Programme (NTP) on Water Resources willbe critical. A similar strategic approach is also needed for the coastal zone. Dealing with efficientwater use must focus on the efficiency of water supply and use in all subsectors, a water rightsframework, and river basin plans to set out water allocation rules. Improving social equity requiresincreased investments for pro-poor rural development, irrigation diversification, and astrengthened ongoing NTP II, particularly on the sanitation side. Environmental sustainability willrequire a focus on pollution from untreated urban wastewater as a priority. For industrial pollution,the emphasis should be on far stronger use of existing measures and a more strategic approach topollutants and their cause.

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TC H A P T E R 3 : W A T E R R E S O U R C E S 55

Water moves significantly across land and overtime. Prolonged droughts severely limit wateravailability, at times extending over many years;severe wet season storms can bring devastation.Water also transports nutrients and sedimentthrough the river basin and exports these to thecoastal zone. Catchment activities can increaseor decrease this movement and its quantity andquality—affecting both river and coastalmorphology and ecosystems. This chapter mustbe considered in terms of these criticalinteractions.

Water Resources in VietnamThe Water Sector Review (WSR) has shown thelimits of Vietnam’s water resources:62 77 percentof surface water occurs in only three river basins(Figure 3.1) and more than 60 percent of the totalsurface water flow originates in other countries.While the total annual surface water exceeds theinternational standard for having adequatewater,63 making such assessments based on

annual water is very misleading. There are longand severe dry seasons, during which only about20–30 percent of the yearly water is available. Byinternational standards, in the dry season and atcurrent development levels, about half of the 16major river basins are currently experiencingirregular or local water shortages.

It is a different story in the short wet season.Vietnam’s geography and topography make thecountry extremely vulnerable to typhoons,storms, and floods. Heavily populated areas suchas the Red and Mekong River deltas and theCentral Coast are especially vulnerable. Each yearhundreds of lives are lost, and there is enormousdamage to livelihoods and infrastructure.

Water quality in upstream river reaches is stillrelatively good except for some locallypolluted areas. However, in the downstreamreaches, especially for rivers flowing throughindustrial zones and large urban areas, thequality gradually deteriorates as wastewater

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TC H A P T E R 3 : W A T E R R E S O U R C E S56

Figure 3.1. Major river basins

discharge pours into the rivers, largelyuntreated. Some river sections are nowclassified as “dead rivers” unable to supportany life.64 Ponds and canals in urban areashave become sewage storages and drains.

Vietnam has large quantities of good-qualitygroundwater used to provide water for living(groundwater provides about half the domesticsupply) and for various economic uses. But thereare areas of concentrated extraction where wateruse is unsustainable. In Hanoi and in parts of HoChi Minh City, water levels have fallen about 30meters from natural levels. Overexploitation alsooccurs in the Central Highlands and in theMekong Delta,65 and some aquifers now have alimited life. There is very poor information on thequality or quantity of groundwater to ensuresustainable use. Groundwater is also veryvulnerable to pollution, and some importantsources are now severely polluted and may notrecover.

Provision of Water Services The pace of Vietnam's urbanization andindustrialization has been beyond the capacityof the water supply and sewage systems to cope.Figures on water supply and sanitation coverageare the subject of dispute and should be seen asrough indications. Nevertheless, they do tell astory. Around 14 million people out of the 22.5million living in cities have access to clean water.However, less than 60 percent have a houseconnection; the remainders get their water fromshared standpipes or wells. Basic water servicesare generally far less available in district towns.The current standard of service is poor in termsof both quality and volume, with water lossesbeing very high.66

Sanitation in the major cities is said to beavailable to almost all of the population, but thisfigure includes access to a “sanitary latrine.” Inprovincial towns, 75 percent of households arenot connected to any form of local or centralsewerage system; they use a septic tank. Lessthan 10 percent of the urban wastewater

collected each day is treated.67 Where they exist,most urban drainage systems combine stormwater and untreated domestic wastewater.

Although Vietnam has made rapid progress inimproving its water supply situation, many ruralareas are not covered. Some 41 million ruralpeople do not have a supply that meets “clean”water standards set by the Ministry of Health(MoH). Only 8 percent of people receive pipedwater in their homes or yards, 82 percent haveaccess to water from improved sources outsidethe house, and 10 percent still depend onunimproved drinking water sources.68 Progressin providing access to sanitation and hygiene hasbeen especially difficult. A recent survey69

revealed that while about half of rural peoplehave some sort of sanitation facilities, only 18percent have access to latrines that meet MoHhygienic standards.

Use of Water for EconomicProduction Nationally, more than 80 billion cubic metersof water are used each year. Figure 3.2indicates the current sectoral allocation. By2020 this is expected to increase by about halfwith particularly sharp rises for industry andurban use.70

Agriculture’s share of the gross domesticproduct (GDP) is declining, but output isexpanding and the sector remains a keycontributor to the economy and employment.Vietnam has become a top exporter of rice,coffee, cashews, and pepper. Agriculturesector GDP value has doubled in real termssince 1993; it provides employment to about70 percent of rural households. Paddyproduction accounted for almost 80 percentof the country’s gross food crop productionvalue in 2006. Between 1990 and 2008 thearea under rice grew by about 20 percent, butnational production almost doubled, to about38 million tons. 71 (See also Box 3.1.)


Hydropower provides about a third of the totalnational power capacity of more than 26,000megawatts. Hydropower in the Red-Thai Binhand Dong Nai River basins accounts for over 50percent of the internal hydropower capacity.Under the power Master Plan VI,72 about 26 morereservoirs are planned, some of which are nowbeing built. While hydropower has manyadvantages in electricity generation, there arealso many disadvantages that are only now beingappreciated, particularly in a Mekong Rivercontext. This will be critical in the future as theprojected level of development of hydropowerpotential is going to be extremely high inVietnam.

Relatively speaking, industries do not use a lot ofwater. But wastewater discharge from thebooming industrial sector and from craft villagesis causing serious pollution. Nearly 70 percent ofindustrial parks are located around Hanoi and HoChi Minh City, and many industries are state-owned. Environmental improvement is lagging,and few industries have effective wastewatertreatment. Less than half of the facilities havecentral wastewater treatment systems. The craftvillage subsector has also witnessed phenomenalgrowth, especially around Hanoi. More than40,000 enterprises are located in craft villages,with around 80 percent of those being smallfamily businesses. Almost all village households


Inland capture fisheries landings are estimated at about 200,000 tons in official statistics—almostcertainly an underestimate. Inland fisheries, particularly in floodplains and rice fields in the Mekong andRed river deltas, provide an important source of aquatic products for rural people’s nutrition and seasonalincome. Although there is a dearth of statistical data, several studies indicate that inland fisheries are ofconsiderable importance for poor people in many parts of Vietnam, not only full-time fishers but alsohouseholds that have fishing as a component of wider livelihood strategies. Accordingly, a study by theTropical Biology Institute of Ho Chi Minh City documented annual yields in 2001 as high as 430 kg/hafrom a 45,000 ha area in Can Tho and Kein Giang Provinces in the Mekong Delta. Considering that theMekong Delta has a flooded area of about 1 million ha during the rainy season each year, thecontribution from floodplain fisheries in that part of the country would far exceed the current estimateof inland fisheries in Vietnam. Based on fish consumption estimates, MRC has estimated that productionin the delta areas of Vietnam could be as much as 300–900,000 tonnes/year. 73

Figure 3.2. National surface water allocation (percent)

Source: ADB 2010b.

Box 3.1. Inland fisheries and aquaculture


Inland fisheries are threatened by pollution, including the use of agrochemicals and flood controlprojects that close off breeding habitats and nurturing grounds for resident and migrating fish andother aquatic species. These threats are particularly significant for poor households that depend onthe fishery. Actions to assure the sustainability of inland fisheries include further assessment of itsimportance to the national economy and to local farmers and poor inland fishers in relation to trade-offs, such as flood control for agriculture; identification of appropriate management measures, such asappropriate gear and closed fishing seasons in selected areas; and establishment of sanctuaries toprotect key breeding and nurturing habitats and to sustain or improve productivity and biodiversityconservation.

Aquaculture has grown significantly in recent years, averaging over 12 percent annual growth since1990. The area under all aquaculture has now reached nearly 1 million hectares, with a total output ofover 1 million tons—over a third of all aquatic production. Aquaculture production mainly comes fromfreshwater aquaculture, especially for river catfish, while the export value mainly comes from marineand brackish-water aquaculture (most of this income is generated within the Mekong Delta). Small-scale producers dominate the subsector, with pond areas of under 0.1 hectares. Aquaculture and theassociated fisheries processing industries can contribute to significant water source degradationthrough water use and pollution.

Aquaculture contributes more than 40 percent to total fishery production. In terms of production, thefreshwater subsector remains dominant, with approximately 65–70 percent. The production ofPangassius catfish exceeded 1.2 million tons in 2009, exporting about 600,000 tons worth $1.4 billion.Brackish water aquaculture (mainly shrimp) contributes around 220,000 tons and more than 40 percentto the overall value of production. Crab farming and limited farming of marine fish and mollusks, inparticular, provide the remainder.

Environmental concerns relating to aquaculture development in Vietnam include:

Localized water pollution from concentrations of freshwater and marine cage farms and lack ofconsideration of carrying capacity

The need for more care to be taken with introduction of new exotic species, due to risks of diseaseand impacts on aquatic biodiversity

The significant loss of mangroves and wetlands from conversion of coastal areas and estuaries toshrimp farming

Aquatic animal disease outbreaks, water pollution, and salinization caused by poorly plannedand managed shrimp farming in sandy and agricultural areas

The dramatic recent rise in the use of trash fish in marine and freshwater aquaculture; suchenvironmental interactions need careful consideration in the promotion of aquaculture inVietnam and should be addressed through better environmental planning and managementpractices and capacity.

Aquaculture is essential to meet future demand for aquatic products. While aquaculture has expandedto supply domestic and export markets, issues concern the available limited capacity in the country topromote and guide its sustainable development in fresh, brackish, and marine environments. The mainconcerns are related to quality and sufficiency of seed and feed supply, disease control, andmanagement of environmental impacts, including understanding of carrying capacity of sea and inlandwater areas, extension services, and marketing channels and quality control systems. More emphasiscan also be placed on using aquaculture for poverty reduction. The quality of the product has been aconcern in some export markets, and anti-dumping cases have revealed the vulnerability of the sectorto external factors related to international trade.

use their houses as production sites, with wastedischarged directly into the surroundingenvironment.79

Major Issues ConcerningWater ResourcesManagement In the past decades, there have been importantachievements in the exploitation of waterresources and in the prevention of harm causedby water. However, for a long time there has beeninsufficient awareness of the significance andimportance of water for human life, health, andthe environment.80 This section sets out some ofthe issues that have resulted.

Institutional, Legal, and PolicyContextThe creation of the Ministry of Natural Resourcesand Environment (MoNRE) in 2002 separated thefunction of state unified management from thefunctions of exploitation and use of waterresources for economic purposes. However,MoNRE is still working towards assuming thisoversight function. While international supportcould be strengthened, the roles of otheragencies in the water sector could also be moreclearly defined to avoid overlap and to promotemore effective coordination. The hierarchy oflaws governing both public and privateparticipants is not clear, consistent, or complete.81

There is little planning or coordination betweenthe sectors, leading to unintended, unfunded,and unmitigated impacts between sectors.

The private sector is becoming increasingly

involved, and in some subsectors thegovernment is slowly transforming its functionsfrom that of operator to regulator. But theregulatory framework needs considerablestrengthening to facilitate this move effectively.Some state-owned enterprises involved incommercial production activities are inefficientoperators with very poor environmentalperformances.82

Another key institutional issue is whethersubnational government is capable of effectivelyfulfilling its devolved roles in water resourcesmanagement and the provision of essentialservices and whether effective instruments are inplace to hold it accountable for doing so.83

Accountability in the delivery of these functionsis important, as subnational governments haveroles that are inherently in potential conflict:simultaneously to stimulate and promotedevelopment and to protect the environmentand the natural resource base.

Vietnam has not yet effectively developed andimplemented sustainability-based approachesfor water resources management. The NationalAssembly’s Science, Technology andEnvironment Committee84 concluded that thecurrent legal framework is sufficient to takeaction against pollution and resourcedegradation. However, development andenforcement of the regulatory framework isinadequate.

In particular, Vietnam has found it difficult tointegrate the management of natural resourceswithin river basins and coastal zones and toaddress relationships between these areas.Vietnam has initiated some measures for both


Climate change will affect aquaculture, but in different ways for the main subsectors. A cost-benefitanalysis for 2010–50 indicates that even without climate change, the catfish industry will facedifficulties. These are expected to be exacerbated by climate change. In contrast, shrimp aquacultureshows good profitability for another couple of decades even with climate change.

Source: Ministry of Fisheries and World Bank, 2005, FAO Web sites, Nguyen Van Trong 2008, and .WorldFish 2010.

river basin and integrated coastal zonemanagement (ICZM), but there are currently nostrong government-led programs in these areas.There are no processes to reconcile the largeregional differences when defining “natural” and“acceptable” environmental and natural resourceconditions. This also has an internationaldimension, particularly in the Mekong River,where the massive sediment load that supportsand rehabilitates the Cuu Long delta is underthreat from the mid-river dams now beingconsidered.85 Another institutional issue is thelack of reliable and accurate water data andinformation for decision making, which is a keyfactor constraining effective management.86

Water SecurityVietnam faces a very uncertain water future, as itis heavily reliant on international rivers, dry-season water availability is already showing areasof shortage and conflict, and climate change willaccentuate these effects. Already some currentwater use is unsustainable. The WSR found thatunder the existing population and economicdevelopment levels, during the dry season sixriver basins are classified as “moderately stressed”and four others are classified as “highly stressed.”The Dong Nai River basin, providing about a thirdof national GDP, is of particular concern. The totalreservoir active storage volume (about 37,000million cubic meters) is less than 5 percent of thetotal average annual surface water discharge,with about two-thirds of this in two river basins.

The lack of formal rights to water is a concern.Although the Law on Water Resources creates aframework for this, limits to the amount of waterthat can be extracted have not been establishedand rights are not defined. New entrants arecontinually eroding the supply. Manyorganizations also believe that their waterdevelopment confers unfettered rights to thewater. The current system is one of perceived butunspecified water rights, with sharing rulesdominated by the most powerful.

Sustainable Water Supplyand Sanitation ServicesDespite enormous gains, and given the pressuresof urbanization and industrialization, it is notsurprising that Vietnam is struggling to ensurewater supply and sanitation for its people. Thepublic sector dominates, leading to overlappingroles and responsibilities and a poor focus onservice delivery. Inappropriate design standardslead to higher capital costs and have an adverseimpact on tariffs, affordability, and acceptability.Sanitation is still considered a private good,requiring support to mobilize and thus maximizethe benefits of a new water supply. Poorsanitation causes human distress, as well asconsiderable economic losses, estimated at 1.8percent of GDP.87 Total investment requirementsrun into many billions.88

Urban drainage is also a major and worseningissue for the rapidly expanding major cities andtowns. One of the most critical watermanagement challenges in Ho Chi Minh City isthe increased need to both protect low-lyingparts from storm surges and high tides and toensure drainage of polluted rainwater andsewage. Intense rainfall that besets Hanoi oftenleaves major parts of the city paralyzed. Rapidurban expansion is not taking drainage intoaccount.

Sustainable Agriculture andIrrigation ServicesIrrigation-based agriculture has been pivotal inalleviating poverty, providing food security, andboosting rural growth. But the rapidly growingpopulation, with increasing affluence, will requiremuch more food and different foods. This willrequire better and more sustainablemanagement of existing irrigated lands, sinceopening up new areas is constrained by lack ofland and water. Agriculture productivity remainsrelatively poor, however, its infrastructure is oldand dilapidated, and it is reliant on state budgetsand foreign development assistance to keep the


systems going. With the irrigation services feeabolished since 2008,89 systems are quite likelyto be deteriorating. It is therefore crucial tomonitor the implementation of this new feepolicy to ensure that adequate budgetaryallocation is provided to support system O&M.Otherwise necessary remedial interventionswould have to be taken. The large-scale, centrallymanaged irrigation schemes are not designed toprovide the reliable, flexible and equitable year-round water service that modern farmingmethods require. 90

Financing and AssetsThe water sector has survived on subsidies andofficial development assistance, which is notsustainable. The pricing policies that are appliedare neither efficient nor fair, leaving grosslyinadequate financial resources tomaintain/replace infrastructure. The subsectorcapital requirements are enormous. Yet agenciesestablished to provide water services are far fromfinancially self-sufficient, largely as a result ofdecisions to curtail charges, particularly atsubnational governments. The abolition of theirrigation services fee has serious implications,given the water scarcity situation and the factthat irrigation uses about 80 percent of waterresources. This was considered serious enoughby the international development partners forthe Poverty Reduction Support Credit to issue atrigger requiring technical guidelines for moreefficient water use in irrigation.

Pollution and DegradationRapid urbanization and industrialization—withuntreated domestic, hospital, and industrialwastewater, poor urban drainage, an expansionin tourism, and the use of rivers, lakes, and pondsas dumping grounds for most solid waste—hasseriously affected water quality. Much of theuntreated wastewater is illegal.91 Economiclosses, mainly due to the health impacts and thecost of protecting humans from pollution ofwater resources have been estimated tohundreds of millions of dollars per annum. 92

The National Assembly’s Science, Technology, andEnvironment Committee has reported on thedifficulties with institutional and regulatoryarrangements, lack of resources, inadequateplanning of urban areas and industrial zones, lackof funding for infrastructure, and lack ofinvestment in toxic waste treatment facilities. Inaddition, community concern about pollution isincreasing, perhaps brought to a head by themuch publicized Vedan case of extreme and illegalpollution in the Thi Vai River. 93 (See Box 3.2.)

Storms and FloodsAlmost 60 percent of Vietnam’s total land areaand over 70 percent of its population are proneto cyclones and floods, which are often morepronounced where river basins and coastal zonesmeet. Over the past 20 years, natural disastershave caused the loss of over 13,000 lives andannual damage equivalent to an average 1


Vedan Vietnam is a monosodium glutamate maker. Investigations in September 2008 found Vedanhad illegally dumped into the Thi Vai River more than 100 million liters of untreated wastewater permonth since 1994, killing farmers’ fish and shrimp in ponds and ruining farmland. MoNRE suspendedthe plant’s wastewater discharge license and fined the company about $15,000. The ministry alsodemanded another $7 million from the company in overdue environmental fees. The company paid thefine and fees. The company has also offered to pay total damages to farmers in Ho Chi Minh City, DongNai, and Ba Ria-Vung Tau provinces. Court action against Vedan is under way.

Source: MoNRE.

Box 3.2. The Vedan water pollution case

percent of GDP. Moreover, there are growingconcerns about the impact of climate change onthe frequency and intensity of climatic hazards.Strengthening disaster management is a priorityfor the government. In November 2007, itapproved the National Strategy for NaturalDisaster Prevention, Response and Mitigation to2020, with a balance of structural andnonstructural measures. Nonstructural measures,such as community-based disaster riskmanagement measures, which have beenimplemented in Vietnam since early 2000, will beincreasingly important. Indeed, the governmenthas approved a community-based disaster riskmanagement program that is expected tosupport more than half of the country’scommunities.

Climate ChangeClimate change will bring more varied rainfallpatterns and sea level rise.94 Annual total rainfallis expected to increase everywhere—perhaps byas much as 10 percent in the Red River Delta areaby 2050. In contrast, during the dry months,especially in the southern regions (including theMekong Delta), average rainfall is expected todecrease, perhaps by about 20 percent. Risingsea levels will greatly affect the Mekong Deltaand Ho Chi Minh City, parts of the Red RiverDelta, and also a significant coastal strip,including small estuaries. The mean sea level riseby 2100 is projected by different sources to beabout 18–70 centimeters, and 100 centimeters ormore is possible through the impacts of highemissions and the melting of land ice. Withoutadaptation action, a one-meter rise in sea levelswould cause more than 9 percent of total landsurface to be inundated, with an even greatershare of the population affected.

The Reform AgendaVietnam has already put in place some keymeasures for the more effective management ofwater resources, including a strengthened Lawon Environmental Protection, a Law on Dikes, theNational Water Resources Strategy, the National

Strategy on Disaster Management, the NationalTarget Programme (NTP) for Rural Water Supplyand Sanitation, and the NTP to Respond toClimate Change.95

Other critical measures are also underdevelopment. First, MoNRE is finalizing an NTP onImprovement of Efficiency for Water ResourceProtection, Management and Multipurpose Use(hereinafter termed the draft Water NTP), which isbased on the main integrated water resourcesmanagement (IWRM)–related activitiesrecommended in the WSR. The total cost of theNTP over 10 years is estimated at almost 10thousand billion VND (approximately $500million). Nearly 60 percent of this is to establish awater resources monitoring system. Approval ofthis NTP, and its support and implementation bythe government with assistance from theinternational development partners, will becritical for Vietnam being able to embrace locallyappropriate elements of IWRM. Second, theMinistry of Natural Resources and Environmentis currently revising the Law on Water Resources.The revised law is due to be submitted to theNational Assembly for approval in 2011. Thefollowing reform measures are aimed at buildingon these provisions.

Efficient Water Use Clear and unambiguous specification of waterrights96 contributes to the efficient use of theresource. Under the revised Law on WaterResources a greatly strengthened water rightsand sharing framework is being developed. Thisneeds to be taken up and implemented so thatall water users operate within a consistentframework. Establishing rights—their term, theircoverage, their relationship to other rights, andhow they can be changed—is critical to businesssecurity and planning in industrial countries. Oneof the most important tools for implementing awater rights framework is the licensing system,and a strengthened licensing system is beingdeveloped for the revised law. This would allowthe government to issue rights and also protectthe community values of water sources by


providing the tool to manage the potentiallydamaging activities of water users. An effectivelicensing system is also one precursor to a waterrights trading system, although it may be manyyears before Vietnam is ready to take its waterrights framework to this level.

Planning for the sustainable use anddevelopment of water sources is an importantaspect of defining rights to water and protectingcommunity values. Resolution of competinginterests or conflicts over access to water is bestaddressed at the river basin scale. River basinplanning can be a very powerful integratingmeasure for water management. It can breakdown the administrative divisions betweengovernments and between sectors. It providesthe opportunity for communities to participate. Itcan provide the integrating framework for water-dependent socioeconomic developmentplanning and for poverty reductioninterventions, in the context of sustainable waterresource use. The same is true for groundwatersources.

Many measures for dealing with water scarcityare included in the draft Water NTP:

Finalizing the legal and policy systems, thestandards and norms, and the economicinstruments for water resourcesmanagement aligned with the socialist-oriented market economy

Completing water resources scenarios for13 priority and international river basins,

based on wet/dry seasons and climatechange, and upstream water use scenarios(including for hydropower), andimplementing adaptation and responseplans

Signing bilateral and multilateralagreements on cooperation and exchangeof water resources data and information,water resources protection, maintenance ofenvironmental flows, and mechanisms toresolve water use disputes and conflicts ininternational rivers

Harmonizing and regulating water sourcesfor efficient water use and development ofwater-saving models; completion of waterallocation plans for priority river basins andensuring the maintenance ofenvironmental flows in rivers; large andmedium reservoirs operated to ensuremultipurpose use and water resourcesefficiency.

Vietnam needs a strategic development planfor urban water supply with priorities clearlyestablished for reducing non-revenue waterand the provision of new infrastructure.Greater priority should be provided to townsunder district control, as they providealternative destinations for rural-to-urbanmigration but they lack financial resourcesand capacity. In addition, a program isrequired to strengthen the business practicesand financial basis of water supply companies.Central to this is higher but realistic andaffordable tariffs. As the creditworthiness of


The Philippine government privatized the state-owned utility for water supply and sewage in Manila in1997 in response to a crisis situation. A 25-year concession was awarded to Manila Water Company. Sincethen, the company has almost doubled service coverage to 600,000 households and achieved significantimprovements in water quality and availability. Water loss is down from 63 to 35 percent. The resultswere achieved while maintaining financial profitability.

Source: World Bank 2010b.

Box 3.3. Improving urban water services: A case study from thePhilippines

the sector improves, access to longer-termlocal financing will become important. Astaged progression should be envisaged overthe next 10 years from the current reliance ondevelopment assistance through mixedfinancing to a sector built on local capitalmarkets. Therefore, the preparation of anurban financing plan is also crucial. (See alsoBox 3.3.)

There is considerable scope to increase foodproduction, enhance livelihoods, and reducepoverty in existing irrigated areas.97 Irrigationmanagement companies currently have little orno incentives to satisfy customers/consumers(who have little information and even lesschoice), and performance standards are low(such as water delivery and application rates perunit of output). Decision taking and policymaking are almost entirely top-down, and thestate’s role remains dominant in terms of targetsand objectives setting. Therefore, the preparationof a long-term irrigation subsector reform andfinancing plan is crucial and must be the first steptoward creating a long-term viable industry base.This strategy would deal with financialsustainability; modernization needs and serviceorientation; water productivity improvements;land tenure arrangements; multiple uses, roles,and functions; and environmental targets.

Increasing the efficient use of water will benefitfrom the development of measures to assess andmeasure changes in the economic value of wateruse for different purposes and from a soundwater accounting/audit system to support policydecisions, river basin management and planning,and irrigation systems improvements. Auditingand benchmarking will also play a strong role.

Environmental Sustainability To address water source degradation issues,measures are required that focus on both theresource itself and the many activities that usewater and affect the water source.

Resource-focused measures are those that lookat the management of the water source. Themost overarching of these is natural resourceplanning. River basin, groundwater, and ICZMplanning can effectively set out actions for themanagement of water pollution in rivers, lakes,wetlands, aquifers, or coastal areas by identifyingall possible pressures and options andintegrating the consideration of water qualitywith water quantity and land use activities (viaspatial or land use planning). The decisions ofone province can have an effect on another,leading to inefficiencies and inequities. Thissuggests a lead role for central government inthese planning initiatives.

The draft Water NTP proposes the developmentand implementation of plans for water sourcesprotection in 13 priority river basins, as well asgroundwater protection plans for the main urbanareas, the Red and Cuu Long delta areas, and thecentral coastal areas and highlands. Othermeasures focused on the resource could includethe identification of water source qualityobjectives and the classification or zoning ofwater sources, including the identification andprotection of sensitive areas.

The draft Water NTP does not, however, extendto the coastal zone. Yet the coastal zone is facingsimilar problems as river basins. The cause ofthese problems can be traced to the sameunderlying problems that have beset river basinmanagement.98 And as with river basinmanagement, there is no simple solution tothese complex problems, although theNetherlands-funded ICZM projects earlier thisdecade will provide a lead as to what may workbest. Vietnam needs to develop a flexible,integrated, and participative strategy to ensurethat the management of its coastal zone isenvironmentally and economically sustainable,as well as socially equitable and cohesive. Thestrategy must build on existing programs,complemented by focused new activities, manyof which will mirror activities in the river basin,and by support for coordinated ICZM action at all


levels. And mechanisms must also be found tointegrate ICZM and river basin initiatives and todeal with sea level rise at the local level.

Activity-focused measures are those directed atactivities that use or affect the water source orthe coastal zone. The activity of most concern inVietnam is pollution. Currently it is illegal topollute water sources, however a major portionof wastewater is dumped into waterways withoutany treatment. This poses a very grave danger tohuman health. Addressing pollution fromuntreated urban wastewater (domestic,hospitals, and urban industrial) is therefore, apriority.99 Effective price signals are important toconvey to water polluters that there is a high costto their activities.

The scale, complexity, and cost of improvingurban sanitation on any significant scale arebeyond the scope of provincial and citygovernments and will require more innovativeoptions. Considering the limited resources andthe enormous needs, step-by-step improvementsin urban sanitation and wastewater treatment aremore appropriate than building up expensivewastewater treatment plants and extensiveseparate collection systems in only a few areas.Effective reform requires a strategic approach,carefully setting priorities for capital expenditureneeds based on a review and ranking of theprovinces, districts, communes, and projects.Choices will depend on the socio-geographicenvironment, population density, and levels ofwater usage, affordability, institutionalarrangements, and access to skills.100

Vietnam’s environmental report for 2009reviewed the performance of industrial zonesand painted a grim picture of the extent ofpollution, the effects on communities, and theflouting of laws and regulations. Efforts to dealwith industrial pollution have failed, mostlybecause of the ineffective application of existinglaws and regulations.101 Strengthening theimplementation of existing governmentdecisions, including a revamp of Decision

64/2003102 (thoroughly handling pollutingestablishments) and better implementation ofDecree 67/2003 (wastewater discharge fees),which so far has been inconsistently andineffectively applied, will be at the center of anyresponse. But this could be augmented by amore strategic approach that focuses on thepollutants that cause the greatest concern andthe industry subsectors that produce thosepollutants.103 Control plans for each of thehighest priority industry subsectors should beprepared by linking the discharges with ambientconcentrations and establishing least-costsolutions.

The more strategic and stronger use of othermanagement tools will also be important:strategic environmental assessments for a widerange of planning activities; much stronger useof environmental impact assessments;establishment of resource quality objectives andregisters of activities that have an impact;wastewater discharge licensing; promotion ofenvironmental management systems forindustries; and adoption of best-managementpractices.

Protecting sensitive lands will play an increasingrole. The Mekong Delta needs particularattention as the country’s largest granary andseafood source, but it faces a difficult future—especially under climate change projections. Inthe first five months of 2010, seawaterpenetrated deep into the delta (up to 50–70kilometers), affecting thousands of hectares ofrice and causing a severe shortage of freshwater.104 Of more long-term concern is the loss ofsediment deposition from the Mekong River—sofundamental to the regeneration and veryexistence of the delta—that would result fromthe construction of the mid-river dams currentlybeing considered. The Red River delta willincreasingly face similar problems. Vietnamshould also identify its major environmentalassets, such as wetlands and heritage areas, andestablish measures to protect them as a meansof protecting biodiversity.


Equity Water development projects (for irrigatedagriculture, for example) have played a major rolein poverty alleviation by providing food security,protection from flooding and drought, andexpanded opportunities for employment. Butpoor communities also suffer the greatest healthburden from inadequate water supplies. Thus,growing scarcity and competition for water are amajor threat to future poverty alleviation. In verydry areas, increasing numbers of the rural poorare coming to see entitlement and access towater for food production, livestock, anddomestic purposes as more critical than accessto primary health care and education.105

In order to bridge the gap in wealth creation,increased investments in water-related projectsfor pro-poor rural development will be essential.Better rural infrastructure will attract moreprivate investment and thus help countermigration to towns and cities, reducing pressuresthere and inequities between urban and ruralpopulations. A key element will be agriculturalmodernization and diversification away fromtraditional paddy rice. Locally adapted irrigationtechnologies have succeeded in raising yieldsusing whatever surface water, wastewater, andgroundwater was available. There areopportunities for investors to identify successfulinitiatives and direct funds toward schemesemulating farmers’ methods.106

A priority must be to build on the successes ofthe current NTP (rural water supply andsanitation) and to accelerate progress under anew NTP. On the water supply side, greaterefforts are needed to increase local capacity foroperation and maintenance and to find ways toelicit genuine support for the scheme. People areoften reluctant or unable to pay for water supplyand, after schemes have been built, people eitherdo not use them at all or use them sparingly,supplementing them with water fromunimproved sources, resulting in an unintendedovercapacity of the system.107 This suggests a

greater focus on behavioral change under thenew NTP and on decentralized and community-based drinking water supply systems, especiallyin remote areas.

Since water supply itself is insufficient todramatically reduce disease, sanitation andhygiene behavior changes need much greateremphasis under the new NTP. The measure ofsuccess should not only be the coverage(ownership) of sanitation facilities but also theaccess, use, and upgrading of the facilities,changes in hygiene behavior, and self-sustaineddemand for more facilities.108 In addition, uniformand appropriate health standards for both watersupply and sanitation (rural and urban) arerequired.

Natural hazards have a major impact on allcommunities, and the central region’s river basinsbear the brunt of the damage. Flooding generallycauses the biggest losses, and dealing withflooding issues has to be considered on a fullyintegrated river basin and coastal zone basis.Central Vietnam should be the priority for thepreparation of natural hazard managementplans, with a focus on nonstructural measures,including community-based disaster riskmanagement approaches.109

A major social concern for water resourcesmanagement relates to the social impacts of damconstruction, including relocation ofcommunities and loss of cultural values. InVietnam, the proposed hydropower projectshave provided a focus for dealing with this issue.In a positive move, the concept of “benefitsharing” is being examined110 and is likely to beformally adopted by the government. This is asignificant development, given the large numberof new hydropower dams being planned.

Measures to Support the ReformAgenda This chapter has shown that the economic boomthat Vietnam is experiencing is far outstripping


the capacity of the support infrastructure,governance, and management of waterresources and the environment. To redress this,and to facilitate the reform agenda just outlined,the following initiatives are recommended. Manyof these are aligned with the draft Water NTP.

Institutional arrangements:

The evolution of the market economyrequires the role of government tochange. Governance needs to beseparated from day-today-managementand implementation and from a directimplementing role to a role as national“market overseer” 111

The performance of subnationalgovernments is central to theeffectiveness of IWRM and ICZM and towater service delivery, as much of thepractical implementation is in theirhands; accountability requirestransparency and public access toperformance data, which will require acultural shift but also considerablesupport in introducing revised processesand acquiring new skills112

The Vietnam Development Report 2010refers to the Provincial CompetitivenessIndex;113 this could be complementedby the establishment of a ProvincialSustainability Index to ensure thatprovinces are not sacrificing naturalresources and the environment forshort-term economic benefits

Stronger arrangements for theoperation of the National WaterResources Council are required,114 as wellas strengthened institutionalarrangements for urban water servicedelivery115

Data and information: providing accurateand reliable data and information for more-effective decision making

Capacity development: at all levels(particularly for provinces) for the

implementation of IWRM approaches andfor key technical areas (such as wastewatertreatment)116

Stakeholders: involvement of stakeholdersin river basin planning and involvingfarmers in irrigation scheme decisionmaking

Education: water education programscarefully targeted to community behavior.

REFERENCES

ADB (Asian Development Bank). 2009. Water—Vitalfor Viet Nam’s Future. Manila.

———. 2010a. Water and Sanitation: SectorAssessment, Strategy and Roadmap. Draft SummaryReport. Manila.

______. 2010b. Agriculture, Natural Resources andEnvironment: Sector Assessment, Strategy andRoadmap. Draft Summary Report. Manila.

AusAID. 2004. Vietnam Water ResourceManagement Assistance Project. Component 2.Future Date Needs Report. Canberra.

Australian Productivity Commission. 2003. WaterRights Arrangements in Australia and Overseas.Productivity Commission Research Paper.Melbourne.

EU (European Union). 2000. Communication fromthe Commission to the Council and the EuropeanParliament on Integrated Coastal Zone Management:A Strategy for Europe. Brussels.

Government of Vietnam. 2006. National WaterResources Strategy Towards the Year 2020. Hanoi.

———. 2010. Vietnam Environment Report 2009—Industrial Park Environment. Hanoi.

Hortle, K. G. 2007. Consumption and the Yield of Fishand Other Aquatic Animals from the Lower MekongBasin. MRC Technical Paper No. 16, Mekong RiverCommission, Vientiane.

ICEM (International Centre for EnvironmentalManagement). 2007. Analysis of Pollution from


Manufacturing Sectors in Vietnam. Technical Reportfor the World Bank. Hanoi.

IPCC (Intergovernmental Panel on Climate Change).2007. Climate Change 2007. Synthesis Report.Geneva.

IWMI (International Water Management Institute),FAO (Food and Agriculture Organization), and ADB(Asian Development Bank). 2009. Revitalizing Asia’sIrrigation: To Sustainably Meet Tomorrow’s FoodNeeds

JICA (Japan International Cooperation Agency).2009. Guideline of Industrial WastewaterManagement. Project for Enhancing Capacity ofVietnamese Academy of Science and Technology inWater Environment Protection. Phase II. Tokyo.

Ministry of Fisheries and World Bank. 2005 VietnamFisheries and Aquaculture Sector Study Final Report.Hanoi.

Ministry of Industry. 2005. Master Plan for ElectricPower Development in Viet Nam 2005–2025. Hanoi.

MoNRE (Ministry of Natural Resources andEnvironment). 2010. “Vietnam Industrial ZonesDump 700,000 cu.m. of Untreated Wastewater aDay.” Press release, 7 June.

MRC (Mekong River Commission). 2010. MRC SEAfor hydropower on the Mekong mainstream.Impacts Assessment (Opportunities and Risks.Discussion Draft. Vientiane, Lao PDR.

Nguyen Van Trong. 2008. Vietnam: Working towardthe Production of Safe and High-Quality AquacultureFoods. Taiwan: Food & Fertilizer Technology Centerfor the Asian and Pacific Region.

UNDP (United Nations Development Programme).2009. Climate Change Fact Sheet: The Effects ofClimate Change in Viet Nam and the UN’s Response.New York.

Viet Nam News. 2010. “Plan Aims to Stem IllegalWater Uses.” 24 March.

. 2006a. Promotion Vietnamese Development—Growth, Equality and Diversity. Washington, DC.

World Bank. 2006. Water Supply and SanitationStrategy: Building on a Solid Foundation.Washington, DC.

———. 2007a. “The Current State of WaterEnvironment in 3 River Basins of Cau, Nhue-Day andDong Nai River Basins.” In Environment Report ofVietnam, 2006. Washington, DC.

———. 2007b. Vietnam Water Resources SectorReview: Irrigation and Drainage Subsector. InterimReport. June. Washington, DC.

———. 2008. Economic Impacts of Sanitation inVietnam. A five-country study conducted inCambodia, Indonesia, Lao PDR, the Philippines andVietnam under the Economics of Sanitation Initiative(ESI). Jakarta.

———. 2010a. Climate Change Impacts andAdaptation in Vietnam: Agriculture and Water.Economics of Adaptation to Climate Change. Finalreport.

———. 2010b. Sustaining Water for All in a ChangingClimate. World Bank Group Implementation ProgressReport of the Water Resources Sector Strategy.Washington, DC.


FOREST MANAGEMENT

CHAPTER 4

Vietnam’s forest landscape has changed dramatically over time: overexploitation andconversion to other uses have eroded the forest resource and depleted its biodiversity.Almost two decades of afforestation programs have reversed the decline in forest cover,but degradation of natural forests continues. And while species of fauna and flora new to

science are still being recorded, the number endangered is growing.

Devolution in the forest sector has provided local people with use and management rights.However, rates of poverty in forested areas remain high, particularly among ethnic minorities in theremote uplands. The economic contribution of the forest sector to the gross domestic product islow, but it would be significantly higher if environmental services were taken into account. Thedramatic growth of the wood industry has brought economic benefits, yet demand for timbermotivates illegal trade, which poses a threat to forests in the region and the future of the industry.

To address these issues, a comprehensive set of reforms are outlined in this chapter. These includemore-effective devolution of forest protection and development to private actors, with incentivesfor sustainable management; enhancing forest law enforcement and governance mechanisms toimprove social equity and environmental sustainability; and information and forest managementsystems to provide robust bases for policy formulation, planning, and multiple-use management.Not only are these reforms necessary for reasons of efficient utilization, greater social equity, andenvironmental sustainability, they also address many of the conditions necessary to benefit in thefuture from international transfers for carbon sequestration services.

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TC H A P T E R 4 : F O R E S T M A N A G E M E N T 71

Figure 4.1. Area of forest by type, 2005

Source: MARD 2008.

Vietnam has some 16 million hectares (ha) ofofficially designated forestland, of which about13 million ha are actually forested.117 Theremainder consists of bare land and denudedhills.118 Of the forested land, about 10 million haare classified as natural forests (although verymixed in structure) and almost 3 million ha areplantations.119 (See Figure 4.1.)120

Forestland is managed according to one of threefunctional categories: special-use forests (SUF),which cover almost 2 million ha; protectionforests, at almost 5 million ha; and productionforests, about 6 million ha.211 The country’scomplicated topography and climate explain itsdiversity of natural forests, ranging from sea levelto over 3,000 meters, including evergreen and

semi-evergreen broad-leaved forests, semi-deciduous and dry deciduous forests, mixedevergreen coniferous forests, and mangroves.

The forest landscape has changed dramaticallyover time. (See Figure 4.2.) Several decades ofintense exploitation and conversion saw forestcover decline from 43 percent in 1943 to about 27percent in 1990, but then approaching 40 percentin 2009. The loss of mangrove forests has been andcontinues to be particularly acute, from 400,000ha in 1943 to less than 60,000 ha in 2008.122

In 1992 the government commenced a series ofambitious afforestation programs to promotetree planting on “barren hills”123 and to protectand enrich existing forests.124 Planting, mainly

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TC H A P T E R 4 : F O R E S T M A N A G E M E N T72

Figure 4.2. Vietnam forest cover, 1983 and 2004

Source: World Bank 2005.

with fast-growing and often exotic species, andprotection to assist regeneration of naturalforests has increased forest cover to almost 40percent.125 The estate now comprises naturalforests (assorted in terms of species composition,structure, and quality) (see Figure 4.1) andreforested areas of low biodiversity value.126 Anddespite the increase in area, degradation, inparticular of natural forests, continues.

Institutional PerspectivesPolicy PerspectivesVietnam’s Socio-Economic DevelopmentStrategy 2001–2010127 provides severaldevelopment objectives for the forest sector:increase overall forest cover to 43 percent,complete the allocation of forestland to socializeforestry development and promote forestry-based livelihoods, stabilize cultivation practicesand prevent the destruction and burning offorests, and accelerate commercial reforestationto provide material for domestic and export-oriented industries. These objectives areelaborated within the five programs of theVietnam Forestry Development Strategy 2006–2020,128 which sets ambitious targets for forestdevelopment and for management, policy, andinstitutional reforms. The cost of achieving theseis estimated at $400 million annually over the 14years of the strategy. However, currentinvestment levels from public and privatesources are only $50–60 million annually.129

Acknowledging this shortfall, the strategyintroduces market-based approaches to sectorfinancing—strengthening incentives and theenabling environment for private actors.

The government’s main policy for forestryinvestment since 1998 has been the Five MillionHectare Reforestation Programme (also known asProgram 661).130 This has had mixed resultscompared with its ambitious targets.131 Althoughthe target for protection forest (3 million ha) waslargely met, the one for production forest (2million ha) was not.132 Also, weak planning,budgeting, and control provisions presented

enormous opportunities for fraud and corruptionat various levels.133 Following a national review,the program was amended in 2007134 and a newPolicy on Production Forest Development135 wasintroduced to provide subsidies for growingtimber and support for forest infrastructure andextension services.

The new Directorate of Forestry under the Ministryof Agriculture and Rural Development (MARD) isresponsible for developing forest policy andproviding oversight and guidance forimplementation. Line agencies at provincial anddistrict levels are responsible for administering forestprotection and development. However,decentralization efforts in the sector remain rathernominal. Furthermore, development of effectiveforest policy is surely constrained by the lack of high-quality and consistent data.137

Economic Perspectives The forest sector contributed just 1 percent ofgross domestic product (GDP) in 2005.138 But thisdoes not include forest product processing andunrecorded forest product consumption.Furthermore, public goods such asenvironmental services provide a value by someestimates several times greater than the timberresource—when including the value of soilprotection, water regulation, and carbonsequestration provided by natural forests.139 Inaddition, researchers have shown that theaverage value of non-timber forest products inVietnam’s natural forests is about 2 million VNDper hectare140 (in total some $1 billion).

Forestry consumes 20–25 percent of publicexpenditure in agriculture/forestry, while itcontributes only 4 percent to the output of thatsector.141 However, this figure does not reflect thefull value of forest services, and the larger part ofinvestment under Program 661 has been in non-commercial forestry for protection andconservation. Furthermore, the benefits offorestry investments are seen in the longerterm—between 5 and 15 years (or more),


depending on species and production objective.

Potential exists to improve productivity of thesector: average plantation yields at 4–12 cubicmeters per ha per year are at least 50 percent lessthan their potential.142 Some 3 million ha offorestland remains bare, and local people oftenlack the resources necessary to put their land intoproduction;143 natural production forests areeither closed for harvesting or exploited under aquota system that removes the incentive forsustainable management.

Timber production consistently dominates otherinterests as it is easier to quantify thanbiodiversity conservation and environmentalprotection functions. But nascent markets forecosystem services exist, with national pilotingof payments for forest environmental services(PFES), and private piloting of carbon-financedforest protection.144 These efforts have receiveda recent boost with the issuance of a Decree onthe policy for PFES.145 This defines the market

actors and lays down principles fordetermination of payments and an institutionalmechanism for handling the transactions.However, weaknesses in forest law enforcement,governance, and monitoring will need to beovercome to fully realize the potential of suchpilots and to ensure that forests are maintainedand their biodiversity protected.

Vietnam’s wood processing industry has growndramatically146 (see Figure 43), with exports of$2.8 billion in 2008.147 The industry enjoyscompetitive advantages as a contactmanufacturer, a sector of the global furnitureindustry characterized by low profit marginsresulting from intense low-cost competition andindirect access to markets.148 Some firms areupgrading toward their own designmanufacturing, but much work is still to be doneto build a long-term, internationally competitivewood processing industry.149 The challenge forthe pulp and paper industry is even greater, withimported paper from Indonesia cheaper than


Figure 4.3. Turnover of forest sector enterprises, by type of activity

Source: General Statistics Office.

that produced by the most efficient mill inVietnam.150

Adding output from wood-based products, thetotal contribution of the forestry sector to GDPrises to over 5 percent.151 This is a notableachievement for an industry that currentlyimports some 80 percent of its raw materials.152

Domestic sourcing remains a struggle for thisindustry: private investment in timberplantations is difficult,153 and farmers allocatedland are less willing to grow sawlogs, and theytend to produce different products at differenttimes.154

Of the 2,500 wood processing enterprises inVietnam, some 500 export wood products.155

Only about 200 of these have Forest StewardshipCouncil (FSC) chain of custody certificates,156

indicating sizable use of imported wood(particularly plantation-grown eucalyptus andacacia) from well-managed forests.157

Strong market demand from the industry forcheap raw material motivates illegal trade fromboth domestic and external sources (withimports of logs from Lao PDR and Cambodiabeing particularly controversial),158 andweaknesses in forest law enforcement andgovernance mean that such trade can flourish.159

New legislation that bans illegally sourced timberand wood products in Vietnam’s main markets(the Lacey Act in the United States and DueDiligence Regulations in the European Union)could soon have a major impact unless thegovernment and industry take appropriateaction, such as putting in place the systems andcontrols necessary to conclude a Voluntary


In July 2010, the European Parliament approved the EU Timber Regulation (formerly known as the DueDiligence Regulation). This requires timber traders to exercise “due diligence” when selling timber onthe EU market and prohibits the sale of illegally harvested timber in the EU. It is expected that theregulation will become applicable in all EU member states in 2013.

Timber from FLEGT (Forest Law Enforcement and Trade) partner countries will be considered to meetthe requirements of the Timber Regulation: the FLEGT Voluntary Partnership Agreements (VPAs) withthese countries establish procedures that ensure that only timber products derived from legallyharvested timber are sold on the EU market. In August 2010 the EU and Vietnam agreed to startnegotiations for a FLEGT VPA. Implementing the FLEGT VPA will enable Vietnam’s timber producers toadapt to the EU legality requirements and will improve the position of Vietnamese timber on the EUmarket.

A common element to all VPAs is that producing countries put in place credible control systems toverify that timber is produced in accordance with national laws. This implies:

A commitment to ensure that the applicable forest law is consistent, understandable, andenforceable and that it promotes sustainable forest management

Development of technical and administrative systems to monitor logging operations and identifyand track timber from the point of harvest and point of import to the point of export

A commitment to improve transparency and accountability in forest governance

Checks and balances built into the tracking and licensing system, including the implementationof an independent monitoring system

Box 4.1. New rules for woods-based exports: EU PartnershipAgreements and the US Lacey Act

Partnership Agreement with the EuropeanUnion, which the government has started tonegotiate (see Box 4.1).

Social Perspectives An estimated 25 million people live in or nearforests, including many ethnic minorities living inmountainous and remote areas where povertyrates are high. The poor tend to have a higherreliance than the non-poor on forest resourcesfor meeting their basic needs, for obtaining “gap-filler” income between agricultural harvests, andfor providing a “safety net” in the event ofemergencies.160 Despite significant achievementsin poverty alleviation in the country as a whole,high rates of poverty in areas with natural forestremain, particularly in the remote uplands.161 Thecontribution of the forest sector to povertyalleviation is unclear. Despite large investmentsin Program 661, the evidence suggests that it has

had little direct beneficial impact on the incomesof the poor. 163

New forest and land laws issued in the wake ofdoi-moi initiated the devolution of forest use andmanagement rights to non-state actors.164 (SeeFigure 4.4.) Since then the area of forestlandallocated to local people has expanded fromalmost nothing to 3.5 million ha in 2006.165

Forestland allocation has generally been a top-down process, however,166 and outcomes havebeen afflicted by inefficient and inequitableallocation167 of mostly degraded or bare land.168

This is exacerbated if local institutions, throughwhich people can voice concerns and shareinformation, are lacking,169 and access to andunderstanding of policies and laws aredeficient.170

After 10 years of piloting community forest


Development of procedures to license the export of legally harvested timber.

Vietnam is a regional and global wood processing hub. It has the United States, EU, and Japan as itsmain end markets for timber products and is thus highly sensitive to the legality requirements of thesemarkets. Vietnam is also dependent on the imports of raw timber from many other timber producingcountries.

Next to the EU Timber Regulation, a number of other consumer countries have similar legislation or arein the process of developing legislation against the trade in illegally harvested timber: the United Stateswas the first to take such measures by amending the Lacey At in 2008 to make it illegal to import, trade,or transport illegally harvested wood and wood products. The Lacey Act places the burden of proof ofillegality on the U.S. government, and it covers all types of wood-based products (including pulp, paper,and furniture). The amended act includes import declaration requirements for information on:

The scientific name of any plant (including the genus and species names) contained in theimportation

The value of the importation and the quantity, including the unit of measure, of the plant

The name of the country from which the plant was taken.

If this information is not available in a producer or processing country like Vietnam, access to the U.S.markets will be denied.

Also, Australia is in the process of developing legislation against the trade in illegally harvested timber,while Switzerland is introducing an import declaration. A growing number of countries have developedpublic procurement policies that aim to avoid using illegally harvested timber in public projects.

Source: EC 2007; EFI 2008, 2009; EU 2010; ITTO 2010.

management (CFM), revision of the forest law in2004 provided for the allocation of forests tocommunities. But CFM remains a pilot process,172

with few areas of mostly poor forestlandallocated with support of donor projects inselected provinces. CFM is yet to become amainstream initiative. It is a model with potential,however, for implementing Reducing Emissionsfrom Deforestation and Forest Degradation Plus(REDD+),173 particularly in light of theconservation activities at village and communelevel, and it is promoted as such by MARD anddonors. 174

The Vietnam Forestry Development Strategy2006–2020 seeks to promote socialization of theforest sector, encouraging non-state actor tenureand resource access. Most forestland, and thebest forests, remain under state control, however,leaving local people disadvantaged by a lack ofco-management opportunities and unclear

benefit sharing mechanisms—a situation that isbeginning to be addressed with the preparationof a decision on piloting of these mechanisms.The reform of state forest enterprises (SFEs) hasreleased relatively little forestland for allocationto households.175 This process commenced in1999 but continues at a very slow pace thatreflects the depth of underlying complicationsand intransigencies. Although SFEs have beenchanged to become state forestry companies(SFC) to be established and operate under theEnterprise Law,176 many remain dependent fortheir survival on subsidies and fees from Program661.177 Proven business models for restructuringthe SFCs are needed, to provide for sustainablemanagement of forests and benefits for the localand wider economies.

Biodiversity Perspectives In 1992 the World Conservation Monitoring


Figure 4.4. Forest tenure change in Vietnam between 1995 and 2009171

Source: Nguyen Ba Ngai et al. 2009; Nguyen Ba Ngai, personal communication, 2010.

Centre evaluated Vietnam as one of the 16 mostbiologically diverse countries in the world.178 (SeeTable 4.1.) Species new to science have beendiscovered over the past 20 years.179 However,the number of species becoming endangered isincreasing. Now more than 300 plant species areat risk, with populations declining mostly due todeforestation and shifting cultivation,180 andabout 400 species of fauna are at risk, mostly as aresult of habitat loss and hunting.181

The area of natural forests of high biodiversityhas declined considerably. Only about half amillion ha of primary forests remain—scatteredin the Central Highlands, the southeasternregion, and northern Central Vietnam—andprimary mangrove forests have almostvanished.185 Vietnam has 128 SUFs, whichcomprise its protected area system.186 Most aresmall and fragmented, and some also includeareas of agricultural and residential land. Thelarge charismatic bird and mammal species have

been lost from most. Many now suffer acontinuing decline in quality rather than extentof habitat, and the unrestricted and widespreadpractice of infrastructure development withinthem threatens their viability.187

The protected area system suffers as a result ofphysical and administrative fragmentation. (SeeBox 4.2.) The former makes it difficult to conservebiodiversity and results in high per-hectaremanagement costs,188 and the latter weakens theauthority and effectiveness of management, asresponsibilities are divided across ministries andbetween administrative levels. A more unifiedprotected area system is needed to avert the riskof more SUFs becoming paper parks.189

Despite comparatively high levels of funding (atleast for the centrally managed national parks),SUFs face major financial problems, whichtranslate into serious management constraints.190

These are intensified by institutional problems191


Table 4.1. Species richness and threat status in Vietnam in 2005

Source: World Bank 2005.

Taxonomic group

Mammals

Birds

Reptiles

Amphibians

Fish

Invertebrates

Plants

Fungi

Algae

Species inVietnam 182

310

840

286

162

3,170

14,000

Percent of global species foundin Vietnam

8

9

5

4

11

6

Nationallythreatened183

78

83

43

11

72

72

309

7

9

Globallythreatened184

46

41

27

15

27

not evaluated

148

not evaluated

not evaluated

and limited inter-agency cooperation.192

Engagement with local communities mostlyinvolves contracting for forest protection—amechanism that (moderately) compensates forloss of access rather than incentivizesmanagement.193 Co-management—the sharingof management functions, benefits, mandates,and responsibilities between managementboards and local people—does not yet exist inSUFs.

Vietnam’s legal system incorporates a largenumber of globally accepted principles onenvironmentally sustainable management, andit is one of the few countries with a biodiversitylaw. In practice such provisions are minorconsiderations in land use and infrastructureplanning decisions. Also, effective lawenforcement is hampered by weak cooperationbetween agencies and by deficiencies ininterpreting and applying ordnances.

Major Issues in the ForestrySectorThe main direct causes of deforestation areconversion to agriculture and infrastructure

development. Illegal logging, overexploitation,and forest fires are major causes of forestdegradation and often precursors ofdeforestation. The indirect or root causes arerelated to the speed and type of economicgrowth, changes in markets, and broader issuesof governance and policy. 194

Global drivers of change in the forest sectorinclude changes in international market demandfor forest goods and services, including climatechange mitigation, with potential for bothadverse and beneficial impacts:

REDD+ (see Box 4.3) offers an incentive forchanging the way forest resources areused—curbing carbon dioxide emissionsthrough paying for actions that preventforest loss or degradation—but there areconcerns that use and management rightsof forest-dependent communities could beweakened.

Responsible timber traders are active inpromoting supply chain and forestmanagement reform, while others aredriving illegal logging.

Vietnam has a good potential for plantation


Box 4.2. Responsibilities for protected area management

Responsibility for protected areas is divided among several agencies. MARD and its provincialdepartments are responsible for all special-use forests, and the Vietnam Environment ProtectionAgency within the Ministry of Natural Resources and Environment (MoNRE) is responsible for Ramsarwetlands.

Within MARD, the Directorate of Forestry has responsibility for the overall management of the SUFprotected area system, and direct responsibility for the management of six national parks. Theprovinces manage the other national parks as well as all nature conservation areas and cultural-historic-environmental sites. Agencies responsible for managing these areas are the Departments of Agricultureand Rural Development, the Departments of Science, Technology and Environment, the ForestProtection Departments, the Fisheries Departments, and the Departments of Culture and Information;arrangements vary, depending upon the type of SUF and from one province to another.

SUF management boards have authority only within a park or reserve. In the buffer zone, managementdecisions are made by district and commune People’s Committees, State-Forest Enterprises, provincialDepartments of Agricultural and Rural Development, and the Department of Land Administration.

development, the opportunity for productivenatural forest management, and the basis for adynamic wood industry. But performance andsustainability across the sector is hampered bylow productivity of planted forests and by weakincentives and support to put allocated land intoproduction. Devolution has been driven byquantitative target-oriented planning, with lessimportance placed on process quality that couldhave delivered greater social equity throughgood forest land use planning, more democraticand transparent land allocation process anddecision making, and post-allocation supportand services to new forestland-holders.

Forest development in Vietnam has focused onachieving centrally set targets, in particular forafforestation. Sustainable management is pilotedbut not wholly practiced in natural forests, andthese continue to be degraded as threats tospecies, habitats, and a well-functioning forestecosystem intensify. Vietnam might end up as acountry dominated by stands of acacia, pine, andeucalyptus—with a great loss of biodiversity anda heightened risk of climate induced calamities(such as storms, fires, and insect infestations) inmore vulnerable monocultures.195

The Reform AgendaIssues affecting the sector are inextricably linkedto and affected by polices and events in othersectors196 and other countries.197 Clearly theprocess of policy reform needs to be coordinatedacross affected sectors, with implementationbetter coordinated among relevant agencies. Keypriorities for the future should be to:

Disentangle private sector and statefunctions, with the key role of forest sectorinstitutions being to facilitate forestmanagement by private actors (see Box 4.4)

Decentralize implementing authority andbuild capacity for service delivery at lowerlevels

Devolve use rights and managementresponsibilities, ensuring that poor forest-dependent minorities and communities areable to derive real benefits frommanagement of allocated forestland

Reform forest policies and managementsystems to create adequate and effectiveincentives for private actors to sustainablymanage forests198


In 2005 a plea was made to consider existing forests as a mitigation measure under the United NationsFramework Convention on Climate Change (UNFCCC). At the 13th Conference of the Parties to theUNFCCC, a decision was adopted that called on Parties to develop proposals for the establishment ofa mechanism for Reducing Emissions from Deforestation in Developing Countries. Over time thismechanism has evolved to include five eligible activities and it is now referred to as Reducing Emissionsfrom Deforestation and Forest Degradation in Developing Countries; and the role of Conservation,Sustainable Management of Forests and Enhancement of Forest Carbon Stocks in Developing Countries(REDD+).

The REDD+ mechanism is likely to become part of the new climate agreement as of 2013. In themeantime there are several initiatives to help developing countries establish national REDD+ programs;the Government of Norway is particularly active in supporting REDD+ establishment. Vietnam was thefirst country to implement a national UN-REDD Programme ($4.3 million) and part of the first group ofcountries to be accepted for funding through the Forest Carbon Partnership Facility of the World Bank($3.6 million). MARD is currently developing its National REDD Program, with support from the UN-REDD Program.

Box 4.3. National REDD + Program

Strengthen governance and lawenforcement mechanisms necessary tounderpin sustainability

Bring the role of forests in greenhouse gasmitigation and climate change adaptationinto full play within strategies and planningof relevant sectors

Facilitate policy consultation and learningfrom pilot initiatives together with keystakeholders to efficiently identity solutionsand implementation arrangements.

Governance and InstitutionalReformsReliable and adequate information (in terms ofdisaggregation, frequency, and transparency) isneeded to provide an appropriate basis for policydecisions and to improve implementationeffectiveness. To improve data quality andconsistency in the forestry sector, the followingrecommendations should be taken into account:

Effective coordination among ministriesand agencies is required to develop a

system and agree upon standards for datacollection, measurement, and compilation,in order to make information comparablein time, space, and across organizationalboundaries.

Clear roles and responsibilities for datacollection, compilation, and publicationbetween ministries and agencies need tobe established, and capacitiesstrengthened.

Modern information technologies shouldbe introduced for reporting, monitoring,and compilation processes and to facilitatepublic dissemination and analysis.

In addition, improved systems and capacity forforest inventories and monitoring will benecessary to provide the information basis formanaging forests sustainably (see Box 4.5), toassess performance linkages for PFES and REDD+payments, and to identify social andenvironmental outcomes.

Interagency cooperation is a primary conditionto enable effective forest law enforcement. Suchcooperation needs to improve dramatically todeal effectively with the forest crime challenge,


Government forestry departments traditionally integrated multiple public and private functions.Challenges of reduced public expenditure, mounting expectations of different stakeholders, andincreasing conflicts over the use of forest resources are stirring public agencies to rethink their roles. Theevolution in focus can be loosely described as moving from policing the forests to managing them tofacilitating management by others.In some cases, reform has been superficial, limited, for example, to changes in ministerial responsibilityor to structural but not functional change. Strategies used in more successful transitions to an enablingrole have included:

Separating policy and regulatory functions from management functions

Entrusting wood production and processing to an independent commercial government entityor privatizing all commercial activities

Decentralizing and devolving management responsibility to the local level, usually as part of alarger program of political and administrative decentralization.

Source: FAO 2009.

Box 4.4. Evolution of forest sector institutions

which will require strengthened cooperation atall levels:

Systems of cooperation are neededbetween MARD, the Ministry of Justice, andthe General Department of Customs toidentify changes needed in the legalframework.

New local-level approaches are needed,such as revised institutional workingrelationships between the Forest ProtectionDepartment and enforcement agencies.

Interagency cooperation at theinternational level can prevent imports ofillegally sourced timber and wildlife;systems need to be in place for sharing dataand working jointly with counterpartagencies in exporting countries.

Sustained access to international markets for thewood processing industry will requireprocurement of verified legal timber originatingfrom well-managed forests, whether domestic or

imported. Government and the private sectorshould put in place effective due diligencemeasures for sourcing raw material. This willrequire an agreed definition of legal wood,systems for verification of legal origin andcompliance, and effective chain-of-custodymanagement. In addition, enforcement effortsshould be focused on the point-of-sale of illegalforest products—sawmills, wood processors, andexport points. The basic elements of thisapproach would require a licensing system forwood processors and traders, an enforceablerequirement to demonstrate legality of rawmaterial, systematic and concerted inspection bytrained forest enforcement and customs officials,and strong legal sanctions for the unlawfulpossession of wood. A similar approach shouldbe also applied to combat illegal wildlife trade,focusing on markets and restaurants sellingwildlife products.

A very preliminary (and likely conservative)estimate of REDD+ revenues, based on low-


MARD has embarked on an effort to integrate data and information on forest resources, management,and economic activities. The Forest Information Management System (FOMIS) has been an earlyattempt at collating, integrating, and publishing such information. This is being strengthened, withsupport from the FOMIS project, to provide a more professional basis for the management of data thatunderlies FOMIS and to enhance opportunities for application in forest management, such as for theelaboration of provincial forest development plans.

The 4th National Forest Inventory (NFI) will be completed in 2010. A new approach to the NFI has beendeveloped through the National Forest Inventory and Monitoring Program (NFIMP), which will seeinformation management based in MARD rather than the Forest Inventory and Planning Institute, as inthe past. The new NFIMP is expected to be endorsed by the government before the end of the year.

The National REDD Programme is developing a system for Monitoring, Reporting, and Verification(MRV), as required by the UNFCCC. The MRV system will collect data on forest resources fromparticipants in the REDD+ mechanism, as well as from secondary sources such as the NFI. The MRVsystem will generate the reports upon which Viet Nam will receive funds for reducing emissions andenhancing removals. A benefit distribution system to deliver payments to participants will use the MRVas its primary “evidence” of performance. The MRV is expected to provide information for other uses aswell, as it is likely to become the most comprehensive database on forest resources and users.

MARD would like to see all three systems—FOMIS, NFI, and MRV—integrated into a single source ofinformation on forest resources in Vietnam.

Box 4.5. Forest information management

resolution remote sensing estimates of forestcover change over the period 2000–05 andIntergovernmental Panel on Climate Changecarbon density estimates, suggests that Vietnamcould earn some $80–100 million a year199

provided international agreement is reachedunder the UNFCCC. REDD-preparedness ishappening and pilots are being planned, but thiscould only be realized if the government takessteps to ensure that REDD+ is implementedeffectively. This will involve developing acomprehensive REDD+ strategy to generate andsustain emissions reductions at the local level,developing the necessary capacity to measureand report on emissions reductions, and puttingin place a benefit distribution system that meetsthe expectations of the international communityin terms of equity, transparency, additionality,performance, and accountability. (See Box 4.6.)

Effective implementation of REDD+ will alsorequire actions to ensure permanence of forestcarbon storage by strengthening forest lawenforcement and governance mechanisms sothat tenure is assured and forests protected,

along with actions to address leakage that couldresult from the demand for raw material having anegative impact on forests in neighboringcountries. Policy incentives need to be designedso that adequate reward is given to the provisionof non-market benefits of forests.

Introduction of a multiple-use managementapproach will require district and commune-levelsupport for forest planning, monitoring, andextension. This will require reform of the forestprotection force to become a more technicalsupporting agency for forest development, ableto facilitate the shift from state to private forestmanagement through cooperative action thatsupports implementation by those who holdforestland.

Efficiency ReformsAppropriate solutions for forestlandaccumulation that improve raw material supplyand deliver benefits to local people arenecessary. This could be in the form of leasingarrangements to enable enterprises to lease


The REDD+ agenda drives an important reform process. Analyses conducted in the framework of thepreparation of the Readiness Preparation Proposal for submission to the Forest Carbon PartnershipFacility highlighted six recommendations to reduce deforestation and forest degradation.

First, it calls for assessing current sectoral development plans both nationally and provincially to identifyplans which are likely to lead to high forest loss. Second, it calls for secure forest use rights tohouseholds, or communities, with the expectation that this will provide incentives for them to protectthe forest area assigned to them. Third, it calls for modifying a number of policies including, for example,the current logging ban and the system for granting permits for afforestation on degraded forest lands’,including the process of classification of degraded land. Fourth, it recommends proper execution ofhigh quality EIAs which would help mitigate development projects which are likely to occur in highforest loss. Fifth, it recommends providing support in certain areas, such as more intensive agriculturalcultivation, encouraging production of higher-value crops and vocational training for off-farm incomeopportunities. One area of particular importance concerns alternatives to slash and burn agriculture.Sixth, it calls for financial transfer mechanisms which would enable forest-using communities to havereal and reliable incentives.

Source: GoV 2010b.

Box 4.6. The Forest Carbon Partnership Facility (FCPF) in Vietnam

blocks of forestland from multiple landholders;outsourcing arrangements (such asimplemented by VINAFOR200), in whichenterprises contract with farmers to plant andgrow material primarily for their consumption; ora refined outsourcing arrangement (suchpioneered by LASUCO201), where farmers alsohave the possibility to become shareholders inthe processing facility they supply. (See Box 4.7.)

It is not realistic to assume that Vietnam’s timberconsumption can be met from domesticsources.202 But the wood processing industrycould drive the development of (certifiable) well-managed forests—especially plantations.Formulation of a national Wood Production andIndustry Development Plan could provide a

blueprint for more integrated development ofmaterial forests and the processing industry. Thiswould identify a limited number of locationswhere substantial areas of plantations could bedeveloped consistent with raw materialrequirements. Also, incentives and the enablingenvironment should be strengthened toencourage private investors that can bring thebest available technology and resources to thesector.

Key objectives of the SFE reform process203 arestill to be fully realized; most enterprises have justchanged their titles without many changes innature.204 Urgent reforms are needed to unlockthe potential of these forests. This could beachieved by allocating to communities to


Smallholders growing trees on allocated land often seek an early return with the production of low-value small-diameter wood sold through agents to the chip and pulp industry. The potential exists tobetter coordinate and manage this resource, providing benefits in terms of sustainability of the forestand better income for local people. One such example has been developed in Quang Tri province,where the World Wide Fund for Nature (WWF) has facilitated the establishment of a Smallholder GroupManagement Scheme. This has just received FSC certification awarded in recognition of responsiblemanagement in accordance with globally established social and environmental criteria.

The smallholder group started off with 125 households, with individual plots ranging from 0.5 to 8 ha,which formed themselves into five village groups each with an elected leader. Additional farmers canapply to the group and be admitted after an internal assessment of the applicant’s compliance with thegroup’s management regulations.

Under the group scheme, individual household members manage their forestland in accordance witha simple forest management plan aiming at the improvement of the economic and environmentalvalue of the stands. The implementation is supported and monitored by a Group Manager (currentlyWWF, but in the future the Forestry Sub-Department within Quang Tri DARD). This has improvedcoordination and management, resulting in tangible benefits:

Coordinated management, harvesting, and marketing, with the possibility to offer larger volumesand negotiate directly with potential buyers

Joint procurement, leading to cost savings for inputs such as seedlings

Planting of native trees to enhance the environmental functions of buffer zones along waterbodies

Potential group investment in processing and loans to group members for forest standimprovement.

Box 4.7. Smallholder group management scheme

support local livelihoods, leasing to users in aposition to invest properly in forest managementand protection, or forming new social enterprisesbetween existing SFCs and local stakeholders.

The potential exists to improve the productivityof planted forests. Gains could be achieved fromthe more rapid deployment of clones, hybrids,and new species and provenances; the policiesand legislation on plant material need to bereviewed to ease and speed deployment ofsuperior material. Also, species-site matchingshould be improved through a system for siteclassification that takes account of soil type,vegetation with indicator plant species,microclimate, and water availability.Furthermore, a network of decentralizednurseries should be established to promote bothexotic and local indigenous species, whilenursery advisory centers should be set up asliving extension centers where planters canpurchase material and obtain advice. Thereneeds to be a major coordinated effort inresearch, training, and extension to supportimprovements in the quality and productivity offorest resources and viable managementsystems. This will require greater coordinationand collaboration between research institutesand forestry-related service agencies,appropriate investment in forestry research andextension, a research agenda driven by the needsof forest users, and participatory techniques toensure that proposed technologies are tested onthe basis of criteria that are important for users.

Equity ReformsCommunity-based forestry can provide more-sustainable and beneficial means ofmanagement and protection than currentpractices in certain situations by, for example,providing a means to develop the local economyin mountainous areas, protecting anddeveloping coastal mangroves for the benefit oflocal people and the environment, or conservingbiodiversity through co-management withinSUFs. (See Box 4.8) To achieve these outcomes, a“basket” of community-based managementmethodologies, providing improved individual,community, and co-management rights andresponsibilities, should be available to beimplemented according to social andenvironmental needs and the strictures ofexisting forest ownership and classificationarrangements. This would require:

Lessons learned from piloting communityforestry to be absorbed and appropriatenational policies developed that can enableallocation of (more) suitable forestland tolocal communities

Formalization of co-managementarrangements, enabling representatives oflocal communities to have a role within themanagement boards of SUFs andprotection forests and providingcommunity members with rights andresponsibilities to meet their needs whilemaintaining forest management objectives


The forests now planned for harvesting were established on bare land with assistance from KfW some10 years ago. With the sale of larger-diameter timber, the smallholders will realize two types of premium:one from selling sawlogs directly to the value-added processing industry, and the other fromcertification, which is providing a 10–20 percent price improvement.

The group provides a focus for training and advisory support and potentially the basis for a public-private partnership with a responsible buyer from the furniture industry. It also offers a model thatcould be replicated in other areas. In collaboration with the IKEA company, WWF is exploringopportunities to expand the scheme to more than 7,000 ha in Quang Tri by 2012, with privateinvestment rather than donor funding, and in so doing contribute to the government’s target of 30percent of production forests being certified by 2020.

Source: Tim Dawson (consultant to the VDR) and Sebastian Schrader (WWF).

Clear benefit sharing arrangements thathelp meet local needs and in turn providethe incentive for protection and sustainablemanagement—the current (short-term)contracting of forest for protection tohouseholds should be replaced by long-term performance-based financing, such asthat piloted under the PFES scheme

Commitment from leadership to put inplace a policy frame at the national leveland technical guidelines at provincial levelsin line with national decentralizationefforts, along with technical and financialsupport to local communities forimplementation.

The forestland allocation process should beimproved to overcome past problems ofinefficiency and inequity. This should include anappropriate solution between MARD and theMoNRE to merge the forest allocation andforestland allocation processes, providing singleuniform guidance on participatory forestland useplanning and allocation. Also, performance of theallocation process should not just be measuredin terms of area allocated but, more important, in

the quality of the process—measured in terms ofequity and transparency—as experienced byrecipients. This could be ascertained throughsurveys.

Environmental SustainabilityReformsA multiple-use forest management approach isneeded to ensure that a better balance is struckamong the economic, social, and environmentalservices that forests should provide. Instead ofstrictly classifying forests as protection,production, or special use, the functional aspectsof all three should be blended within site-specificforest management plans. These would graduallyreplace the current uniform managementprescriptions and the quota system. Combining“production” with “protection” would increase theincentives and benefits for households andcommunities to actively engage in forestmanagement and protection. Furthermore, theinitial inventories and forest function mappingwould provide baselines against which tomonitor changes, thereby supportingsustainable forest management, PFES, and REDD


Mangroves have been lost from much of the coastline of Thanh Hoa province (as elsewhere in Vietnam).In Hau Loc District, protection of remaining mangroves had been financed by Programme 661 using theBorder Army for enforcement activities. Seeing the importance of mangroves in sustaining coastalresidents’ livelihoods and contributing to the reduction of disaster and climate change vulnerability,CARE facilitated the development of a community-based approach to mangrove management.

Local people have received training and guidance in hands-on activities in order to assumemanagement responsibilities. They collectively run the nursery, selecting and sourcing seeds ofrecommended varieties for the area’s varied local conditions, such as mudflats or sandy sea-beds; andthey work together in preparing and planting the mangroves in groups of 50 to 700 people at one time.Thus far, nearly 250 hectares of mangroves have been re-established.

Mobilizing community-wide labor has been key to the high plantation survival rates. This has extendedthe existing mangrove area and increased the storm protection afforded to more than 6,000 people inthe six project villages and to some 2,300 people from neighboring villages. In addition the communityformed a protection team to report and stop activities that harm the mangroves and a youth-led GreenTeam with more than 160 members active in planting, beach cleanup, and raising awareness on thevalue of mangroves and environmental protection.

Box 4.8. Community-based mangrove management

processes. The prerequisites for this approach willinclude:

Improving the quality of forest inventory asa basis for forest management planning

Identifying social, environmental, andeconomic forest functions and demarcationand mapping of production and protectionzones

Elaborating management plans thatcontain specific management prescriptionsfor the forest zones and their inherentforest functions

Delegating provincial-level implementingauthority, with capacity strengthened tosupport the process.

Closing natural forests to all harvesting is not aneffective measure for sustainable forestmanagement, and the existing quota systemdiscounts the basis for sustainable forestry:harvesting based on growth and yield in adefined and permanent forest area. Under asystem of multiple-use management of naturalforests, the national harvesting quota systemshould be replaced with a scientific approachbased on assessment of forest status anddynamics in order to determine sustainableyields. This will unlock the potential of naturalforests to contribute more to local livelihoodsand the wider economy, and it will increase theincentive for sustainable management.

Management of the protected area system needsa major institutional rethink, so that policy,planning, and regulatory decision making and

management oversight are administered by acentral organization, replacing the current multi-agency arrangement.

SUFs need to be adequately financed andeffectively managed. This will require a definitionof criteria for SUF funding that takes account ofbiodiversity value rather than just staff numberand SUF size; an enabling environment, so thatSUF management boards can generate incomefrom biodiversity offsets, PFES, and leasing;capacity building for managers, technical, andfield staff for more effective implementation offorest and biodiversity legislation; and integratedmanagement approaches that provide for co-management in collaboration with localstakeholders, incentives to strengthen protectionthrough benefit sharing arrangements, andbuffer zone management arrangements thatcomplement and reinforce protection activities.

Much of Vietnam’s important biodiversity isfound outside the boundaries of SUFs. To addressthis, there is an urgent need to improveintegration of biodiversity conservation andenvironmental protection measures intomanagement of production and protectionforests. The multiple-use management approachwould provide for this better, as biodiversityvalues would be identified at an early stage ofplanning and as zoning and managementprescriptions would enhance protection efforts.This approach is also highly relevant in thechanging climate, as critical sites would beprotected and relevant environmental functionswould be maintained (see Box 4.9).


After nearly three years, the communities asked the Hau Loc District People’s Committee for the fullrights to plan, manage, protect, and sustainably use the mangroves. In October 2009, they wereawarded these rights for five years, incorporating rules and regulations, which the villages hadnegotiated with local government under the framework of national legislation and regulations. A study sponsored by CARE explored opportunities for replicating this co-management approach ona larger scale by other donors and in future for mainstreaming it by government, such as within the newnational program on mangrove reforestation and rehabilitation.

Source: Nguyen Van Anh and Morten Fauerby Thomsen (CARE).

Provinces lack a clear provincial land useplanning vision. Provincial Forest Protection andDevelopment Plans should be prepared byconsolidating site-level management plans.These will clarify management and protectionneeds as well as development potential for eachprovince as a whole, based on individual sitefunction mapping and zoning. Provincialadministrations will be better able to plan forsupport to and development of the sector and tointegrate these objectives within provincialsocioeconomic development plans. Each planwill also provide a basis for defining a province’spermanent forest estate and a means foridentifying potentially adverse impacts frominfrastructure and agriculture developments. Thisapproach will require a greater commitment ofplanners and decision makers to ensure that theforest estate remains permanent; adequateresources and capacity building for planners,extension, and forest development staff atprovincial, district, and commune levels; and astrengthening of legal safeguards to protectnatural forests from avoidable damage.

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EIA (Environmental Investigation Agency) andTelapak. 2008. Borderlines: Vietnam's BoomingFurniture Industry and Timber Smuggling in theMekong Region. London and Bogor, Indonesia.

Emerton, L., J. Bishop, and L. Thomas. 2006.Sustainable Financing of Protected Areas: A GlobalReview of Challenges and Options. Gland,Switzerland, and Cambridge, U.K.: InternationalUnion for Conservation of Nature.

FAO (Food and Agriculture Organization). 2009.Asia-Pacific Forestry Sector Outlook Study II, WorkingPaper No. APFSOS II/WP/2009/09 - Vietnam ForestryOutlook Study. Rome.

EU Delegation to Vietnam, press release 8/18/2010(http://www.delvnm.ec.europa.eu/news/vn_news/vn_news109.html). Hanoi.

EC (European Commission). 2007. FLEGT BriefingNotes 06: Forest Law Enforcement, Governance andTrade – Voluntary Partnership Agreements(http://ec.europa.eu/development/icenter/repository/B2_Flegt_Br6_2007_en.pdf).


A recent study of the forestry sector concludes that sea level rise, higher temperature, unpredictablerainfall and extreme climatic events will impact the boundaries of forests, the distribution of species andbiodiversity. Very limited research is found to support quantitative conclusions, but the risk of forestfires, pest and diseases in forests are predicted to increase. However, some forest species can also benefitfrom higher levels of CO2 and reach higher standing volumes.

In order to mitigate these impacts it will be important to design biodiversity corridors that are resilient,enhance coastal mangrove barriers, improve seed breeding, and build capacity to fight forest fires.

Source: Adapted from Vu Than Phuong et al. 2010.

Box 4.9. Climate change and forestry in Vietnam

EFI (European Forest Institute). 2008. Forest LawEnforcement Governance and Trade – The EuropeanUnion Approach. Policy brief No. 2(http://www.efi.int/files/attachments/publications/efi_policy_brief_2_eng_net.pdf ).

———. 2009. What is a Voluntary PartnershipAgreement – The European Union Approach. Policybrief No. 3

(http://www.efi.int/files/attachments/publications/efi_policy_brief_3_eng_net.pdf ).

FAO (Food and Agriculture Organization of theUnited Nations). 2009. State of the World's Forests2009. Rome.

FSC (Forest Stewardship Council). 2010. Global FSCCertificates: Type and Distribution, June 2010. Bonn.

FoE (Friends of the Earth International). 2001. TreeTrouble—A Compilation of Testimonies on theNegative Impact of Large-scale Monoculture TreePlantations. Prepared for the sixth Conference of theParties of the Framework Convention on ClimateChange by Friends of the Earth International incooperation with the World Rainforest Movementand FERN.

Forest Trends. 2009. Timber Market and Timber TradeBetween Laos and Vietnam: A Commodity ChainAnalysis of Vietnamese Driven Timber Flow.Washington, DC.

Fraser, Alastair. 2003. Forestry Sector PolicyChallenges in Vietnam: A Way Forward. Prepared forthe Program Steering Committee Meeting of theForest Sector Support Program, 5 December.

GoV (Government of Vietnam). 2001. Socio-Economic Development Strategy 2001–2010.Presented by the Central Committee, Eighth Tenure,to the Ninth National Congress.

———. 2010a. Decree: On the Policy for Payment forForest Environmental Services. No. 992010/ND-CP,September 24, 2010. Hanoi.

———. 2010b. Strategic Options of the ReadinessPreparation Proposal. Submitted by the Governmentof Viet Nam to the FCPF in August 2010

Humphreys, Rowena, and Vu Thi Hien. 2008. TheUnderlying Causes of Ethnic Minority Poverty inNorthern Mountainous Vietnam.

ICEM (International Centre for Environmental

Management). 2003a. Vietnam National Report onProtected Areas and Development. Review ofProtected Areas and Development in the LowerMekong River Region, Indooroopilly, Queensland,Australia.

———. 2003b. Lessons Learned in Cambodia, LaoPDR, Thailand and Vietnam. Review of Protected Areasand Development in the Lower Mekong River Region.Indooroopilly, Queensland, Australia.

ITTO (International Tropical Timber Organization).2009. Interim Report on Long-Term Outlook for theTropical Timber Market. Yokohama, Japan.

Karsentry, Alain. 2006. Study on the Impacts ofMarket Investment Liberalization on Vietnam’s Pulpand Plantations Sector, With Particular Reference toChina. Bogor, Indonesia: Center for InternationalForestry Research.

Katila, Marko. 2007. Market Prospects andDevelopment Scenarios for the Vietnamese ForestSector: Implications for Forest Sector Investments.Prepared for the Forestry Investment Forum, Hanoi,9 May.

Katila, P. 2008. Devolution of Forest-Related Rights:Comparative Analyses of Six Developing Countries.Doctoral Thesis. Tropical Forestry Reports No. 33.Viikki Tropical Resources Institute, University ofHelsinki.

MARD (Ministry of Agriculture and RuralDevelopment). 2008. Viet Nam Forest SectorMonitoring and Information System FOMIS: SectorIndicators and Baseline Data Report 2005. Hanoi.

———. 2009a. 2008 Forest Sector DevelopmentReport. Prepared for FSSP Annual Review Meeting15 January 2009. Hanoi.

———. 2009b. 2009 Forest Sector DevelopmentReport. Prepared for FSSP Annual Review Meetingin 2 February 2010. Hanoi.

———. 2009c. Achievements from 2 Years (2006-2008) Implementation of the Vietnam ForestDevelopment Strategy 2006-2020. Draft, 16 August.Hanoi.

McElwee. Pamela. 2009. “Reforesting ‘Bare Hills’' inVietnam: Social and Environmental Consequencesof the 5 Million Hectare Reforestation Program.”Ambio 38 (6): 325–33.

McNally Richard. 2010. Preparing the REDD Strategy.


Presentation to Ministry of Agriculture and RuralDevelopment, June 3–4.

MoNRE (Ministry of Natural Resources andEnvironment). 2007. Vietnamese Red Data Book2007. Hanoi: Natural Scientific and TechnologyPublishing House.

———. 2009. Report—Gap Analysis of TerrestrialProtected Areas System in Vietnam. Hanoi: VietnamEnvironment Administration, BiodiversityConservation Department.

MoSTE (Ministry of Science, Technology andEnvironment), 1996. Red Data Book of Vietnam.Natural Science and Technology Publishing House,Hanoi.

Müller, Daniel, Michael Epprecht, and William D.Sunderlin. 2006. Where Are the Poor and Where arethe Trees? Targeting of Poverty Reduction and ForestConservation in Vietnam. Working Paper No. 34.Bogor, Indonesia: Center for International ForestryResearch.

Nguyen Ba Ngai. 2007. Viewpoints of the Party andState on Socialization in the Forest Sector. Speechpresented at the Forestry Partnership Forum onPromoting Stakeholder Participation in Forestry, 8May. Hanoi.

Nguyen Ba Ngai, Nguyen Quang Tan, William D.Sunderlin, and Yurdi Yasmi. 2009. Forestry andPoverty Data in Viet Nam: Status, Gaps, and PotentialUses. Bangkok, Washington, DC, and Hanoi:Regional Community Forestry Training Center forAsia and the Pacific, Rights and Resources Initiative,and Vietnam Forestry University.

Nguyen Hoang Nghia. 2004. “Conservation of ForestGenetic Resources in Vietnam with Reference toEndangered Tree Species.” In T. Luoma-aho, L. T.Hong, V. Ramanatha Rao, and H. C. Sim, eds. ForestGenetic Resources Conservation and Management.Proceedings of the Asia Pacific Forest GeneticResources Programme Inception Workshop,Kepong, Malaysia, 15–18 July 2003. Serdang,Malaysia: International Plant Genetic ResourcesInstitute’s Regional Office for Asia, the Pacific, andOceanea.

Nguyen Quang Tan, Nguyen Ba Ngai, and Tran NgocThanh. 2008. Whose Forest Tenure Reform Is It?Lessons from Case Studies in Vietnam. RECOFTCPolicy Brief No. 1. Bangkok: Regional Community

Forestry Training Center for Asia and the Pacific.

Ogle, Alan, and Robert Donnelly. 2004. Vietnam—International Perspectives, Building an InternationallyCompetitive Industry. New Zealand Forest Industries.

Peters, James, Nguyễn Chí Thành, and Nguyễn ThịBích Thủy. 2009. “The Pilot Payment for ForestEnvironmental Services in Lam Dong Province.” FSSPNewsletter. Vol. 26-27, December. Hanoi: Ministry ofAgriculture and Rural Development.

Phan Nguyen Hong, and Hoang Thi San. 1993.Mangroves of Vietnam. Bangkok: InternationalUnion for Conservation of Nature.

Polet. G, Prof. Mai Trong Nhuan, Nguyen Giang Thu,Nguyen Ba Thu, and B. Long 2006.Recommendations for the Reclassification of theVietnamese Protected Area System and RequiredAdaptation to the Existing Legal Framework. WWF.Hanoi.

Sunderlin, William D., and Huynh Thu Ba. 2005.Poverty Alleviation and Forests in Vietnam. Bogor,Indonesia: Centre for International ForestryResearch.

Sunderlin, W. D., S. Dewi, A. Puntodewo, D. Müller,A. Angelsen, and M. Epprecht. 2008. “Why ForestsAre Important for Global Poverty Alleviation: ASpatial Explanation.” Ecology and Society 13 (2): 24.

Swan, Steve. 2010. Collaborative Natural ResourceManagement and Governance: Experiences in theForestry Sector, Northern Vietnam, 2006 to 2009.Hanoi: CARE International in Vietnam.

Swinkels, R., and C. Turk. 2006. Explaining EthnicMinority Poverty in Viet Nam: A Summary of RecentTrends and Current Challenges. Background paper forMinistry of Planning and Investment Meeting onEthnic Minority Poverty, Hanoi, September.

Tran Kim Long. 2008. The Overview of Forestry LawEnforcement, Governance and Trade (FLEGT) inVietnam. Presentation at Chatham House Meeting,Illegal Logging Update and StakeholderConsultation No. 11, 17, and 18, January. London.

UN REDD (Reduced Emissions from Deforestationand Degradation). 2010. Design of a REDD-Compliant Benefit Distribution System for Viet Nam.

van der Poel, Paul. 2007. Towards a Program-basedApproach in the Forest Sector in Vietnam? Study toProvide a Basis for Revising Program 661 and


Preparing a Financing Modality for Revised Program,Taking into Account Experience Results from KfW Co-financed Forest Projects. Hanoi: GFA Consultants.

Vietnam Forestry University. 2005. Forestry, PovertyReduction and Rural Livelihoods in Vietnam. Reportprepared by Xuan Mai and Ha Tay for the ForestrySector Support Program.

Vietnam News. 2009. “Timber Industry in Need ofMajor Reform.” 13 March.

Vu Tan Phuong, Pham Duc Chien, and Hoang VietAnh. 2010. Economics of Adaptation to ClimateChange: Forestry Sector of Vietnam. Final Report.Ministry of Agriculture and Rural Development.Forest Science Institute of Vietnam. Hanoi.

WCMC (World Conservation Monitoring Centre).1992. Development of a National Biodiversity Index.Discussion Paper. Cambridge, U.K.

Wode, Bjoern, and Bao Huy. 2009. Study on State ofthe Art of Community Forestry in Vietnam. Hanoi: GFAConsulting Group and GTZ.

_________World Bank. 2005. Vietnam EnvironmentMonitor: Biodiversity. Washington, DC.

_________ 2005a. Going, Going, Gone…The IllegalTrade in Wildlife in East and Southeast Asia. Hanoi.

---------. 2005b. Vietnam Environment Monitor 2005.Biodiversity. Hanoi. In partnership with MoNRE andSida.

———. 2009. Vietnam: Aligning Public Spending withStrategic Priorities in the Forestry Sector. RuralDevelopment, Natural Resources and EnvironmentDepartment, East Asia and Pacific Region.Washington, DC.

———. 2010a. Wildlife Consumption in Vietnam:Reforming Policies and Practices to StrengthenBiodiversity Conservation. Project IdentificationForm. Washington, DC.

———. 2010b. Socialist Republic of Vietnam—ForestLaw Enforcement and Governance. Washington, DC.

Wunder, Sven, Bui Dung The and Enrique Ibarra.2005. Payment is Good, Control is Better: WhyPayments for Forest Environmental Services inVietnam Have so far Remained Incipient. Bogor,Indonesia: Centre for International ForestryResearch.


MARINE RESOURCES

CHAPTER 5

Almost half of Vietnam’s provinces are located by the sea. In these coastal provinces,marine capture fisheries and coastal aquaculture account for a significant share ofincome and employment. Total annual catch in marine fisheries has increased almostfivefold in the past 30 years. Meanwhile the domestic market for fish and fish products is

also expanding rapidly, with the people of Vietnam now obtaining about half of their dietaryprotein from seafood.

With this exceptional growth, a major price has been exacted, however. The marine resource baseis deteriorating due to overexploitation and excessive fishing capacity, habitat loss, weak coastalplanning, pollution, and other impacts. Major intersectoral deficiencies, jurisdictional overlaps,and policy gaps further compound these problems. A lack of efficiency is seen in the decreasingcatch per unit effort due to overcapitalization in the fisheries sector or the loss of the servicesprovided by coral reef and other marine habitats. Equity concerns arise from illegal fishing andpoorly enforced regulation of fisheries. The documented declines in the abundance of marinespecies and in habitat extent and quality have serious consequences for the continued sustainableuse of marine biodiversity and overall environmental quality in the marine realm. The poor systemof data collection and lack of integrated coastal planning are overarching problems prevalentthroughout the sector.

Marine resources pose a very basic "commons” problem, where various individuals all seek toexploit a shared resource that lacks some form of property rights, resulting in overexploitation withthe costs borne by all users. Individual fishers, buoyed by government policies encouragingcontinued investment, have a strong incentive to increase their harvest. No individual has anyincentive to exercise restraint, especially when regulatory and enforcement systems have littleimpact in controlling or managing the industry.

Ensuring sustainable, more-efficient, and more-equitable use of marine resources in Vietnam willrequire an innovative, integrated approach using a mixed strategy of regulation and market-basedmeasures. A relative emphasis on non-state actors and private sector engagement is implied. Wheregovernment support and capacity development is warranted, these should generally be targetedat the provincial and/or district levels. For fisheries, a reform agenda should foremost develop andimplement a program to steadily decrease the reliance of fishing households on a depletingresource. Intimately linked to this is the objective to institutionalize co-management and the useof rights-based measures in fisheries. Improving the standard of data collection and monitoring isalso fundamental to such a strategy. Finally, more effectively applying marine spatial planningtools such as marine protected areas in managing marine resources for their sustainable use andconserving specific marine species and habitats of special concern is required.205

Many of Vietnam’s more than 20 distinctecosystem types206 along the 3,200-kilometercoastline are regionally unique in theiroceanographic properties. At the species andhabitat level, Vietnam is a reservoir of diversity,home to over 11,000 known species. Offshore inthe East Sea, northward undercurrents andsouthward countercurrents coalesce to formintense upwellings of nutrient-rich water, an

engine of primary productivity. Together, thesemany varied marine species and habitat types inVietnam not only form an impressive array ofbiodiversity, they also serve as a foundation forhuman economic development and livelihoodattainment for millions of coastal peoples, as wellas contributing significantly to national foodsecurity and the dietary protein intake ofVietnamese peoples.207

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Fueled by rising demand and driven by theincreased coastal population base, the marinefisheries industry has become the cornerstone ofVietnam’s coastal development, accounting fornearly 6 percent of gross domestic product andwith exports in 2009 valued at over $3 billion,making it the third leading exporter in thecountry.208 Fisheries provide a direct or indirectsource of livelihood to approximately 4 millionpeople, and some studies estimate that up to 12million people are partially dependent on marinefisheries. 209

Approximately 130,000 powered fishing vesselsare currently registered and operate withinVietnam’s Exclusive Economic Zone (EEZ), withmany more unpowered small unregistered craftin use for subsistence fishing.210 These vesselsconcentrate in near-shore areas, with anestimated 85 percent of total harvest caught inan area of only 11 percent of the nation’s EEZ.With a wide variety of engine sizes and hulllengths and with an array of (ofteninterchangeable) gear employed, marine capturefisheries in Vietnam are not readily classified into“small scale” and “industrial” sectors; instead, theyare more conventionally categorized as eitherinshore or offshore. 211

In 2009 total annual capture fisheries productionpassed 2 million tons for the first time, anexpansion greatly aided by governmentprograms. (See Figure 5.1.)212

Fisheries management in Vietnam is under theMinistry of Agriculture and Rural Development(MARD). Under MARD, the Department ofCapture Fisheries Exploitation and Protection(DECAFIREP) is responsible for fisheries resourcemanagement, vessel registration and licensing,monitoring, control, and surveillance. Majorstrategy and other documents for MARD includethe Vietnam Fisheries Law (2003), the Five YearMaster Plan for Fisheries Sector Development2006–2010, and the Master Plan onDevelopment of the Fisheries Sector till 2010 andOrientations Toward 2020 (MARD 2006).

Although the sector has received relatively littlebilateral or multilateral agency support over thepast decade, this has still played an importantrole, providing about one-third of publicresources. The support provided by thegovernment of Vietnam in terms of finance,human, and material assets is small comparedwith the sector’s contribution to the grossdomestic product. Investment and investment-related technical assistance have accounted for

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Figure 5.1. Total catch and engine power in Vietnam’s marinefisheries, 1981–2009

Source: MARD 2010.

the bulk of support, creating an imbalancebetween investment and maintenance/operation funding in the sector.213 The mainprogram assisting the sector at present is theDANIDA-funded Fisheries Sector ProgramSupport (FSPS) Phase II and NORAD Fisheries LawPhase II.

Major Issues for the MarineSectorMarine resources are under tremendous pressurefrom the impacts of overfishing; overcapacity;illegal, unreported, and unregulated fishing(IUU); habitat loss and degradation; and othertrends. Driven by Vietnam’s strongly production-based policies combined with a general lack ofpast management planning within a largelyunregulated open-access system,214 and furtherexacerbated by the high level of vulnerabilitycharacteristic of coastal fishing communities,these issues pose great challenges in terms ofachieving sustainable marine fisheries andsustainable livelihoods. Further complicationsarise from a coastal planning process designedto stimulate economic growth with conflicting

land-sea uses, leading to increased risks ofcontamination and vulnerability to climatechange.

Various studies indicate that almost all inshoreareas are overexploited. Catch per unit effort hassteadily declined. (See Figure 5.2.) Studies oncatch composition have documented a declinein average fish size, as well as the “fishing downthe food web” phenomenon, in which toppredators are systematically overfished, resultingin a marine ecosystem dominated by mostlylower-value species.215

Given that poverty is still a major issue for coastalfishing communities,216 Vietnam’s inshore fishingcommunity is in a precarious situation. For theoffshore—where national policies continue topromote the development of fisheries to reducepressure on the inshore resources—sustainablelevels of production and capacity are stillunknown. There is no mechanism to ensure thatthe phenomenon witnessed in past years—withlarge boats ending up fishing inshore instead—is not repeated.

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Figure 5.2. Total engine power and yield in Vietnam’s marinefisheries, 1981–2009

Source: MARD 2010.

The management of resources in the marinerealm is extremely complex. This chapter aims tohighlight a few of these issues as priorities, basedon urgency, feasibility, or strategic opportunityfor positive change. Other issues that are notgiven prominent treatment in this chapter are

nevertheless important factors to be consideredin a comprehensive strategy aimed at securingsustainable fisheries and livelihoods. Box 5.1summarizes key factors contributing to theoverexploitation and degradation of marinefisheries resources.


• Overcapitalization and overcapacity in capture fisheries, aggravated by a lack of regulationspreventing bigger offshore vessels from fishing inshore.

• Control over the fishery is severely constrained, both by the “open access” system and an overalllack of enforcement and monitoring of activities.

• Survey data are weak and insufficient to provide a foundation for sustainable fisheries or anecosystem-based approach to management. Communication mechanisms between centraland provincial levels related to data management and processing are ineffective.

• Communication mechanisms between central and provincial levels related to datamanagement and processing are ineffective.

• Destructive fishing methods (dynamite, cyanide, etc.) continue to be used in coral reef habitats,decimating key rearing, nursery, and foraging habitats.

• Marine spatial planning tools, such as no-take marine reserves and fisheries refugia, are notwidely implemented or comprehensively applied in fisheries management planning.

• The harvest of marine species of concern (such as sea turtles, sharks, and juvenile fish ofcommercial value) remains high, either as a directed catch or as “bycatch.”

• “Trash fish” landings have increased, driven by an increasing demand from feed industries andleading to large-scale ecosystem impacts.

• Subsidy programs continue to encourage the use of fuel-inefficient and badly designed woodenfishing vessels. Past and current investments (and subsidies) aimed at offshore expansion havebeen mostly ineffective in meeting key targets and often exacerbate the overfishing problem.

.• The quality of fish landed is often poor (due largely to poor vessel design and lack of post-

harvest onboard technology).

• There is a general prevalence in fisheries management of production volume as an indicator ofsuccess as well as an inconsistency between the strategic orientation of the national fisheriessector and (economic-based) harvest strategies at the provincial and district levels.

Source: Compiled from Pitcher 2006 and Pomeroy et al. 2009.

Box 5.1. Key issues and constraints for Vietnam’s marine capturefisheries

Fishing Overcapacity andResource InefficiencyThe increased costs of fishing combined withdeclining yields suggest declining benefits fromfisheries.217 As a result, competition hasintensified—between small-scale fisheries andlarge-scale fisheries and between fleets, nationalvessels, and foreign fishing vessels—furtherexacerbating the problem. In response to thischallenge, Vietnam aims to reduce the numberof fishing vessels in the country by 50 percent.218

The overall policy is outlined in Vietnam’s MasterPlan on Development of Fisheries Sector till 2010and Orientation toward 2020 (MARD 2006). Anational Catch Documentation Scheme relatedto the exporting of marine capture fish productsto the European Union (EU) has also beenestablished. However, the efforts to managefishing capacity are still in their early days.

Illegal, Unreported, andUnregulated FishingStudies suggest that IUU fishing by national aswell as foreign vessels is widespread andincreasing in Vietnam’s EEZ. This is characterizedby the increased use of prohibited gear ormethods, the large number of unregisteredvessels, lack of catch documentation, andgenerally poor capacity in fisheriesadministration.219 The issue has also become amajor policy imperative, given the growing levelof international scrutiny related to IUU andcurrent and emerging trade restrictions, asexemplified in the European Commission (EC)IUU fishing regulations introduced in 2010. 220

A strategic response to the IUU issue must alsorecognize that capacity at MARD and provincialDepartments of Agriculture and RuralDevelopment Sub-departments to provide catchdocumentation or improve overall statisticalmanagement systems pertinent to IUU isextremely limited. As witnessed in January 2010,when the EC regulations came into effect,221 thispoor capacity translated into economic impacts

as a result of a steep decline in orders from theEU for species such as tunas, swordfish, squid,and crabs.

Lack of Data and FormalReference PointsThe lack of detailed or verifiable stockassessment data and appropriate managementreference points continues to confound fisheriesmanagement. Where data on fish landings arecompiled, they tend to be by commercial groupand not by species. This makes attempts toestablish reliable biomass estimates (andtherefore Total Allowable Catch estimates) adubious approximation at best. DECAFIREP has agood fisheries management software package(VietFishBase). But the coastal provinceenumerators are unable to record and send thenecessary data from all coastal provinces on aregular basis. Poor data capture also leads to aninability to manage fish stocks in contiguousprovinces.

Figures for maximum sustainable yield (MSY)—currently estimated at about 1.7 million tons—are likewise unreliable.222 Separate from the MSY,the economically optimal level of exploitation isthe level of catch that provides the maximum neteconomic benefits or profits to society (MEY).Because costs rise with increasing effort, the MEYis necessarily lower than the MSY and would be amore appropriate indicator for more-effectiveplanning and management in the fisheriessector.223

Vulnerability and EquitySeveral studies have documented high levels ofvulnerability in coastal communities.224 Forexample, in the face of overexploited resources,local fishing households have to work harder tomake the same income; they lack the capital orcredit to invest in new gear or occupations; thereis a high level of risk for fishing households interms of income stability and outlook; and thereremains generally poor access to markets or new


technologies for these communities, as well as aheavy reliance on intermediaries to sell fish.225

Socioeconomic indicators are generally belownational targets or averages—particularlyaverage household income, poverty rates, andeducation levels.226 There is also vulnerability toextreme weather events and the long-termimpacts of climate change, which will bring risingsea levels and increasing saltwater intrusion.Extreme weather events damage boats, livingquarters, coastal vegetation, and aquaculturefacilities. Above all, they take lives.

Co-management in capture fisheries is in its earlystages in Vietnam. There is a legal framework forpeoples' participation in a range of managementareas227 at the commune level. This has led tosignificant (but still insufficient) financial supportto a Capture Fisheries Co-management TaskForce for the planning and implementation ofpilot projects with a view toward nationwidedissemination. Legal reforms allowing fishingrights to be assigned under fisheries co-management scenarios have been slow todevelop.

Supply Chain InadequaciesThe supply chain for seafood in Vietnam has notbeen effectively designed for sustainability.Problems include limitations in traceability, poorcoordination, lack of clarity around the roles andresponsibilities of different actors in improvingmanagement, and lack of branding or eco-certification. Buyers and processors have almostno direct links to producers, resulting in a majorgap in supply chain management. Supply chainpartnerships (such as contract systems) andfishery cooperatives—essential for bettervalidation and more-sustainable exploitation ofthe resources—are largely lacking.

The major issues just outlined related to marinecapture fisheries have clear consequences for themaintenance of marine biodiversity—indeed,fisheries are the major driver of negativeenvironmental impacts in the marine realm. The

loss of critical spawning, rearing, and foraginghabitats from destructive fishing methods suchas particular types of bottom trawling, dynamiteand cyanide fishing, and illegally sized netmeshes is directly evident. Drivers such as coastaldevelopment, pollution, and coastal aquaculturehave also taken a heavy toll on marinebiodiversity. The general absence ofcomprehensive and integrated coastaldevelopment planning and weak managementof economic activities in coastal areas haveconsistently limited efforts aimed at theconservation and sustainable use of a coastlinethat supports a rising population.228 Coastaldevelopment has led to widespread destructionof adjacent coral reefs, sea grasses, andmangroves through sediment loading andpollution. Coastal tourism has been largelyunregulated, with impacts not only fromconstruction but also from the growing level ofmarine tourism activities along the coast.229

Marine environmental quality has also beennegatively affected by poor natural resourcemanagement upland, such as deforestation thatleads to increased runoff, soil erosion, andsediment loading in rivers, streams, estuaries, andultimately the ocean. The ramifications of suchimpacts are widespread. For example, thedevelopment of harmful algal blooms has hadmajor implications for overall food safety, exportmarketing, and profitability in the seafood sector.

Indicators that marine biodiversity is in declineare widespread. Twenty-five percent of Vietnam’scoral reefs are classified as being “at very highrisk” from degradation and habitat loss—thehighest rate of more than 10 countries surveyedin Southeast Asia.230 Sea grass beds are similarlydeclining, threatening the livelihoods of thecommunities who depend upon them.Mangrove forests, central to the biodiversity ofmarine and estuarine ecosystems as a naturalnursery for a wide range of finfish and shellfish,continue to decline, from 400,000 ha in 1943 to59,760 ha in 2008, with primary mangrove forestshaving virtually vanished.231 The number of


productive sea turtle nesting beaches in Vietnamhas declined significantly. Dugongs—aherbivorous marine mammal that is listed as“vulnerable” on the International Union forConservation of Nature’s Red List—have virtuallydisappeared from Vietnam.

The Way ForwardImproving Data Collection andResource AssessmentEffective data collection, analysis, and resourceassessment is a cornerstone of fisheriesmanagement. New capacity is urgently neededat provincial and district levels for data collection,monitoring, information sharing, administration,and enforcement to support of a variety of keypolicies and measures (such as capacityreduction, co-management, IUU, offshorefisheries management, and so on). Specific areasof effective intervention could include thefollowing:

Expanding the application of VietFishBasesoftware on a provincial basis, linkedtogether through a network; thecomprehensive application and inter-networking of VietFishBase would helpdetermine which provinces are beingeffective in data capture and analysis andhelp resolve the confounding problems ofinstitutional non-linkages and lack of chainof command in fisheries monitoring,control, and enforcement to aid decisionmaking

Concerted efforts to adequately trainprovincial fisheries staff (and provideadditional required resources) inenumeration, onboard observer programs,and dockside monitoring and the use ofsoftware applications

Further development and expansion ofonboard Observer Programs aimed atcollecting data on catch rates and impactson sensitive species as well as providingopportunities for detailed biologicalsampling

Ascension by Vietnam into the Western andCentral Pacific Fisheries Commission as afull member nation.

Reducing Capacity for EnvironmentalSustainability and Greater EfficiencyThe government of Vietnam, with support fromthe Food and Agriculture Organization, hasdrafted a National Plan of Action (NPOA) onfishing capacity reduction that identifiesmanagement priorities for various interventions.While the NPOA provides an importantfoundation for addressing overcapacity, it will beessential to select the most appropriateinterventions, based on an understanding of thesocial ecology of fishing communities, and withan emphasis on the active participation of fishingcommunities as well as a focus on household (asopposed to individual fishers). Approaches needto go beyond “alternative income generation”projects that assume (inappropriately) thatfishers are willing and able to leave fishing;232

they need to focus on improving the enablingeconomic environment together with jobdiversification and vocational trainingopportunities. This will allow fishing householdsto reduce their dependence on a depletingresource.233 The critical contribution that co-management may provide in achieving capacityreduction goals should also be recognized, andsuch approaches should be integrated into thePlan of Action. Thus a strategic agenda foraddressing capacity reduction could include thefollowing:

Increased financial and human resources atprovincial and district levels to improvedata collection and local administrationaimed at implementing the NPOA

New governance arrangements at locallevels that use a form of rights-basedmeasures, such as limited entry and/orterritorial use rights).

Stronger programmatic linkages betweencoastal fishing communities and nationalpoverty alleviation and/or jobdiversification programs


Related to above, detailed livelihood andjob diversification strategies at the districtlevel focused on improving the broaderenabling economic environment as ameans to reduce the dependence ofhouseholds on fishing

Development of job diversificationstrategies that link into mariculturedevelopment, particularly those industriesthat are labor-intensive yet comparativelyless harmful to the environment (see Box 5.2)

Improved interministerial andinterjurisdictional linkages to ensurecooperation and coordination for theseinitiatives.

Expanding and InstitutionalizingFisheries Co-managementNational policies endorsing co-managementas a strategy for managing fisheries haveexisted for over a decade. However, co-management has yet to becomeinstitutionalized in Vietnamese fisheries,despite several documented successfulexamples of fisheries co-management. (SeeBox 5.3.)

Co-management frameworks should recognizethat a legal framework on fishing access rightsgranted to local fisheries associations wouldsupport better governance of the sector andaddress various management constraints,including lack of compliance with regulationsand the lack of bargaining power for coastalfishers. It is recommended that the co-management framework initiated under FSPS becontinued and scaled up through further pilotsand a concerted effort to institutionalize theframework within MARD as standard practicenationally. The expansion of co-managementinitiatives should be initially concentrated on afew selected areas where opportunities forsynergies and success are highest. Arecommended course of action would includethe following:

Continued support for the CaptureFisheries Co-management Task Force(established under FSPS II) and the Co-management Network under MARD tomonitor and evaluate progress andfacilitate future planning andimplementation of further pilots

Provincial and district-level support for the

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The option of industrial scale nearshore mariculture using “low-on-the-food-chain” species—such asseaweeds, holothurians, bivalve (mussels and oysters), and gastropod (abalone) mollusks—offers apotentially innovative and effective tool for linking capacity reduction with job diversification. As theyare labor-intensive, these floating systems, inherently less detrimental to the environment,234 wouldtake advantage of high productivity and could provide employment for fishers displaced from capturefisheries.

Employment would involve transporting inputs and final produce to and from local ports, transportingpersonnel, guarding, laying moorings, maintaining systems, cleaning production units, and harvesting.These floating systems would act as de facto Marine Protected Areas, as guards would ban fishing,especially the illegal dynamiting and use of cyanide and chlorine plus electricity. Anecdotal evidence,combined with fisheries co-management sanctuary studies, suggests that biodiversity and abundanceboth increase in these systems, thereby improving artisanal fisheries in the surrounding areas. Prior toencouraging investment, however, market surveys need to be carried out to assess the impact of severalthousands of tons of product on long established markets. These surveys should also look at the cost-benefit of adding value by sun-drying, smoking, extracting chemicals like agar and carrageen, and so on.

Box 5.2. Low on the food chain but high on the value chain?

establishment of more fishingorganizations and to facilitate new co-management pilots in priority areasdisplaying a strong potential for success(suggested priority areas include Binh Dinh,Quanh Nam, and Nghe An)

Support at the national level (in MARD) forimproving the legal framework for co-management and application of rights-based measures, as well as elaboration ofimplementation guidelines to be usedacross all coastal provinces


The fisheries co-management model developed at Tam Giang Lagoon in Thua Thien-Hue province235

is widely regarded as one of the most advanced in Vietnam.236 Initiated in 2005, the model providesfor a variety of fishing access rights and mechanisms for shared decision making and co-management(including the establishment of local fishing associations). Legally, Decision no. 4260/2005/QD-UBNDpromulgated by the People’s Committee of Thua Thien Hue enables the issuance of fishing rights andhas been described as “very innovative both for Vietnam and Southeast Asia as it provides for a wholenew management structure for coastal resources in the country and a model for other areas in thecountry.237” The numbers of fishing households, fishing effort, species, and catch sizes are largelydecided by fishers. The model in particular provides an innovative approach for using zoning andallocating fisheries rights to user groups.

The Management of Natural Resources in the Coastal Zone project238 in Ao Tho B, Soc Trang Province,has enjoyed demonstrable success in piloting the establishment of mangrove co-management and intesting the national fisheries co-management framework. Initiated in 2007 with the Forest ProtectionSub-department of the province, the pilot aimed at developing solutions through participatorymethods to solve various conflicts between economic development and sustainable coastal zonemanagement. Specifically, a co-management system was developed that not only enabled theparticipatory planning of mangrove forests (into protection, rehabilitation, and sustainable use zones)but also controlled access, allowing only members of the local co-management group to catch fish.Fishing techniques and gear are also strictly regulated, and a simple yet effective monitoring programhas been established. Preliminary findings indicate that the project has been successful in protectinglocal habitats and livelihoods, in reducing the workload of authorities, and in the equitable sharing ofbenefits. 239

Established in 1997, the Rang Dong Fisheries Cooperative has evolved into an excellent example ofhow rights-based fisheries management can provide incentives for resource users to protect their localresources and gain long-term, sustainable economic benefits. The cooperative was formed at theprovincial level to manage the natural fishery resources in 900 hectares for both raising breeding clamsand growing them out in intertidal areas for harvesting. Access to the clam fishery is restricted to itsmembers, and the mud flats are policed by uniformed staff. Approximately 40 percent of the mud flatsare left unexploited, in order to ensure sustainable brood stock, environmental conservation, andproduct quality. The clam fishery—increasingly destined for export to niche markets in Europe—hasbeen economically successful.240 In 2009 this clam fishery was the first in Southeast Asia to receive fullenvironmental certification under the Marine Stewardship Council (MSC). Buoyed by the success ofthe Rang Dong example, 10 additional clam cooperatives have been established in recent years. Thestrong management system in place to protect the clam beds and control their harvest was essentialfor achieving this certification.241

Box 5.3. Successful examples of fisheries co-management in Vietnam

Parallel activities at selected marineprotected area (MPA) sites aimed atestablishing rights-based measures forlocal fishing communities (suggestedpriority sites include Con Dao and NuiChua).

Market-based Access and Eco-certification Strategies The growing interest in key export markets formore sustainably harvested seafood (especiallyamong retailers, buyers, and exporters) providesopportunities for incentives for improvedmanagement across the supply chain and forshifting generally toward value-added andsustainability-based (as opposed to production-based) models. Strategies for enhancingsustainability, adding value, and improvingefficiency through market access could include:

Establishing public-private partnerships(PPPs) aimed at building capacity in PPP asa viable means of financing andmaintaining projects aimed at managingand sustaining capture fisheries resources

Implementing fisheries improvementprojects incorporating a step-wiseapproach of “continual improvement” andusing positive incentives (includingimproved access to markets, extensionprograms for environmentally friendly gearand techniques, and the establishment ofdirect sourcing arrangements) across thesupply line

Improving traceability systems nationwide,with an emphasis on traceability forenvironmental sustainability andregulatory compliance; activities couldinclude dissemination of guidelines,communications, and training programsacross the supply chain, using andpromoting good examples (such as Ben Treclams)

Continuing to support training andextension services in post-harvesttechniques aimed at linking improved

management measures (such as adoptionof fisheries best practices, use of moreenvironmentally friendly fishing gear) withoptimizing value; shifts from the currentmodel of quantity-based targets towardmore value-based approaches can alsohelp generate employment and thus link tocapacity reduction strategies; cost-benefitanalyses would be required to ensure thatmarket demands can be met and that risksduring the value addition can be mitigated

Expanding the eco-certification agenda inVietnam, including exploring newopportunities for MSC certification.

Reforming Fisheries SubsidiesThe government has extended significantsubsidies to fisheries.243 These can be justified ifthey provide public benefits that the marketwould otherwise undersupply. But subsidies arealso a financial drain on the public coffers andcan further distort markets. In practice, some ofthe fisheries subsides have gone to traditional“public good” investments of fisheriesinformation systems and storm shelters. Butthere have also been tax breaks, as well as fuelsubsidies of some $90 million in 2008—the latestyear for which data are available.

Despite the best intentions of subsidies aimed atexpanding offshore fishing or at re-establishingprofitability in the short term (for example, fuelsubsidies), the overall impact of these programson long-term efficiency, equity, and sustainabilityin the sector can be expected to be negative.244

Subsidies such for vessel upgrades, credit, andother assistance aimed at expanding offshorefisheries will likely spill over into more fishinginshore unless protection of those areas can beimproved, further damaging already depletedfish stocks. This circle of events can push poorfishing households further into poverty as theresource they depend upon is further depleted.The sustainability of further offshore fisheriesexpansion is also questionable.

Therefore it is recommended that fisheries

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subsidies policy in Vietnam be reconsidered. Arecent report co-authored by the VietnamInstitute of Fisheries Economics and Planningmakes several progressive recommendations forreprioritization of fisheries subsidies programs.(See Box 5.4.)

Sustainable Use of MarineBiodiversityIn general, the legislative framework in Vietnamprovides a basis for the conservation andsustainable use of marine biodiversity. But theeffective implementation of legislation isfrequently constrained by unclear andoverlapping institutional jurisdictions, weakinteragency cooperation, and capacitylimitations. Moreover, the approach toconservation interventions in Vietnam hastended to be opportunistic and independentrather that strategic and coordinated. However,a number of opportunities for the improvedmanagement of marine biodiversity can beidentified, including the wider and more effectiveapplication of MPAs along with marine speciesprotection and conservation programs aimed at

reducing impacts on species of special concern(and their habitats) and reversing the decline ofkey populations.

Marine Protected AreasMPAs, while not a cure-all, can provide veryuseful tools for addressing sustainability issueslocally and for testing approaches for sustainablecoastal development, including the applicationof spatial planning for fisheries enhancement,site-specific protection of habitats, establishmentof local co-management schemes, developmentof eco-tourism, and the integration with coastaldevelopment planning. Vietnam is embarking onan ambitious national marine protected areaplan245 with a shortlist of 16 MPAs alreadyapproved by the Prime Minister, most recentlyunder Decision 742/QD-TTg to adopt nationalMPA system planning to. To date four MPAs—NhaTrang Bay, Cu Lao Cham, Phu Quoc, and ConCo—have been officially designated, togetherwith two National Parks with marine components(Con Dao and Nui Chua).

The new capacity developed through theLivelihoods and Marine Protected Areas Program


Reform of fisheries information management, including licensing and statistical managementsystems.

Strengthening the monitoring, control and surveillance of fisheries activities.

Promotion of community-based fisheries co- management as a means to reduce fishing effortsand promote more responsible fisheries while reducing interventions and expenses ofgovernment.

Support for ecosystem-based fisheries management including establishment of MPAs.

Providing scientific research to support more efficient and sustainable fishing.

Implementing environmentally friendly technologies (e.g. by-catch reducing gear) and otherprograms (such as Observer Programs) aimed at promoting fisheries Best Practices

Source: VIFEP and WWF 2009.

Box 5.4. Key recommendations for the reprioritization of fisheriessubsidies

opens new avenues to expand the MPA networkin Vietnam and improve managementeffectiveness. Investments in MPAs since theearly 2000s have led to important insights intotheir application for biological conservation andsustainable livelihoods. These lessons are critical,as past reviews of MPA managementeffectiveness at preliminary pilot sites havedocumented a variety of key shortcomings. (SeeBox 5.5.)

A suggested strategic way forward for MPAs inVietnam includes the following:

Developing operational managementplans for selected new MPAs; suggestedpriority sites include Cu Lao Cao and PhuQuy islands, where feasibility has beenestablished; other new MPA processesshould first undergo feasibility studiesbased on clear biological, socioeconomic,and governance objectives246

Supporting small-scale MPAs at local levels,specifically Trao Reef Locally Protected Area(Khanh Hoa) and Tam Hai Locally ProtectedArea (Quang Nam); while not formally partof the currently proposed MPA networkfrom MARD, these sites have a highpotential to deliver biological,

socioeconomic, and governance results,and their importance has been re-affirmedby their mention in the recent Decision onMPA systems planning

Link national job diversification strategiesto livelihood programs aimed at reducingdependence on fishing for communities inand around MPAs

Investing in training (for MPA site andnetwork staff and other relevant provincialand national government staff) in planningand management, building upon progressand lessons to date and using managementeffectiveness guidelines already developedand introduced;247 such training should beexpanded to include local stakeholders andinclude programs for certification in MPAmanagement

Systematically applying “reef resilience” 248

management and design criteria at existingand future MPAs, aimed at mitigatinganticipated impacts from coral bleaching (awhitening of corals) arising from prolongedrises in sea temperature

Integrating the fisheries co-managementmodel and legal framework for rights-based measures being developed by MARD


For MPAs to be effective they should include significant coverage of “no take” areas as well asother highly protected areas with a designation based on biological management criteria.

MPA operational management needs to be strategically applied to protecting spawningpopulations and enhancing recruitment of commercial fish species locally and regionally. Thisalso implies the long-term monitoring of fishery indicators and assessment of fisheries benefitsat the MPA sites.

Delivery of the benefits of MPA establishment (particularly fisheries-related benefits but alsoother economic benefits, such as eco-tourism) to local communities is paramount for success.This implies greater involvement of local fishers in the planning and management of MPAs, theapplication of co-management approaches, and the use of exclusive fishing rights for localcommunities as part of the MPA design.

Box 5.5. Lessons learned for MPA planning and management tosupport sustainable use of marine biodiversity in Vietnam

with MPA management (suggested prioritysites are Con Dao and Nui Chua MPAs).

Species ConservationThe protection and conservation of marinespecies of special concern remains an urgentissue in Vietnam. While past investments from thedonor community in programs aimed atprotecting and conserving endangered speciessuch as sea turtles and dugongs have beensignificant, they have proved insufficient inreversing population declines. More recently, thedeclining status of various shark species in theregion has become a growing concern and mayhave far-reaching consequences botheconomically (as an important seafoodcommodity) and environmentally (as a toppredatory that helps maintain functional andbalanced marine ecosystems).

Suggested priorities would include the following:

Scaling up sea turtle beach protection atpriority sites (Con Dao, Nui Chua, and PhuQuy) and implementing comprehensivetraining in nesting beach management atthese and other key areas based onapplication of the (successful) model at ConDao

Expanding experimental trials of circlehooks249 in longline tuna fisheries as ameans to gain support for their use andwith a view to securing politicalcommitment and regulatory measuresaimed at mainstreaming the use of circlehooks (as well as turtle de-hookers andturtle rescue techniques)

Linked with above, expanding the current

longline fisheries Observer Program250 to alevel where at least 10 percent of alllongline vessels have trained onboardobservers using standard protocols forspecies identification and for monitoringand recording catch rates of sea turtles,sharks, and juvenile tuna

Introducing national, provincial, and districteducational campaigns aimed at raisingawareness and changing attitudes of theVietnamese population, especially youngergenerations, regarding marine wildlifetrade, particularly the illegal trade in seaturtles.

REFERENCES Asian Development Bank. 2000. Coastal and MarineEnvironmental Management in the South China Sea(East Sea), Phase2. Project ADB5712-REG. Manila:WWF and GEG Consultants.

Burke, Laurette, Liz Selig, and Mark Spalding. 2003.Reefs at Risk in Southeast Asia. World ResourcesInstitute report for U.N. Environment Programme–World Conservation Monitoring Centre. Cambridge,UK.

Creel, Liz. 2003. “Ripple Effects: Populations andCoastal Regions.” Policy Brief. Washington, DC:Population and Reference Bureau. September.

Dang Van Thi, Tran Thi Lien, Raakjaer Nielsen, andFrank Riget. 2002. “Results of Bottom Trawl SurveysCarried Out in Vietnamese Waters (20–200 m) in1996-1997.” ICLARM Quarterly 25 (1).

GSO (General Statistics Office). 2009. Statistical Dataof Agriculture, Forestry and Fisheries. Hanoi.


Livelihood projects aligned with MPAs should focus on job diversification. Individual “alternativeincome generation” projects tend to have limited effectiveness or conservation impact. It iscritical to ensure that target groups are adequately identified.

Mechanisms for better intergovernmental coordination and cooperation at MPAs would helpensure strategic alignment with coastal development and tourism planning.

Source: McEwin et al. 2008.

Hassan, R.B.R., R. Ali, Nguyen Lam Anh, Dang Ho Hai,S. Fujiwara, K. Shiomi, and N. Seman. 2001. “PelagicStock Assessment by Hydroacoustic Method in theSouth China Sea, Area IV: Vietnamese Waters.” InProceedings of the SEAFDEC Seminar on FisheryResources in the South China Sea, Area IV: VietnameseWaters.

McEwin, Angus, Nguyen To Uyen, Tham Ngoc Diep,Ha Minh Tri, and Keith Symington. 2008. SustainableLivelihood Strategy: Vietnam Marine Protected Areas.Published by “Sustainable Livelihoods in andaround Marine Protected Areas,” Ministry ofAgriculture and Rural Development, A componentof Danish Development Cooperation in theEnvironment Programme (2005–10). Hanoi.

MARD (Ministry of Agriculture and RuralDevelopment). 2006. Master Plan on Developmentof the Fisheries Sector till 2010 and OrientationsToward 2020. Promulgated by the Prime Ministeralong with Decision no. 10/2006/qd-ttg of 11January 2006. Hanoi.

_______. 2010. Capture Fisheries Annual Report(1990–2009). Department of Capture FisheriesExploitation and Protection. Hanoi.

Ministry of Fisheries and World Bank. 2005. VietnamFisheries and Aquaculture Sector Study—Final Report.Hanoi.

Morgan, Gary, Derek Staples, and Simon Funge-Smith. 2007. Fishing Capacity Management and IUUFishing in Asia. Publication 2007/16. Bangkok: Foodand Agriculture Organization.

Nasuchon, Nopparat. 2009. Coastal Managementand Community Management in Malaysia, Vietnam,Cambodia and Thailand, With a Case Study of ThaiFisheries Management. Division for Ocean Affairsand the Law of the Sea Office of Legal Affairs, NewYork: United Nations.

Nguyen Chu Hoi. 2003. “Key Directions of theSustainable Fisheries Development in Viet Nam.” InReview of International and National Efforts TowardsAddressing the Main Sectoral Concerns Regarding theSeas of East Asia. Partnerships in EnvironmentalManagement for the Seas of East Asia (PEMSEA).Ministry of Fisheries. Hanoi.

Nguyen Thi Dieu Thuy and Keith Symington. 2008.Sustaining Fisheries and Alleviating Poverty inVietnam: A Socio-economic Review and Case Study.Hanoi: WWF Vietnam.

Pitcher, Tony. 2006. “An Estimation of Compliance ofthe Fisheries of Vietnam with Article 7 (FisheriesManagement) of the UN Code of Conduct forResponsible Fishing—Vietnam.” Evaluations ofCompliance with the UN Code of Conduct forResponsible Fisheries. Fisheries Centre ResearchReports 14(2). Vancouver: University of BritishColumbia.

Pollnaca, Richard B., Robert S. Pomeroy, and IngvildH. T. Harkes. 2005. “Fishery Policy and JobSatisfaction in Three Southeast Asian Fisheries.”Ocean & Coastal Management 44 (2001) 531–44.

Pomeroy, Robert, and Rebecca Guieb. 2008. “End ofAssignment Report on Lagoon Co-managementSystem for FAO/IMOLA Project, Thua Thien Hue,Vietnam.” Ath t t p : / / w w w. i m o l a h u e . o rg / p d f / p o m e r o y -guieb2008-en.pdf.

Pomeroy, Robert, Nguyen Thi Kim Anh, and Ha XuanThong. 2009. “Small-scale Marine Fisheries Policy inVietnam.” Marine Policy (33): 419–28.

Schmitt, Klaus. 2009. Management of NaturalResources in the Coastal Zone of Soc Trang Province.Soc Trang City, Vietnam; Deutsche Gesellschaft fürTechnische Zusammenarbeit.

Sumaila, Ussif Rashid, and Daniel Pauly (eds). 2006.Catching More Bait: A Bottom-up Re-Estimation ofGlobal Fisheries Subsidies. Fisheries Centre.Vancouver: University of British Columbia.

Tietenberg, Thomas. 2008. Environment and NaturalResource Economics (8th edition). Reading, MA:Addison-Wesley.

VIFEP (Vietnam Institute of Fisheries Economics andPlanning) and WWF Vietnam. 2009. FisheriesSubsidies, Supply Chain and Certification in Vietnam.UNEP Framework Document. Hanoi.


MINERAL RESOURCES

CHAPTER 6

The mining of solid minerals in Vietnam has grown rapidly in the past five years, drivenprincipally by the exploitation of coal. Excellent geological potential exists for developmentof other mineral deposits, such as bauxite, nonferrous metals, and industrial andconstruction minerals. Compared with many other countries, Vietnam has made significant

progress in managing the development of its mineral resources. In spite of the expansion of thesector, however, Vietnam is not yet achieving the true value of the contribution that its mineralendowment could make to economic development.

This chapter identifies the opportunities for improvements of Vietnam’s management of itsresources in terms of three main themes: efficiencies in providing access to mineral resources andeffective sector administration and environmental sustainability, management of environmentaland social impacts, and equitable distribution of benefit streams.

The chapter proposes a “reform agenda” that addresses these opportunities. This includesenhancing efficiency in the minerals sector by planning for minerals development using the“resource assessment” model, reinforcing security of the legal regime and granting of mine titles,encouraging exploration for new mineral deposits by the private sector, strengthening theinstitutional reforms in the mining sector, and giving due attention to the strengths and weaknessesof State Owned Enterprises. In terms of environmental sustainability, it will be important to closethe gap between theory and practice in the Environmental Impact and Strategic EnvironmentalAssessment processes and to tighten regulations and administration of environmental fees andfinancial sureties. With respect to the equity theme, the main reform proposals are to establishcommunity development agreements, measure the economic contribution of mining on anationwide and project basis, and adopt the principles and implement the Extractive IndustriesTransparency Initiative.

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Development of mineral resources can and doescontribute to the wealth of nations and to overallgoals of economic development and povertyreduction. Achieving positive results is not easy,however, and governments, private sectorcompanies, and civil society face numerouschallenges to ensure sustainable development.Some governments fail miserably in overcomingthe challenges and fall victim to the “resourcecurse.”251 Other governments use their naturalmineral wealth to much better effect and areachieving sustained growth with equity in thesector. This chapter argues that the SocialistRepublic of Vietnam is in between these twoextremes: some of the mineral wealth of thecountry is being developed and is contributingto economic development, but Vietnam could domuch better in terms of achieving efficient accessto the resources, improving environmentaloversight, and distributing the benefit streamsfrom minerals development in an equitablemanner.

The Mining and Quarry Industrial (MQI) sector inVietnam includes petroleum, constructionmaterials, coal, industrial minerals, mineral water,and some base metals.252 The sector has grownrapidly, contributing 11 percent of grossdomestic (GDP) in 2005, up from 5 percent in1995253. (Oil and gas are not considered in thischapter since this industry operates mainlyoffshore, and the environmental ramifications ofthese operations are entirely different from solidminerals.) Excluding oil and gas, the size of thesolid minerals segment of the MQI sector relativeto the overall economy in Vietnam would put thecountry on a par with Ghana, which derives 6percent of GDP from gold mining along with 45percent of its export earnings and 12 percent ofthe government’s tax receipts254.

This chapter does not attempt to cover all thecurrent issues in this sector;255 rather, it focuseson the main themes of this report: efficiency,environmental sustainability, and equity. The

Annex provides a case study on how these threethemes interplay in the development of coal.

Vietnam is reasonably well endowed with some60 mineral commodities and produces many ofthem, such as coal, bauxite, gold, copper, zinc, tin,copper, chromite, manganese, titanium, barite,ilmenite, limestone, and phosphate. By far themost important mineral commodity produced iscoal: in 2009, some 44 million tons of coal wereproduced, of which 50 percent was exported.256

Some minerals, such as chromite, ilmenite, barite,and zinc concentrates are exported; however,most of the mineral commodities are processedand consumed locally, including limestone (forcement), refined copper, fertilizer materials(ammonia, urea, and phosphate), rolled steel,refined tin, and zinc.

In spite of the growth of this sector and thecountry’s excellent minerals endowment, MQIsolid minerals are heavily dominated by coal, andnot enough exploration is being conducted todevelop new deposits and diversify theproduction base. For instance, metallic ores andother minerals are not growing as fast, andexpansion of these commodities is a majorchallenge for the future. There are a number ofreasons for this, including lack of newinvestment; the modest size of investments,which may lack economies of scale; shortages ofrequired infrastructure, especially power andtransport; antiquated mining equipment andtechniques; and poor efficiencies and mineralloss in extraction due to outdated miningtechnologies. In addition to not producingoptimum benefits, the sector could, in someinstances, actually cause harm to economicdevelopment. This occurs because of short- andlong-term environmental damage as well asaggravating social tensions related todevelopment of extractive industries projectsand distribution of benefit streams.

Two issues are particularly vexing. First, more canand should be done to mobilize private sectorinvestment to explore and discover mineral

resources. Vietnam’s geological features aresimilar to those of Lao PDR and the southern partof Yunnan province in China. In each of theselocations significant investment in explorationover the last 5–10 years has resulted in thediscovery and development of several world-class copper, gold, nickel, and tin mines.

In Vietnam, however, expenditures onexploration seem to be going in the oppositedirection. From a peak of $63 million spent onexploration in 2008, total exploration in 2009 wasonly $4 million.257 Second, Vietnam could achievehigher value added from its minerals productionby encouraging beneficiation and processing ofraw minerals258. Even though enhancedprocessing is mandated in the Minerals Law andby the Politburo policies, in reality many mines inVietnam still export raw ores.259 Achieving greatervalue added through beneficiation andadditional processing is not easily done, however.Small-scale mining companies lack the capitaland technology to beneficiate their ores, andthey are in any event more interested in sellingraw ores quickly for profit. And a nickel smeltingfacility, for example, could cost $120 million ormore. International market conditions need to betaken into consideration, as the marginal cost ofadditional processing may not be compensatedby greater access to markets at higher value.Governments have had mixed success devisingincentives for enhanced beneficiation. In general,fiscal and other investment incentives forproducers to beneficiate have had limitedsuccess in achieving higher value added, andthese incentives also could involve substantialcosts to the state treasury.

Efficiencies in ProvidingAccess to ResourcesCommodity “Master Plans” Development of the MQI is guided through“master plans.” These are drafted by thegovernment to cover 10–15 years and they drivethe exploration, exploitation, and processing of

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different minerals. The plans generally focus onmineral deposits that are considered “essentialreserves” that may be developed and exploitedon a large industrial scale. Approval fordevelopment and monitoring of exploitation ofthese large mineral deposits in the master plan isthe responsibility of the central authorities,principally the Ministry of Natural Resources andEnvironment (MoNRE). Smaller deposits, notspecifically identified in the master plan, arecontrolled by the provincial authorities. There arecurrently 13 approved master plans for 39minerals, among them gold, copper, nickel, iron,chromium, manganese, lead, zinc, bauxite, andtitanium, with visions generally extending to2020 and 2025. The main content includes thedevelopment targets, demand forecasters,exploration plans, mining and processingplanning, and investment capital required. (Seethe list of master plans in the References.)

Master plans used in Vietnam are “dirigiste” innature and tend to simply list projects andproduction targets. They are contrary to thecurrent development paradigm of encouragingprivate sector investment and competition. Andthey can actually stifle new ideas and innovativeproposals. For example, if an explorationprogram proposed by a private company for acommodity or in an area is not noted in themaster plan, the proposal would be difficult forthe government agencies to accept. The masterplans are only issued every several years and theexperience in the solid minerals sector is that theplans are updated on an ad hoc basis rather thanregular basis. Experience in the solid mineralssector is that the plans cannot be amended easilyor within a reasonable amount of time. Thus,some companies having viable projects notnoted in the master plan have had to wait at leasttwo years for the plan to be updated or haveexercised other options, such as directlyintervening with the highest political authorities,to have the projects authorized.

Other significant drawbacks are that the plansare prepared by government agencies (Ministry

of Industry and Trade, MoNRE, and/or the state-owned company (Vinacomin) in Hanoi) and maynot sufficiently reflect the realities of the marketor local conditions. The master plans take theanalytical approach of “what we have” rather thanthe more rigorous market analysis approach of“what the consumer needs.” In practice, publiccomment and consultation with localcommunities and companies during thepreparation of the master plans is a mereformality and does not normally result inmeaningful changes being integrated into themaster plans as a result of these consultations.Finally, while the newest regulations for masterplans require a Strategic EnvironmentalAssessment (SEA), the master plans that havebeen approved to date and prior to the July 2006do not deal with highly salient topics, such asinvoluntary resettlement, possiblecontamination and environmental pollution, in-migration, local multiplier effects, alternativeland use patterns, effects on household incomes,and induced health effects.

The first item on the reform agenda for themining sector is to plan for mineralsdevelopment using the “resource assessment”model. The use of master plans to program theindustrial development of specific mineraldeposits is highly unusual in terms ofinternational practice and reflects an attachmentto the past heritage of central planning. There isnothing inherently wrong about planning forsector development; indeed, “resourceassessments” can be highly useful to assist in landuse planning, plan for infrastructure investments,and develop integrated growth poles or resourcecorridors. A proper resource assessment alsoconsiders all the benefits directly from theproject or induced as well as all of the costs,including long-term environmental costs andalternative land uses, recording of benefitstreams, and special topics such as gender andclimate change issues (for example, the emissionof methane, which is a powerful greenhouse gas)associated with sector development.


Granting of Mine Titles andConcessions Foreign or domestic companies wishing to investin large-scale exploration, development, andexploitation operations in Vietnam follow a two-track process to obtain the mine title under theMineral Law and to set up an entity by obtainingInvestment Certificate for each specific projectunder the Investment Law.

The basic legislative instrument that governsminerals exploration, extraction, and processingis the Law on Minerals of 1996 (amended by theMineral Law of 2005), as supplemented byvarious Decrees and Circulars of the governmentagencies responsible for mining.260 This Lawderives from fundamental Politburo policydirective 13-NQ/TW (1996). The government is inthe process of amending the Minerals Law and isconducting extensive discussions with variousstakeholders on the subject.

In addition to the Minerals Law, the Investment261

Law applies to investments in the mining sector.In particular, this law seeks to attract foreigndirect investment in order to mobilize sufficientcapital for this capital-intensive sector, to attractadvanced technology to exploit mineralsefficiently, and to promote the transfer of foreignadvanced technology with spillover impact onthe human capital base.262 Several other legalobligations and authorizations of the appropriateauthorities apply to investments: rights to landuse, forestry clearance procedures, constructionpermits, work permits (for expatriate employees),exchange control, accounting practices, wateruse, loan agreement registration, environmentalrehabilitation program, permit for usinghazardous materials and equipment, and others.

The procedures to register the investment, obtainmining titles, and receive the variousauthorizations are tedious and time-consuming,and it can give rise to the possibility ofinappropriate practices and favoritism byauthorities. If the proposed mineral deposit is not

noted in the “master plan” for the commodity,then special dispensation and permission mustbe obtained.263 In many cases, the master plandoes not have complete or independentlycorroborated exploration estimates on thereserves of the deposit, which means thegovernment must rely on reserve estimates fromthe company, and these can be understated sothat the company can illegally export greaterquantities of ores without paying the relevantroyalties and taxes.

A relatively new issue in Vietnam since 2005 isthat the measures to decentralize governmentdecision making has led to the rapid proliferationof small-scale mining licenses granted byprovincial authorities. This has led to a chaoticsituation and lack of proper oversight ofoperations in some provinces. For example, over3,495 licenses were granted by provincial and/ormunicipal authorities from 2005 to 2008compared with a total of 926 licenses granted bythe central ministry in the previous 12 years.264

While decentralization of the authority couldpresent the advantage of bringing theadministrative burden closer to the potentialinvestor, it has proved in practice difficult toimplement due to the lack of administrativecapacity and review procedures of the provincialauthorities.

An issue frequently considered by governments iswhether or not to provide for the auctioning ofmineral properties. On the one hand, an open andcompetitive tender, transparently and professionallyconducted, of mineral properties in theory wouldresult in the government achieving the best marketvalue. On the other hand, experience in manycountries shows that successful tender of mineralproperties is mixed. The fundamental determinant isthat the government should possess and provide forpotential bidders sufficient geological data toestablish proven and probable reserves. Without thisinformation, bidders would not have enough datato establish a fair market price for a deposit orprovide a viable development plan. The latestamendments to the Minerals Law in Vietnam


provide for tenders to be conducted for mineraldeposits. The dispositions in the law will need to becompleted with detailed regulations andprocedures in order to successfully conduct tenders.

It is important, therefore, to reinforce security ofthe legal regime and the granting of mine titles.The processes of mineral title acquisition,registration under the foreign investmentregime, and compliance with other legislativeinstruments corresponds to the practices inmany countries and provides the foundationupon which the state allocates mineral resourcesto third parties and ensures that investmentscorrespond to contractual and legalobligations.265 In finalizing the reforms to theMinerals Law, the government, in consultationwith private companies and other parties, shouldwork to strengthen security of tenure, providerealistic time frames for development ofresources, establish objective criteria forevaluation of mine title applications, establishclear mandates for intervention of governmentdepartments, provide for judicious use of tenderand auction mechanisms that reflect the realitiesof the international market, and ensure that the

tax regime pertaining to minerals development iscompetitive and fair.

IIt is also important to encourage exploration fornew mineral deposits by the private sector. Atpresent, only the geological survey unit withinMoNRE conducts basic research and explorationfor minerals resources. Vietnam could do a betterjob to mobilize investment from private sectorcompanies in this regard. (But see Box 6.1.) Thiswill require a clear legal mandate and security oftenure within the mining law that adheres tointernationally accepted principles of “first come,first served” in the issuance of explorationlicenses as well as automatic progression to anexploitation license for the company in the eventof a discovery. Also, regulations will have to bemodified to allow foreign companies to invest in“grass roots” or preliminary exploration withoutthe requirement to identify a specific project orinvestment. Additionally, regulations will need tobe adopted to put into operation the dispositionsin the amended Minerals Law pertaining totender operations. Exploration by its nature isexpensive and risky; the state has every interestin maximizing private capital and risk taking in


The Ban Phuc nickel project is the only foreign investment enterprise currently licensed in Son LaProvince. During the first phase of the construction period, the company employed 298 people, 184 ofwhom were local workers from within Son La. The creation of jobs is a significant contribution to thesocioeconomic development of the Bac Yen district, a mountainous and difficult area. Duringconstruction, BPNM has been paying an average of $1.9 million per month to Vietnamesecontractors/suppliers. Of this, Son La based contractors or suppliers receive approximately 20 percentor $350,000 per month. In addition to the 298 company employees, BPNM has provided income for 240Vietnamese contractors or suppliers, 10 of whom are based in Son La province.

The construction of Ban Phuc Project has created new opportunities for local and national Vietnameseemployees to achieve good income and improve their living standards. On average, employees at BanPhuc Mine earn $210 a month. This is a significantly income for local people around the mine, wherea year ago they could earn only $60 a year from small-scale farming and supporting activities.

In addition to salary, BPNM also provides its employees with Social Insurance and Health Insurancecoverage, safety equipment and instruments, and safety training for local workers. Finally, approx VND3 Billion per month are paid to Son La in taxes.

Source: Ban Phuc Nickel Mines 2009.

Box 6.1. Contributions of a mining project: The case of Ban Phuc Nickel

return for access to the data and information onpotential geological resources.

Effective SectorAdministration andEnvironmentalSustainabilityEffective management of the mining sector is afunction of clear and non-over-lapping mandatesbetween the various institutions intervening inthe sector at the central and provincial levels. InVietnam, MoNRE266 is the principal centralgovernment agency responsible for geologicalsurvey work, mine title administration andmaintenance, and review of environmentalassessments. In addition to MoNRE, the Ministryof Industry and Trade (MOIT) plays a key role inthe development of master plans for variouscommodities as well as approving the usage andexport of minerals in collaboration with otherstate-owned mining companies and agencies.The Ministry of Planning and Investment isresponsible for investment certificate registrationand investment capital of companies. In theprovinces, local government assisted by districtagencies modeled on the central governmentcounterparts also intervene in the mining sector,particularly in the authorization and issuance ofpermits for quarry and small-scale miningoperations.

In the case of Vietnam, there is a continuedstrong role in the mining sector (as well as otherheavy industries) of state-owned enterprises(SOEs). Prior to 2005, the principal miningenterprises were the Vietnam National MineralsCorporation (VIMICO) and Vietnam National CoalCorporation (VINACOAL).267 In that year, however,a state holding company was established:Vietnam National Coal-Minerals IndustriesCorporation (Vinacomin), which now directlyowns and operates coal and metals mines inVietnam and/or retains on behalf of the stateshares in joint ventures with private miningcompanies. Vinacomin directly or indirectly

controls approximately 95 percent of thecountry’s hard-rock minerals production. Themembers of Vinacomin’s management board arestate employees, and the Chairman and GeneralDirector are appointed by the government.Vinacomin enjoys preferential treatments by thegovernment: for instance, it is not necessarilysubject to the same level of appraisal as foreigncompanies for new investments. This presents asignificant challenge to the efficiency andtransparent administration of the sector.

Most countries designate a single lead agency foradministration of the sector, with support fromother agencies on related matters such asexchange control, investment authorization,planning, labor relations, and others. While in thepast in Vietnam the sector was administered byboth MoNRE and MOIT, the revisions to theMineral Law under consideration—but not yetadopted—will designate MoNRE as the leadagency for sector administration. This is a positivedevelopment as it will allow requisite proceduresand expertise for sector oversight to be housedin one agency, which could improve efficiencyand effectiveness of administration. However,currently investors also have to work directly withseveral different agencies for various issues andpermits at the ministry level in the centralgovernment and at the department level in theprovinces. Particularly at the provincial level,significant capacity improvements will have tooccur to build expertise to ensure that theprocedures are properly and expeditiouslycarried out.

Government ownership and operation ofenterprises in the extractive industries is adeclining practice, especially for non-petroleumresources. Even though some countries withsuccessful mining industries have SOEs (CodelcoChile, for example), experience hasdemonstrated a number of drawbacks to thisapproach. (See Box 6.2.) Mining companiesowned and administered by governmentbureaucrats rarely achieve the efficiencies ofprivate companies managed by professionals


reporting to stockholders. Even if the companiesare given clear goals and objectives, they are stillsubject to considerable political pressures.Accountability and accurate financial reportingare oftentimes compromised by politicalimperatives. Mining SOEs oftentimes incursignificant losses that require subsidies from thecentral state budget.

And it is important to note that there is aninherent conflict of interest in the role of the stateas shareholder in an SOE and impartial referee toadjudicate disputes between the company andcitizens who may be affected by the company’soperations. Finally, because of the closeconnections and ties of the SOE with othergovernment agencies, private companies are at acompetitive disadvantage when it comes toreceiving mine titles and developing mines. Thishas the net effect of reducing introduction ofnew technologies and processes for the sector aswell as exploration for additional mineralresources. Since Vinacomin gets its licensesdirectly from the central ministry, provincialauthorities cannot inspect or manage whatVinacomin does on its concession area.

In light of all this, it is important to pursue andstrengthen the institutional reform. Theproposed designation of MoNRE as the leadagency for the minerals sector is a step in theright direction and will help to clarify today’sconfusion in mandates and responsibilities. Asreformed and with enhanced capacity andlogistical resources, MoNRE can more effectivelycoordinate planning for resource development,evaluate the geological resources of the country,and oversee and monitor various mineraldevelopments and operations. Muchinstitutional strengthening and capacity buildingneeds to occur at the provincial level, especiallywith a focus on smaller mining and quarryoperations.

The strengths and weaknesses of state-ownedenterprises need attention. The role of SOEs inthe mining sector in other countries hasadvantages and disadvantages. In Vietnam,Vinacomin is the principal SOE and, as such, playsa pivotal role in mining operations and potentialdevelopments. The government should becognizant of potential weaknesses in thedominant role of Vinacomin to ensure that a “defacto” monopoly is not created and that


A considerable degree of controversy surrounds the Prime Minister’s Decision 167/QD-TTg (2007) onthe master plan for bauxite and the government’s announcement 2728/VPCP-QHOT (2008) relative toa bauxite-alumina project in Dak Nong and Lam Dong provinces proposed by BHP Billiton, a very largeAustralian company. This company has since abandoned its interest in the project. But Russian, andEuropean companies are now said to be interested, and two Chinese plants are now operational.

Bauxite development illustrates some of the weaknesses in the present system identified in this report:concession and mine title issuance procedures, monitoring and oversight of government institutions,inadequate community consultation, and possible-large scale environmental damages that have notbeen fully assessed or understood. A number of issues will need to be more fully understood if thisproject moves forward, including pricing of bauxite and a cost-benefit analysis of processing toalumina, cross-border implications (if any) with Lao PDR and Cambodia, specific environmentalconsiderations (red mud and tailings management), the roles and responsibilities of central andprovincial agencies, personnel development, ethnic minorities, and the reporting and management ofrevenues and benefit streams.

Source: Decision No. 167/QD-TTg of the Prime Minister dated 11.1.2007 approving the master planfor exploration, exploitation, processing bauxite for the period from 2007 to 2015; VOV News 2008.

Box 6.2. Mining concessions: The case of bauxite

competition is allowed. Further, clear distinctionbetween the roles and responsibilities of lineministries (MoNRE and MOIT) and Vinacominneeds to be established. Financial flows fromoperations need to be recorded and reportedusing not only Vietnamese accounting standardsand practices but also international financialreporting and accounting practices. This willserve the interests of transparency andprudential financial management as well asenhance the ability of Vinacomin to mobilizefunding on the international markets.

Theory versus Practice: TheEnvironmental and SocialImpact Assessment Process Vietnam’s law and various regulations anddecrees pertaining to the environmental andsocial protection reflect, in many respects, bestpractice for mining as well as other sectors. Thefundamental environmental legislation is theLaw on Environmental Protection of 2005, assupplemented by various decrees andcirculars.268 This body of laws requires anEnvironmental Impact Assessment (EIA, whichincludes a chapter on social impacts, an SIA) forall industrial-sized mining projects, with theassessments evaluated and approved by theMoNRE or the provincial department. In recentyears, MoNRE has reviewed around 30 EIAs formining projects of a large industrial scale.269

Environmental impact assessments for smallmining projects are evaluated at the provinciallevel, though the reviews by the provincialauthorities are much more problematic due tolack of understanding of the specifics of miningprojects. In addition to specific requirements forprojects, the law requires StrategicEnvironmental Assessments (SEAs) be includedin all commodity “master plans”; to date,however, no SEA has been approved since thisdisposition took effect, though Vinacomin is saidto be close to submitting an SEA for coal forapproval.

As in many countries, there is a large gap

between well-intentioned and well-structuredlegal instruments on environmental protectionand the ability of the government to administerthe laws. In Vietnam, the agencies responsible forevaluation of EIAs lack appropriatemethodologies, guidelines, normativeregulations,270 and proper templates to reviewthe impact assessment submissions fromcompanies.271 This weakness in internal staffcapacity is remedied in part by requesting reviewby the Appraisal Council, consisting of outsideacademics and experts from other ministries.Monitoring and follow-up on compliance withenvironmental regulations is also very weak,especially at the provincial level, because of toofew and inadequately trained staff as well aslogistical and funding bottlenecks.

Because companies recognize that thegovernment capacity to evaluate EIAs (and theSIAs within them) is weak, there is a tendency toprepare EIAs to simply conform to the letter ofthe law rather than to integrate the findings ofthe studies into mine planning and design. Forinstance, in Quang Ninh province, inspections bythe district office of natural resources andenvironment found that only 38 out of 68 coalmines have produced EIAs and that fewcompanies have up-to-date versions (as requiredby the law) even if an initial report wasprepared.272 The situation is even worse for small-scale operations, which do not file EIAs at all and,even if they did, would not comply with thestipulations.

The reform agenda therefore includes closing thegap between theory and practice in the EIA/SEAProcess. In order to put the environmental reviewprocess into effective operation, the governmentneeds to put into place training and capacitybuilding programs for relevant government staff,to develop appropriate templates and criteria forevaluation, and to provide logistical and othersupport for site visits to mining operations. Thenecessity for capacity building is especiallyneeded for certain provincial authorities wheremining activities are strong.


Physical Environmental andSocial ImpactsMining activities are well known to havesignificant impacts on the physical environment.Waste management, tailings impoundment, soilpollution, acid drainage, and air and waterpollution are some of the ongoing issues withany mining operation.

In Vietnam, the physical environmental impactsare particularly evident in the coal mining sector.(See also the Annex.) The impacts are evident inboth the large and small-scale (and oftentimesillegal) operations. Some 285 million tons ofwaste rock and soil were discharged by coal in2008.273 Dust pollution from the coal miningoperations are determined to be five times thepermitted standards at the mine site and overthree times the permitted standards in theresidential areas. This has significant healthimpact on residents of the coal mining areas(Quang Ninh province, in particular). Somestudies274 suggest that 60 percent of the peoplein Vietnam who suffer from silicosis and chronicbronchitis come from the coal mining areas.

The land acquired for the mine site, waste dumps,and facilities can be significant: at four coalmines, more than 3,000 hectares have beenacquired; if this is virgin land it may not have alarge cost, but prime agricultural land wouldhave a significant cost. Wastewater, the result ofwashing the coal or discharge from tailingsimpoundment facilities, is a serious problem inthe coal mining centers. In Dong Trieu district,half of the 25 reservoirs are judged “acidic” basedon ph levels of less than 3.5 compared with thestandard of 5.0–5.5. Rice yields in some localitieshave decreased significantly in some localities: 30quintals per hectare instead of 45 in years past.275

Mining also has significant “social” impacts oncommunities within the “footprint” of the miningdevelopment. Some of these include in-migration, “have” versus “have-not” dynamics invillages, changes to household expenditure

patterns and preferences, disturbances to socialand family hierarchies, loss of traditionallivelihoods or other economic activities,dependence on unsustainable infrastructure, andsocial behaviors. Negative social impacts onlivelihoods in communities surrounding miningareas have been seen, for example, in Lao Cai,Binh Dinh, Thai Nguyen, Son La where industrialmining activities are being conducted. Theseimpacts are reasonably well studied andunderstood in many countries, thoughgovernments and companies are generally notas far along in dealing with the social aspects asthey are the physical environmental aspects. Thisis true for other countries as well as Vietnam.

Vietnam requires an environmental protectionfee to be collected, which varies from $0.02 to$9.00 per cubic meter or ton of ore mined.276 Thefee for solid minerals goes to the provincial statebudget, which is supposed to use it to supportand protect the environment of the province. Insome provinces, fees for clean up andrehabilitation are collected. But it is difficult toassess the future cost of cleanup, so the feescollected at present may not be sufficient for thetask in future. The fees are also supposed to beused for prevention activities, yet most of thefunds are spent on remedying existing pollutionproblems and land degradation. For instance,some titanium mining enterprises in Binh Dinhprovince have paid only a portion of the feesrequired as per the mining plans, and the localPeople’s Committee used the money to simplyrehabilitate a small portion of the road from themain highway to the mining site, rather thanestablish mechanisms to prevent thedeterioration in the road surface in the firstinstance.

Vinacomin, the largest coal producer in Vietnam,recognizes its environmental responsibilities andrequires its operating units and subsidiaries to setaside 1 percent of total expenditures forproduction of services and goods to bededicated to cleanup and environmentalprotection at its operations.277 While this


approach is useful, it would be more appropriateto require precise environmental managementplans of each operating unit—plans that wouldbe costed and implemented on an annual basis,adjusting for price and operational costconsiderations. This is the approach used in mostcountries with large-scale coal miningoperations.

Many governments require companies to postfinancial sureties or otherwise reserve and putaside funds to cover the costs of cleanup andclosure of mining operations in addition to payingfor the costs of any environmental remediationduring exploitation. In Quang Ninh province, theapproval of rehabilitation and reclamation plansfor coal mines had not been approved as ofJanuary 2010 and hence no bond has beenposted. Government agencies at the central andprovincial level also complain that the regulationsand guidelines in place to administer theestablishment of the bond and sureties areimprecise, confusing, and difficult to follow.

Legislation to address the social impacts ofmining is not as well developed as for physicalenvironmental impacts, and the enforcement ofstandards is even weaker. For instance, minesestablished before the Law on Environment of2005 carried out little or no consultation with thelocal communities. The regulations also are silenton the nature of the consultations, who shouldbe involved, the type of reporting on decisions,and the mandates of the participants. In theory,project owners must write to local authoritiesand fatherland fronts for their comments,according to Decree No. 80. However, thecomments given by local authorities andfatherland fronts have no empirical basis,because they have not conducted indigenouscommunity consultations.

Regulations and guidelines on compensationlevels for local communities for land acquired formining operations or affected by the operationsexist, but the compensation rates are oftentimesbelow fair market value for the alternative land

use of the area. Currently, there are no legallybinding rules for companies to makecontributions for “in-kind” support, for instancefor schools, dispensaries, and infrastructure.However, the proposed revisions to the MineralsLaw now require that companies make acontribution to infrastructure development inlocal communities. In addition, many companieshave internal policies related to corporate socialresponsibility. These policies guide companyoperations in the countries where they operateand provide guidelines for companycontributions to local communities. (See Box 6.3.)Finally, communities may benefit from some ofthe tax payments in the form of special socialtarget programs: education (scholarships forpoor students) and other in-kind direct supports.In addition, communities receive the normalbenefits of government services, such as security,infrastructure, education, medical care, and otherservices provided by the government.

The reform agenda should thus include efforts bygovernments at the central and provincial levelsto tighten up on the effective application of thefees charged mining operators for environmentaldamage caused by operations and eventualcleanup and rehabilitation of site. Further, thegovernment needs to adopt regulationsconcerning the application of the financial suretyand bond system required for mining operators,in particular concerning reimbursement of fundsnot used for cleanup purposes, with regularadjustments of the funds to be posted as suretybased on environmental management plans.

In some countries, Canada for example, miningcompanies enter into binding CommunityDevelopment Agreements (CDA) directly withthe communities in which they operate. Theseagreements specify the mutual obligations of theparties, the community, and the company toprovide and operate certain services, managecompany contributions to social and communityinfrastructure, and establish the fiduciaryresponsibilities for reporting and accounting offunds. These CDAs greatly facilitate company


operations and the management of communitybenefits, and they should be established inVietnam.278

Equitable Development andDistribution of BenefitStreamsThe benefit streams from any mining operationinclude fiscal benefits (taxes, royalties, otherpayments) to the central and provincialgovernment, jobs and direct/indirect/inducedemployment, spin-off businesses and industries(both tradable and non-tradable goods andservices), infrastructure provision and usage, andimprovements in overall living standards andconditions. Unfortunately, in Vietnam, as in manyother countries, precise data and information ona nationwide or industry basis of the benefitstreams from mining projects are not available.

Despite the lack of such generalized information,it is possible to discuss some of the salientpractices in Vietnam in terms of management offiscal revenues as well as individual companycontributions to wider benefit streams.

The current management of fiscal receipts frommining in Vietnam has the characteristics of acentralized planning economy. The Ministry ofFinance controls the planning, assessment,collection, and disbursement of tax revenues. Onan annual basis, each central ministry and eachof the 63 provinces will set out its operationalplan and budget for the year. This budget is thendiscussed with Ministry of Finance foradjustment and approval. All taxes, fees, andother fiscal receipts flow back to either thecentral State Treasury or the provincial treasuries.

Budget reforms over the last years have changed


Though active in the oil sector, the community social responsibility profile of Talisman Energy isindicative of what contributions could be achieved from solid minerals in terms of communitycontributions, even though on a smaller scale.

In 2009, Talisman contributed over $6.3 million to community projects. In addition, the company andits employees around the world have also generously contributed $1 million to other charity work,such as United Way of Calgary, or to Haiti relief ($135,000) through Canada Red Cross.

In Vietnam, in line with the government’s human capital development programs, Talisman providesscholarships for Vietnamese students and other educational activities. It supports safety standards foremployees and communities (landmine clearance for a community in Quang Binh Province andhelmets for kids across the country), environment protection (standards and codes in construction topromote energy saving and low carbon dioxide emissions as a means of climate change, mitigation),and community health (Operation Smile and heart operations for disadvantaged children).

Globally, each Talisman employee or contractor is entitled to $485 annually to volunteer and supportcommunity work. Talisman’s staff members in Vietnam have been actively engaged with thecommunity by coming to Phu Yen to help victims of the Mirinae typhoon, helping children sufferingfrom leukemia hospitalized in Ho Chi Minh City, and helping orphans and disadvantaged children torealize their education.

Source: Talisman Energy, CSR Reports.

Box 6.3. Community social responsibility: The case of TalismanEnergy

the previous centralized system ofdisbursements. Presently, local governmentsdecide the disbursement of more than 50percent of total annual state budget. In addition,internal regulations of the State Treasury andMinistry of Finance regulate the limited numberof taxes that provincial governments can receivedirectly. For instance, provinces may receive acredit for 3 percent of the 10 percent value addedtax collected in the province and retain 100percent of environmental protection fees due inthe provinces.279

Vietnam is not alone in lacking data on theoverall economic and social impacts of mining:most countries do not have sufficient data in thisregard. Nonetheless, it is clear that these impactsare large and consistent over the life of the mine.The government should develop templates forthe reporting of this data, require regular reportsand updates from mining operators, andcoordinate these data with that gathered byother government agencies as, for example,education and health. The goal should be tocollect data not only on a project-specific basisbut also on a provincial and national basis and torelate this data to development outcomes andultimately to the Millennium Development Goals.

The Extractive Industries Transparency Initiative(EITI) was established in 2005 as a means todisclose taxes paid by extractive industrycompanies and taxes received by governments.The EITI is governed by a board of directors anda secretariat in Oslo, Norway. To date, some 38countries have subscribed to the principles of theEITI and are in the process of implementing theinitiative. Upon successful completion of thesteps in the process, countries are certified asEITI-compliant. This has the great advantage ofdemonstrating that the extractive industry sectoris in fact contributing taxes to the governmentand demonstrating internationally and locallythat good governance procedures are in place forthe sector. Vietnam should consider endorsingand implementing the EITI.280

Annex. Case Study: CoalCoal has been mined in Vietnam for the past 130years, beginning under French colonial rule in1883. It is by far the dominant mineralcommodity produced in the country. Vietnamproduces all varieties of coal, from lowest tohighest grade: peat, lignite (Braunkohle), sub-bituminous through bituminous (Flammkohle,Gasflammkohle, Gashohle, Fettkohle, Esskohle,Magerkohle), and anthracite (Anthrazit).281

Mining of coal takes place in 10 provinces andareas,282 principally in the northeastern part ofthe country. Extraction is both opencast (60percent) and underground (40 percent) miningmethods. Vietnam is the largest producer ofanthracite in Asia; most of the production isexported to China. In 2008, some 38,5 milliontons of commercial coal was produced, of whichapproximately 50 percent was exported,accounted for 0.57 percent of the world coalproduction, which is very modest.

Since 2000 Vietnam’s coal industry has undergonerapid expansion, growing at well over 10 percenta year. The expansion is primarily due to demandfor Vietnam’s high-quality exported anthracite,which commands a premium on the internationalmarket. (See Figure 6.1.) Total sales revenuesgenerated by anthracite exports were $1.4 billionin 2008.283 Growth in coal production is also dueto continued high domestic demand for coal asan energy source for power generation andcement manufacturing. However, exported coalcommands a premium price that is two to threetimes the prices paid for domestically used coal.

The structure of the Vietnamese coal miningindustry has undergone significant changessince 2000. During the colonial period and until1995 coal mining was a monopoly of the state. In1995, the Vietnam Coal Corporation wasestablished, which in turn has been owned 100percent by Vinacomin since 2005. Over the pastfive years, Vinacomin’s investment has increasedeightfold and paid-in capital grew four times, butthe before-tax profit remained unchanged and


the profit-to-capital ratio decreased four times.284

In July 2008, the Prime Minster issued a decreeapproving the strategy for coal development forthe period 2015 to 2025. This calls for theassessment and development of coal resourcesin the Red River basin below a depth of 300meters and the goal of achieving overall outputof coal of 80 million tons by 2025. If the strategyis followed, and assuming international marketsremain buoyant, the coal mining sector inVietnam will expand rapidly over the next 15years.

The case of coal in Vietnam illustrates many of thethematic issues discussed in the mining chapter:

Development of new extractiontechnologies and exploration. TheVietnamese coal industry is reasonablyefficient at its traditional extraction,processing, and export operations. Some

improvements in exploitation efficienciescan be achieved at these operations,however, through the introduction of newtechnologies, and the planned expansionto new exploitation areas needs theintroduction of new and advancedtechnologies. Specifically, the plannedexpansion to the Red River valley needsadditional exploration to prove reserves.

Also, the extraction of these resources willprove challenging given the shallow depthin river delta environment and the possibledisturbances to agricultural surface lands.Particularly, investigations need to becarried out at this site as well as others inVietnam on the introduction of methanegas extraction technologies for bothunderground and open cast operations.The introduction of these moderntechnologies would contribute to the


Figure 6.1. Evolution of Vietnam’s coal industry, 2000–2008

Source: The consumption department of Vinacomin.

country’s actions on the climate changemitigation agenda. It is noted thatVinacomin is working on the gasification ofcoal in the Red River basin in a consortiumwith LincEnergy (Australia) and MarubeniCorporation (Japan) since 2008 on a $ 6.5-million investment in trial exploitation.

Inadequate sector supervision. Illegalcoal mining has increased dramatically inrecent years. Customs statistics from Chinaon coal imports from Vietnam areconsiderably larger than the amountsdeclared in official statistics. SomeVietnamese estimates are that as much as10 million tons of coal was exported toChina illegally.285 Illegal coal mining andexports are a consequence ofimplementing the licensing andmanagement reforms provided for in theminerals legislation without adequatecapacity and clear mandates of the centralregulatory bodies. This is evidenced by thedominant role of the state-ownedenterprises (Vinacomin) as operators andregulators of the industry. For instance,Vinacomin subcontracts with privatecontractors for some of its excavation andtransport activities or sublicenses acompany to exploit a coal seam andoutcrop on its permit area withoutadequate supervision. In the investmentlaw, coal mining is classified as a“conditional business” so that localgovernments could also license privatesector companies and operators.

Regional disparities in benefitdistributions. Coal contributessignificantly to the economic developmentof the provinces where it takes place but itcan also exacerbate regional disparities ineconomic development. In Quang Ninhprovince (a principal anthracite productionarea), economic growth averaged over 12percent a year for the period 2006–10,which is much higher than many otherprovinces and 1.6 times higher than thenational average over the same period.

Nationally, the coal industry has createdaround 125,000 direct jobs, and employeesearn roughly 10 times the Vietnameseminimum wage.286 It is noted that the coalmines in Quang Ninh province have alsohelp create numerous ancillary industriesand activities that also provideemployment and job opportunities. Theincome from the mines has helped toreduce poverty and increase the well-beingof residents.

For instance, near the operations of the NuiBeo Coal company in Quang Ninh province,the percentage of households living belowthe poverty line decreased from 7.4 percentin 2007 to 4.6 percent in 2009, with a targetto fall below 5 percent by 2010. The ruralpopulation’s access to clean water supplystood 80 percent in 2010, up from around70 to75 percent previously. The percentageof trained and skilled workers in QuangNinh province was 42 percent, comparedwith the national average of 30 percent.Finally, given the projections for growth ofthe coal mining sector, the number ofemployed persons will also substantiallyincrease and reach around 300,000employees by 2025.287

Pollution and Emissions. 288 Coal miningin any country has significantenvironmental impacts. Some of thesignificant impacts in Vietnam include:

Airborne emissions of methane gas,smoke pollution, and dust. Gases emittedcontribute to global warming potentialthrough CO2, N2O, and CH4. Whencombined with water, “acid rain” can becaused.

Wastewater and other pollutants. Whenwater comes into contact with heavymetals present in the mined materials orwaste rock, it can contaminate surfaceand ground water. In addition, in manyareas mining takes place close to urbandwellings, and rain runoff generally


carries large amounts of dust, soil, andcontaminants. There are estimates289 of2.4–3 cubic meters of wastewatercreated for each ton of coal produced.

Tailings and waster rock management.An estimated 50 million tons of wasterock is produced through coal mining inVietnam. Disposal, impoundment, andmanagement of this waste rock poses aproblem, since disposal areas can benear populated areas, and slopes anddams need to be stabilized.

REFERENCES Ban Phuc Nickel Mines. 2009. “Corporate SocialResponsibility Report of Ban Phuc Nickel MinesProject,” Canadian CSR Seminar, Hanoi, 15 October.

Circular No. 05/2008/TT - BTNMT dated 08/12/2008of the Ministry of Natural Resources andEnvironment concerning guidelines for assessmentof strategic environment and environmentalimpacts and commitment to environmentalprotection.

Dao Danh Phuong, Nguyen The hung, Nguyen TheBau, Doan Van Hai, Mine Science and TechnologyJournal, No. 1/2009

Decision No. 13/2006/QD- BTNMT dated 08/9/2006of the Minister of Natural Resources andEnvironment concerning issuance of Regulationson Organization and Operation of an AppraisalCouncil.

Decision: 89/2008/QĐ-TTg of Prime Minister dated07 July 2008 approving the strategy on the coalindustry development plan of Vietnam to 2015 withthe vision to 2025.

Decision No. 167/QD-TTg of the Prime Ministerdated 11.1.2007 approving the master plan forexploration, exploitation, processing bauxite for theperiod from 2007 to 2015.

Decree 160/2005/ND-CP dated 27 December 2005on making detailed provisions for implementation ofmineral Law and Law on amendment of Mineral Law.

Decree 63/2008/ND_CP dated 13 May 2008 on

environmental Protection fee applicable to mineralmining

Decree No. 80/2006/ND - CP dated 9/8/2006 of theGovernment of the Socialist Republic of Vietnam ondetailing the implementation of some articles of the2005 Law on Environmental Protection.

Decree No. 21/ 2008/ ND- CP dated February 28,2008 of the Government concerning partialchanges in some articles stipulated in Decree No.80/ 2006/ ND- CP dated 9/ 8/ 2006.

Law on Environmental Protection approved by theNational Assembly of the Socialist Republic ofVietnam at the 8th session of the 11th NationalAssembly and seconded by the President under thepromulgation decree dated July 01, 2006.

Law on Minerals, 1996 (amended 2005), NationalAssembly of Vietnam.

Lao dong newspaper, The fight against illegal coal inQuang Ninh, what does the coal industry say, No.93dated 25/04/2008

Master plans on exploration, mining, processingand using of iron ore until 2010 with reference to2020 (Decision No.124/2006/QĐ-TTg of PrimeMinister dated 30 May 2006);

Master plans on exploration, mining, processingand using of lead and zinc ores in 2006 – 2015period with reference to 2020 (DecisionNo.176/2006/QĐ-TTg of Prime Minister dated 01August 2006);

Master plans on exploration, mining, processingand using of titanium ores in 2007 – 2015 periodwith reference to 2025 (Decision No.104/2007/QĐ-TTg of Prime Minister dated 13 July 2007);

Master plans on exploration, mining, processingand using of bauxite ores in 2007 – 2015 periodwith reference to 2025 (Decision No.167/2007/QĐ-TTg of Prime Minister dated 01 November 2007);

Master plans on exploration, mining and using ofminerals for cement production until 2020(Decision No.105/2008/QĐ-TTg 2007 of PrimeMinister dated 21 July);

Master plans on exploration, mining,processing and using of minerals forproduction of construction materials until2020 (Decision No.152/2008/QĐ-TTg of PrimeMinister dated 28 November 2008);


Master plans on partition, exploration, mining,processing and using of chromites and manganeseores in 2006 – 2015 period with reference to 2025(Decision No.33/2007/QĐ-BCN of Minister ofIndustry (nowadays is Ministry of Industry andTrade) dated 26 July 2007);

Master plans on partition, exploration, mining,processing and using of tin, tungsten and antimonyores in 2007 – 2015 period with reference to 2025(Decision No.05/2008/QĐ-BCT of Minister ofIndustry and Trade dated 04 March 2008);

Master plans on partition, exploration, mining,processing and using of gold, nickel andmolybdenum ores until 2015 with reference to 2025(Decision No.11/2008/QĐ-BCT of Minister ofIndustry and Trade dated 05 June 2008);

Master plans on partition, exploration, mining,processing and using of gemstone, rare earth anduranium ores until 2015 with reference 2025(Decision No.25/2008/QĐ-BCT of Minister ofIndustry and Trade dated 04 August 2008);

Master plans on exploration, mining and selectionapatite ores in 2008 – 2020 period with referenceafter 2020 (Decision No.28/2008/QĐ-BCT ofMinister of Industry and Trade dated 18 August2008);

Master plans on partition, exploration, mining,processing and using of industrial minerals group(serpentine, barite, graphite, fluorite, bentonite,diatomite and talc) until 2015 with reference to2025 (Decision No.41/2008/QĐ-BCT of Minister ofIndustry and Trade dated 17 November 2008);

Master plans on partition, exploration, mining,processing and using of material minerals group(white limestone, feldspar, kaolin and magnetite)until 2015 with reference 2025 (DecisionNo.47/2008/QĐ-BCT of Minister of Industry andTrade dated 17 December 2008)

Nguyen Thanh Ha, Structure of coal consumptionfrom 2010, Trade Magazine, 10 Jan 2010;http : / / t intuc.xa lo.vn/00-941362 442/dao_nguoc_co_cau_tieu_thu_than_tu_nam_2010.html.

Official Letter No. 570/TTg-CN dated 11 April 2006of the Prime Minister on surmounting the difficultyin implementation of the Amended Mineral Law onseveral provisions of the Mineral Law.

Official Letter No. 570/TTg-CN dated 11 April 2006of the Prime Minister on surmounting the difficultyin implementation of the Amended Mineral Law onseveral provisions of the Mineral Law.

Pham Quang Tu, Professor, comments on VDRmining chapter, August 2010

Talisman Energy, CSR Reports, 2009

Vietnam Statistical Yearbook, selected years

Vietnam Geology Association, Vietnam Union ofScience and Technology Associations, Consultancyon Development, Workshop Report: MineralDevelopment and Sustainable Development, Hanoi,May 2010

Vinacomin, Reports on Production volume ofDepartment of Distribution, 2008-2009.

Vinacomin, Department of Labor and Salary, 2010

Vinacomin, Mine Science and Technology Institute,monitoring project 2008

VOV News. 2008. “Lesson 1: economic benefits andenvironmental consequences.” Athttp://vovnews.vn/Home/Bai-1-Loi-ich-kinh-te-va-hau-qua-moi-truong/200812/100872.vov. 12December.

Vu Xuan Nguyet Hong (CIEM) and Nguyen Thi Lan(ILSSA). 2010. Economic Governance and Policy-Making Process in Vietnam. June.


Population and EmploymentTable 1.1 PopulationTable 1.2 Population by localityTable 1.3 Total employment by sectors

National AccountTable 2.1 GDP by industrial origin and by economic sector in current pricesTable 2.2 A GDP by industrial origin and by economic sector in constant pricesTable 2.2 B GDP by industrial origin - growth rateTable 2.3 A GDP deflatorTable 2.3 B Change in GDP deflatorTable 2.4 National accounts: sources and uses

Balance of PaymentsTable 3.1 Balance of paymentsTable 3.2 Merchandise exports by commoditiesTable 3.3 Merchandise imports by commodities

Monetary SurveyTable 4.1 Monetary survey

BudgetTable 5.1 State budget revenuesTable 5.2 State budget revenues (share of GDP) Table 5.3 State budget expendituresTable 5.4 State budget expenditures (share of GDP)Table 5.5 External Debt

PricesTable 6.1 A Monthly change in consumer pricesTable 6.1 B Monthly comsumer price indexTable 6.2 A Consumer price by commodity groupsTable 6.2 B Consumer price index by commodity groups

AgricultureTable 7.1 Agriculture production in current priceTable 7.2 Agriculture production in constant priceTable 7.3 Industrial crop production and yields

IndustryTable 8.1 Industrial production outputTable 8.2 Major industrial products

STATISTICAL APPENDIX

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TS T A T I S T I C A L A P P E N D I X126

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TS T A T I S T I C A L A P P E N D I X 127

1 Using World Bank Atlas methodology. Seehttp://siteresources.worldbank.org/OPSMANUAL/Resources/OP310_AnnexD_July2010.pdf. Viewed 6August 2010.

2 EIU 2010.3 GSO 2008.4 The Gini coefficient rose from 0.34 (1993) to 0.36

(2006); see World Bank 2010f. A value of 0 impliestotal equality, while a value of 1 signifies totalinequality.

5 UNESCAP and CIEM 2009.

6 MPI 2006.7 World Bank 2010d.8 GSO 2010.9 Cira and Karam 2010.10 GSO 2010. See table 2.1 in the appendix for details.11 The Vietnam Development Report 2010 (World Bank

2009) is also available in Vietnamese.12 See CECOD et al. 2010 for specifics. Water pollution

is also analyzed in LBCD Consultants Inc. andExperco International Ltd. 2010 and in World Bank2008.

13 For good overviews, see FSPS 2009 on forests andMARD 2010 for fisheries.

14 World Bank 2005a,b. Biodiversity is treated in itsterrestrial component in the forestry chapter and inits marine component in the marine chapter.

15 See the appendix, table 3.2 for major exports bycommodity, and table 3.3 for major imports.

16 World Commission on Environment andDevelopment 1987.

17 See World Bank 2006 and World Bank (forthcoming)for a detailed account of the methodology andapplications to a cross-country analysis.

18 Comparisons for 2008 are from World Bank 2010x.

19 See Yale Center for Environmental Law & Policy andColumbia University Center for International EarthScience Information Network 2010.

20 Except for roadside stations, concentration levels ofnitrogen dioxide, sulfur dioxide, carbon monoxide,and lead are generally stable and comply withVietnam standards. There is limited information toassess the situation for smaller particulate matter(PM2.5), which has a critical importance in terms ofhealth impacts, or for ozone. The 2005 ambient airquality standards were signed and due to become atechnical regulation in 2009. While there is nonationally legislated air quality index system inVietnam, Ho Chi Minh City uses an Air Quality Indexbased on U.S. Federal Register guidelines. Air qualitymonitoring systems are expected to improve as thegovernment implements its plan to expand itsEnvironmental Quality Monitoring Network systemsas well as when the Ministry of Natural Resourcesand Environment (through the Center forEnvironmental Monitoring) completes its guidelinesand handbook for air quality monitoring in Vietnam.Sources: ADB and CAI-Asia 2006; MoNRE 2008;BTNMT 2009; CAI-Asia 2010; and Dr. Tuan, Center forEnvironmental Monitoring, personalcommunication.

21 An important indicator here is the prevalence ofacute respiratory infections among children underfive years of age, which is 20 percent for Vietnam.This can be compared with the followingpercentages: Timor-Leste (14), the Philippines (10),and Indonesia (8) (World Bank 2010g). Many factorscontribute, but this indicates a potentially significantissue that would deserve discussion. To ourknowledge, however, detailed analysis of the role ofindoor air pollution in Vietnam is not available.

22 See, for example, ADB 2009a, 2010; GoV 2009;ISPONRE 2009; Monash University 2010; MoNRE2009; World Bank 2010a, 2010b, 2010c, and 2010d.

23 The estimate assumes a 2 degree C warming. SeeWorld Bank 2010d.

NOTES

24 Monash University 2010.25 The term “likely” is used with reference to the IPCC

(2007) assessment and indicates an estimatedprobability of >66 percent. IPCC notes that there isevidence of an increase in intense tropic cycloneactivity in the North Atlantic since about 1970, butonly “suggestions” of the same in other regions,where data quality is lower. In summary, IPCC (2007,p. 53) therefore lists “intense tropical cyclone activityincreases” as “likely.”

26 The government of Vietnam adopted a program in2008 to determine the consequences of climatechange and establish national priorities. ThisNational Target Program to Respond to ClimateChange (NTP-RCC) is the country’s guidingdocument for responding to climate change in themedium term (2009–15). See also MoNRE 2009 andUN-Viet Nam 2009.

27 WRI 2009.28 SeeWorld Bank 2010b.29 But see, for example, the NPT-RCC.30 One important factor is what is assumed about CO2-

fertilization. See Nelson et al (2010) for a clearillustration.

31 See World Bank 2010b.32 See Poverty-Environment Partnership 2008 for a

detailed explanation and specific sources for eachcountry.

33 Vietnam’s Law of Environment Protection 2006requires agencies responsible for the formulation ofland use plans to prepare strategic environmentassessments (SEAs), at least at the interprovincial orregional levels.

34 See Dusik and Xie 2009; Clausen et al. 2010.35 REDD+ stands for Reducing Emissions from

Deforestation and Forest Degradation in DevelopingCountries; and the role of Conservation, SustainableManagement of Forests and Enhancement of ForestCarbon Stocks in Developing Countries.

36 MoNRE 2010.37 Here and in further in this report, the term “land

management” is used in the broad meaning,including two narrower concepts of landadministration (defined by FAO as the way landtenure rules are applied and made operational) andland management (i.e. how the land is used orutilized).

38 According to the Vietnam Population Census 2009,

by April 1, 2009, the country was home to85,789,573 persons (an increase by 9.5 million since1999). The annual population growth was 1.2percent in the period 1999–2009, representing adecrease by 0.5 percent compared with the previousdecade and the lowest annual growth rate in the last50 years.

39 Progress of land allocation in Vietnam (million ha).40 The decentralized grassroots-level process of

redistribution of cooperative land to farmerhouseholds, its equitable outcomes, and thepositive welfares impacts are analyzed in Ravaillionand van de Walle (2001). The land redistributiongave 15 percent higher consumption for the poorestand 20 percent lower for the richest compared witha simulated efficient allocation based on maximizingaggregate consumption. In terms of outcomes forpoverty and inequality, the land reallocation wasroughly the same as giving all farm households thesame irrigated land equivalent.

41 Truong Thien Thu and Perera 201042 A statistical and econometric analysis of data

collected through the Vietnam Household LivingStandards Survey in 1992–93 shows the earlierdecentralized allocation of cooperative land tofarmer households had roughly the same averageconsumption and consumption inequality impactsas giving every household the same amount ofirrigated-land equivalent. Further, efforts might takeplace at the grassroots level to protect the poorestand reduce overall inequality, at the expense ofaggregate consumption. The analysis does notconfirm the significance of non-egalitarian landallocations in case relatively well off local cadrescaptured the allocation process. The allocationentails an equity-efficiency trade-off and hasachieved positive values of both the objectives. Italso establishes that if a free-market efficiency-based land allocation had taken place instead, theoutcome would have been less equitable (Ravaillionand van de Walle 2001).

43 The granting of a Land Use Rights Certificate (LURC)signals completion of the first registration processand the formal recognition of the land user’s rights,providing judicial protection of tenure security andformal land transactions. In the period 1993–2000,almost 11 million LURCs were reportedly granted to90 percent of farmer households, making this thelargest land titling program in the developing world.In comparison, only 8.7 million land titles have beendistributed in Thailand since early 1980s, 1.87 millionin Indonesia between 1996 and 2000, and 1.2 millionin Peru by 2000 (Truong Thien Thu and Perera 2010).

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TN O T E S152

NN A T U R A L RR E S O U R C E S MM A N A G E M E N TN O T E S 153

44 For a good discussion on land degradation indeveloping countries, see Scherr and Yadav 1996; forspecific studies in Vietnam, see Nikolic et al. 2008and Wezel et al. 2002.

45 For example, in Ho Chi Minh City and Hanoi, landand property prices increased by 40–50 percent in2007 but 20 percent in 2009.

46 LURCs are often issued for a specific governmentpredetermined land use purpose (such as ricegrowing land, forestland, or residential land), adeviation from which could be classified as misuse ifthere were no pre-approval by concernedauthorities. Upon the completion of the land useperiod (20 and 50 years for agricultural andforestland respectively) the tenure could beextended if respective land users have the demandand used the land according to the assigned landuse purpose. There are also ceilings on landholding—for example, 2–3 hectares of agriculturalland per household in the Red River Delta and 4–5hectares in the Mekong River Delta.

47 World Bank 2009b.48 Jones Lang LaSalle 2006 and 2010. 49 Landlessness stands at more than 12 percent of the

rural population and is particularly acute in theMekong River Delta and Southern East, where bothland and labor markets are more developed(Government of Vietnam 2004). Ravalion and van deWalle (2005) show that the landlessness tends to behigher among non-poor in rural Vietnam as a wholeand that those non-poor engaged in landtransactions tend to be better off.

50 Ravallion and van de Walle 2005.51 The government fully understands the importance

of the completion of the issuance of LURCs and hasset the target to do that in principle by the end of2010 (resolutions 07/2007/QH12 of the NationalAssembly and 02/2008/NQ-CP of the Government).MoNRE/General Department of Land Administration(GDLA) estimates, based on the currently adoptedapproach and methodology, that completing theissuance of LURCs and modernizing the land

administration system for all provinces wouldrequire about $850 million in 2008–15, not including$100 million under the ongoing World-Bank fundedVietnam Land Administration Project. To meet thistimeline, a number of LURCs would have to beissued on the basis of existing documents and mapsand updated with more accurate spatial datareferences later when adequate survey andmapping capacities are available. In this respect,MoNRE/GDLA was advised to consider alternativeoptions. In this respect, the issuance of titles basedon the parcel border demarcation agreed to byconcerned land owners, subject to relatedstakeholders’ proper awareness and participationused in some countries, could be useful. Thisapproach has proved to be less costly and less time-consuming than current GDLA practice (VietnamLand Administration Project. SecondImplementation Support Mission April 1–10, 2009.Aide Memoire).

52 World Bank. 2009b; Truong Thien Thu and Perera2010; Davidsen 2010.

53 Vietnam’s Law of Environment Protection 2006requires agencies responsible for the formulation ofland use plans to prepare strategic environmentassessment (SEA) reports, at least at theinterprovincial or regional levels, as an integralcontent of the plan and concurrently with theformulation of the plans. The SEA shall include,among other items, the likely adverse impacts ofand proposed mitigation measures for the plan’simplementation. The SEAs shall be reviewed by acouncil established according to the level of theplans and with representatives of relevant national,regional, and provincial authorities. Organizationsand individuals have the right to submit theirrequests and recommendations of environmentalprotection to the agencies that are responsible forestablishing the review councils. The conclusion ofthe SEA review serves as a basis for final approval ofthe plans.

54 World Bank 2010a.55 In legal acts and Vietnamese literature, customary

titling is often referred to as “land allocation tocommunities.” A community is defined by the LandLaw as a group of Vietnamese who live in the samevillage or hamlet and have the same customs andhabits or family clans (Article 9.3). Broader, in thecontext of Vietnam, customary titling can beunderstood as providing statutory long-term landuse rights, taking into account long-standingprinciples (called as “customary law”) and traditionalland administration institutions that often operateoutside or in parallel with the formal legal system

and define how rights are ruled, allocated, andpreserved within a community. Customary titlingcan take place in forest and “unused” landdominated by ethnic groups with largely intacttraditional social structures. Currently, it is estimatedthat 2–2.5 million hectares of forestland are de-factomanaged by communities.

56 See Circular 38/2007/TT-BNN on forest allocation.57 Foerster and Apel 2004.58 State forest enterprises or companies manage more

than 4 million hectares of forestland. Much of this isunderutilized, and at least 1 million hectares couldbe released to local authorities for redistribution tolocal farmers and firms in needs (World Bank 2001).Also reportedly, most commercial land in Hanoi isstill in the hands of state-owned enterprises andgovernment bodies and often rented out to theprivate sector.

59 World Bank 2009a.60 World Bank 2010b.61 World Bank 2010c.62 The Water Sector Review (WSR) in 2007/2008 was a

joint project of the government of Vietnam and anumber of international development partners. Theaim was to help the government and its partnersadopt better management approaches based onintegrated water resources management (IWRM)principles, in line with the objectives of the NationalWater Resources Strategy. The immediate objectiveof the project was to review the state of the watersector in Vietnam and to establish a commonframework to guide development decisions andsupport IWRM initiatives. Seehttp://www.vnwatersector-review.com.

63 The international standard for adequate water perperson is 1,700 cubic meters a year, with thepossibility remaining of having irregular or localwater shortages with water availability of between1,700 and 4,000 cubic meters a year (based on theFalkenmark Water Stress Indicators).

64 World Bank 2007a.65 The Ministry of Natural Resources and Environment

(MoNRE) Web site reports that in the Mekong Delta,unchecked use of bores has been causing landsubsidence and pollution from damaged bores. Thelevel of groundwater in the delta has fallen by 12–15meters, and groundwater in several areas would bedepleted by 2014.

66 A total of 68 urban water supply companies provideservice averaging 21.6 hours per day, with 55


companies supplying 18 hours per day or more.Average supply ranges between 80 and 90 liters percapita per day (lcd) to 120–130 lcd in the larger citiesat a low service pressure, compared with a nationaldesign target of 120–150 lcd. Unaccounted-forwater is reported as reduced to 30 percent in 2009.These official averages, however, maskunaccounted-for water values in parts of urbanareas as high as 75 percent (ADB 2010a).

67 ADB 2010a.68 Unimproved drinking water sources include

unprotected dug wells and springs, vendors usingcarts, bottled water, and untreated surface water. Inthe dry season, water quality in most unimprovedsources deteriorates markedly as quantity falls andthe contaminant load rises, increasing the incidenceof both water-washed and water-borne diseases(ADB 2010a).

69 UNICEF, Country Program of Cooperation (2006–2010) between the government of Vietnam andUNICEF, the Water, Environment and Sanitationprogram (ADB 2010a).

70 ADB 2010b.71 Ibid.72 Ministry of Industry 2005.73 Hortle 2007.74 Aquaculture accounts for about 17 percent of the

total fisheries workforce. The area under aquacultureis nearly 1 million hectares, with a total output ofover 1 million tons, over a third of all aquaticproduction. However, the productivity ofaquaculture is low (250–300 kg/ha) compared withother countries in the region. The brackish shrimpfarming area increased threefold between 1999 and2005. Nearly 90 percent of the shrimp farming areais in the Mekong River Delta (FAO Web sites; NguyenVan Trong 2008).

75 Open net cage fish farms and land-based fish farmscan discharge significant amounts of wastewatercontaining nutrients, chemicals, andpharmaceuticals. The nutrients in unused fish feedand fish feces can cause local algal blooms, oreutrophication. These blooms lead to reducedoxygen in the water, which in turn can lead to theproduction of ammonia, methane, and hydrogensulfide, which are toxic to many aquatic species.Reduced oxygen can also directly kill marine life. Inaddition, a wide range of chemicals is currently usedin the aquaculture industry, mainly pharmaceuticalssuch as antibiotics and anti-fouling agents such ascopper. Some of these chemicals are toxic to

mollusks and crustaceans (http://wwf.panda.org/about_our_earth/blue_planet/problems/aquaculture/pollution/).

76 FAO Globefish report 2009 http://www.globefish.org/pangasius-march-2010.html.

77 See Government of Vietnam 2010 for details. 78 See JICA 2009 for details.79 JICA 2009.80 Government of Vietnam 2006.81 Ibid.82 ICEM 2007.83 ADB 2010a.84 The MoNRE Web site reports on the findings of a

study by the National Assembly’s Science,Technology and Environment Committee, whichfound that the cooperation among ministries,departments, and local governments in resolvinginter-regional environmental problems remains lesseffective due to particularly overlapping regulationson the responsibility of state organizations and localgovernments toward environmental protection.

85 More than 11 hydropower dams are being studiedby developers for the mainstream of the Mekong.The 1995 Mekong Agreement requires that suchprojects be discussed among all four countries priorto any decision. That discussion, facilitated by theMekong River Commission (MRC), will consider thefull range of social, environmental, and cross-sectordevelopment impacts within the Lower MekongBasin. So far, none of the prospective developershave reached the stage of notification and priorconsultation required under the MekongAgreement. While there will be a net economicbenefit for the power sectors in all countries, thedams are also likely to have wide-ranging economicimpacts that are distributed unevenly across thelower Mekong Basin communities and countries andthat differ considerably in their significance betweendifferent locations and groups. The MRC isundertaking a strategic environmental assessmentof the proposed mainstream dams to provide abroader understanding of the opportunities andrisks of such development (MRC 2010).

86 A range of water resource data-related issues inVietnam were identified in detail by AusAID (2004).

87 Financial losses, reflecting expenditure or incomelosses resulting from poor sanitation, are equal toroughly 0.5 percent of annual gross domesticproduct (GDP), while overall population welfare


losses are equal to 1.3 percent of GDP. The majorityof economic losses are shared between health (34percent), water resources (37 percent), and theenvironment (15 percent). The annual losses percapita equal $9.38 or VND150,770 (World Bank2006).

88 Currently, 170 urban water supply projects, valuedat close to $1 billion, are under way, aimed atproviding clean water throughout the country by2020 (VIETWATER '10, Brochure, Vietnam WaterSupply Association). The Ministry of Constructionhas sought approval for a $494 million project toreduce water loss (Viet Nam News 2010). Investmentneeds to meet the Millennium Development Goalsin Vietnam in both rural and urban water andsanitation by 2020 are tentatively estimated at $600million annually, which is roughly four times theannual investment in the last 10 years (World Bank2006).

89 Prior to the abolition of irrigation charges, theIrrigation and Drainage Management Companies(IDMC) collected an irrigation service fee (ISF). Theaggregate total ISF revenues collected by IDMCs in2006 was VND 659 billion and accounted for 58percent of the aggregate total expendituresincurred by IDMCs in that year. Total revenue earnedby IDMC in 2006 was VND 886 billion and covered78 percent of the aggregate total expenditures(World Bank 2007b). While the irrigation services feewas abolished (and land taxes), farmers continue topay irrigation fees to their water user organizationsor more commonly to agricultural servicecooperatives (which operate in all or mostcommunes).

90 IWMI, FAO, and ADB 2009.91 The MoNRE Web site reports that more than 3,000

violations of the Environment Law occurred duringthe first six months of the year, compared with 600during the same period last year. More than 1,000organizations and 2,000 individuals were foundviolating provisions of the law, and a total of VND17billion ($895,000) in fines were issued.

92 A total figure for the cost of water pollution is notavailable. However, estimates are available for a sub-set of the problem related to polluted water due topoor sanitation. A study (World Bank 2008)estimated the economic losses from health impactsof poor sanitation to be $262 million per year. Muchof this—but not all-- is due to the impacts ofpolluted water. Health impacts were divided into thecosts of health care, productivity losses due tomorbidity, and premature death. The study indicatesthat sanitation accounts for nearly 7 million diarrhea

cases, 2.4 million cases of scabies, helminthes,hepatitis A and trachoma and 0.9 millionmalnutrition-related cases per annum. Thesediseases also cause more than 9,000 deaths per year,mostly among children. A second major impactmeasured in this study is the economic costs of poorwater quality that are only indirectly related tohealth. This study estimated these costs to be morethan $287 million per year, including costs oftreating polluted water used as drinking water,additional costs for finding improved water, andproductivity losses in fisheries. Additional costs addup to the $780 million that has been quoted byMoNRE 2010.

93 Vedan Vietnam is a monosodium glutamate maker.Investigations in September 2008 found Vedan hadillegally dumped wastewater. Court action againstVedan is under way, per the MoNRE Web site.

94 The impacts of climate change on precipitation andwater management differ considerably betweenmodels. A run of 14 different climate models showsthat Vietnam has about an equal chance of gettingdrier or wetter by 2050 (World Bank 2010a). Thegovernment has adopted a medium greenhousegas emissions scenario for Vietnamese climatechange projections and planning. According to thisscenario, annual total rainfall will increaseeverywhere in Vietnam. Under the high emissionsscenario, rainfall is estimated to increase by anaverage of 6.6 percent during this century, includingby as much as 10 percent in the Red River Delta area.Should this come about, it could lead to increasedrisk of flooding and landslides in mountainous areas.In contrast, during the dry months, especially in thesouthern regions including the Mekong Delta,average rainfall could decrease by about 20 percent,leading to increased drought risks. Vietnam’s“planning parameter” is a one meter rise in sea levelsby 2100, which is consistent with a high emissionsscenario. Without major action, such as dikereinforcements, a one meter rise in mean sea levelswould cause major inundation (UNDP 2009). It isprudent to adopt planning parameters that takeinto account even an extreme sea level rise. Forcomparison, it can be noted that theIntergovernmental Panel on Climate Change (2007)projected a global mean SLR of 26-59 cm by 2100,on the basis of thermal expansion of sea water only.

95 There are also sub-laws dealing with environmentalprotection charges on wastewater (Decree 67/2003),urban water supply and drainage (Decrees117/2007, 88/2007 & 59/2007), river basinmanagement (Decree 120/2008), and inter-reservoiroperation rules (Decree 112/2008).


96 Water rights are specified in terms of a volume orshare of the water that a right-holder may take. Theymay also specify when and at what rate such watercan be taken. Water rights include a priority ofaccess that a right-holder has relative to other right-holders. Specifying priority of access is one meansby which the year-to-year variability of watersupplies is rationed between users and uses. Waterrights have a specified duration. Water rights mayalso confer rights to construct the necessary worksto extract water, to use water, and to set the timingof the delivery of that water. However, in a numberof jurisdictions, separate approval processes arerequired to put into effect the necessary works toextract water, to use water, and to make use of thechannel capacity. Finally, water rights also imposeliabilities on their holders not to injure other right-holders. These liabilities are generally intended toprotect third parties, such as other right-holders orthe environment. Such liabilities are an importantaspect of the enforcement of water rights(Australian Productivity Commission 2003).

97 ADB 2010b.98 Based on EU 2000.99 World Bank 2006.100ADB 2010a.101The MoNRE Web site reports on the findings of a

study by the National Assembly’s Science,Technology and Environment Committee thatreviewed the enforcement of environmental laws inindustrial parks and urban and economic zones. TheDeputy Chairman of the Science, Technology andEnvironment Committee, Dr. Sc. Nghiem Vu Khai, isquoted as saying that existing state policies andlegal documents have laid a necessary foundationfor pollution treatment and environmentalprotection in urban areas and industrial parksthroughout the country. Nevertheless, pollutionstays at a critical level in many areas, challengingeconomic growth and threatening people’s health.This is attributed to the low enforcement ofenvironmental laws, for which relevant state bodiesand local governments must take the blame.

102Decision 64/2003 on handling pollutingestablishments and the regulatory and operationalresponse across government is a significantachievement. But innovations are needed toimprove performance. In particular, the criteria fordesignating an enterprise or area as “most seriouspolluter” are not well defined. See ICEM 2007.

103Eight industry groups and a number of theirsubsectors are consistently ranked at the top of the

pollution indexes. Thus, significant improvements inenvironmental quality and reductions in industrialpollution could be achieved by focusing pollutioncontrol efforts on these industrial subsectors. Theeight industry groups are chemicals industries,primary metals industries, food processing, leatherand leather products, paper and wood products,textiles, ceramics, and non-metal mineral productsindustry (ICEM 2007).

104Various documents on the MoNRE Web site reportthat in the first five months of 2010, seawater hadentered areas as far as 50–70 kilometers inland.About 40 percent of the rice production in thatregion has been affected by saltwater, and one-thirdof the rural population in the region does not haveenough freshwater for daily activities. In someprovinces, numerous canals have dried up becauseof the prolonged dry and hot season. Meanwhile,there is also a problem with a lack of seawater forshrimp production due to the province’s policy toclose the seawater supply pipeline to save morethan 20,000 hectares of rice in the province. Tryingto meet both the demand of rice growers for freshwater and the needs of shrimp breeders forseawater has proved difficult.

105Ibid.106IWMI, FAO, and ADB 2009.107ADB 2010a.108World Bank 2006.109The Quang Ngai Natural Disaster Mitigation Project

is an example. The project provided and equipped aprovincial Centre for Management and Mitigation ofNatural Disasters and initiated and put intooperation an effective community-based disasterrisk management (CBDRM) approach. Thisdemonstrated a highly successful application ofcomplementary structural, nonstructural, andcommunity-based components. Flood modelingconvinced the authorities of the value of anintegrated approach to disaster management,where previously the main provincial interest was inthe structural components of projects. CBDRM alsodemonstrated the value of communities that havebeen prepared and resourced to manage the localdisaster risks through preparedness, safe behaviors,adequate warning and rescue facilities, and somelow-cost local structural measures. Such programscan also consider more specific aspects, such asdealing with children who have to learn to live withflooding, for example in the Mekong Delta. Safetyprograms such as swimming classes and flotationdevices may save many young lives.


110ADB TA-4689 (VIE) supporting the preparation andpilot testing of guidelines to introduce benefitsharing mechanisms on hydropower projects inVietnam, Final Report, December 2007.

111ADB 2010b.

ADB 2010a; The Vietnam Development Report 2010contains a thorough treatment of governance.

112The Provincial Competitiveness Index is a ranking ofprovinces based on the competitiveness of thebusiness environment.

113The National Water Resources Council is chaired bya Deputy Prime Minister and consists of all the watersector ministries.

114Water service operators need far greater businessflexibility within a regulatory framework thatprotects communities, customers, and theenvironment. The WSR noted that, through Decree117/2007 on clean water production, supply, andconsumption and Decree 88/2007 on urban andindustrial park water drainage, the government hasnow created the legal framework to undertake amajor and on-going process of reform for the urbanwater sector service providers. The reforms should(based on World Bank 2006) aim to ensure theservice providers have greater autonomy fromgovernment in day-to-day management andoperation, are progressively commercialized, areaccountable and subject to appropriate regulatorycontrols, have legal requirements to monitorperformance against specified performance targetsset by government, undertake tariff reform toimprove cost recovery and financial sustainability,and are oriented to customer needs. The ADB alsorecommends a program to strengthen the businesspractices and financial basis of water supplycompanies (including the systematic introduction ofperformance indicators, benchmarking, assetinventory, management systems, and energyefficiency). The overall aim is to make water supplycompanies effective and financially viable (ADB2010a). The WSR also recommended that thegovernment consider the establishment of singlebody governing water and sanitation services andintegrate urban water services functions to takeadvantage of operating and administrativesynergies and economies of scale.

116ADB 2009.117MARD Minister’s Decision No. 2140/QĐ-BNN-KL,

dated 9 August 2010, on the Official Data on ForestLand by 2009.

118MARD 2009b.

119MARD Decision No. 2140/QĐ-BNN-KL.120Note that this chapter mostly uses the most recent

data on forest cover (Decision No. 2140); howeverthe most recent data on forest structure is drawnfrom the 2005 National Forest Inventory, henceinconsistencies exist in some figures (for example,area of plantations) due to the different points intime of the data sets.

121Data source: MARD Decision No. 2140/QĐ-BNN-KL.Summary of functional categories: Special use forestis intended for nature conservation, protection ofecosystems and of flora and fauna gene resources,and for historical, environmental, and cultural sites.Protection forest is set aside for protection ofwatersheds, soil and the environment. Productionforest is the source of wood and non-wood forestproducts and is also meant to contribute toecological protection.

122Phan Nguyen Hong and Hoang Thi San 1993; MARDDecision No. 1267/QĐ-BNN-KL, dated 4 May 2009Announcing the Current Forest ResourceManagement of the Country (for area of mangrovesin 2008).

123The widely used terms “barren” or “bare” hills are amisnomer as most are covered by a dense scrubbycover of both woody plants and grasses (McElwee2009).

124Afforestation programs included: Program 327 in1992, Program 556 in 1996, and Program 661 in1998.

125MARD Decision No. 2140/QĐ-BNN-KL.126MoNRE 2009.127Government of Vietnam 2001.128Prime Minister Decision No. 18/2007/QD-ttg, 5

February 2007, on Approval of the Vietnam ForestryDevelopment Strategy 2006–2020. VFDS“Development” Programs: I. Program on SustainableForest Management and Development; II. Programon Forest Protection, Biodiversity Conservation, andEnvironmental Services Development; III. Programon Forest Products Processing and Trade. VFDS“Support” Programs: IV. Program on Research,Education, Training, and Forestry Extension; V.Program on Renovating the Forest SectorInstitutions, Policy, Planning, and Monitoring.

129World Bank 2009.130Prime Minister Decision No. 661/ QD-TTg, 29 July

1998, on Objectives, Tasks, Policies and Organisationfor the Implementation of Reforestation of FiveMillion Hectare Program.


131The main targets were to establish 5 million hectaresof forest (3 million hectares of protection forest and2 million of production forest) through a series ofcash incentives (protection forest) and preferentialloans (production forest).

132Van der Poel 2007.133World Bank 2010b.134Prime Minister Decision No: 100/QD-TTg, 6 July

2007, on Revision and Amendment of Some Articlesof the Decision 661/QD-TTg (the 5 Million HectaresReforestation Program); the main revisions included:revision of targets, reclassification of forests toreduce protection forests and increase the area ofproduction forests, and finalization of landallocation and lease.

135Prime Minister Decision No. 147/2007/QD-TTg,10/9/2007, on Production Forest DevelopmentPolicy for the period of 2007–2015.

136For example, current forest policies remain rathercentralized, with often overly complex and detailedregulations hampering application in the field(Wode and Bao Huy 2009); lower levels remainupwardly accountable, hindering innovation andefficiency gains that subsidiarity offers, andadministrative and service provision capacity for theforest sector at district and commune levels islimited; the state retains direct control of most offorests—continuing to manage most of the SUFs (85percent) and protection forests (70 percent)(Nguyen Ba Ngai 2007); and many aspects of centralcontrol persist, for example in the form of harvestingquotas and land-use options - household land-usedecision making is mostly driven by command-and-control measures, much less so by economicincentives (Wunder et al. 2005).

137According to Nguyen Ba Ngai et al. (2009), adequatecoordination among ministries for an integrateddata compilation system does not exist, noconsistent time-series data compilation has beendone, and in some instances data are simply notavailable. Also, according to Muller et al. (2006) theaccuracy of forest data ranges from 65 to 95 percent,depending on factors like the method of datacollection and compilation, the complexity oftopography, and the homogeneity of forests.

138World Bank 2009.139Extrapolation based on value per hectare of timber

and of forest environmental services for differentforest types derived by ADB (2009) and on forestarea from FIPI in 2005(http://www.fipi.vn/solieu_ck3/SolieuCK3.htm).Environmental service values: $29,731 million,

consisting of soil protection at $1,822 million, waterregulation at $3,545 million, carbon sequestrationat $24,364 million, and timber value at $10,757million.

140ADB 2009.141World Bank 2009.142In Vietnam the mean annual increment of fast-

growing species under the right conditions is some26 cubic meters per hectare (ADB 2001; Fraser 2003;Katila 2007).

143Local people lack capital, production experiences,techniques, and information on markets and aretherefore unable to carry out effective productionon allocated land (Vietnam Forestry University2005); Swan 2010.

144For example: CO2OL Biodiversity Reforestation( h t t p : / / w w w . c o 2 o l . d e / C O 2 O L -Biodiversity.195.0.html?&L=1).

145GoV 2010a.146In 2007 Vietnam was the tenth largest exporter of

secondary processed wood products by value (ITTO2009); it may well be ranked sixth in 2010.

147Vietnam News 2009.148This is consistent with the MARD (2009c) finding

from some enterprises that financial effectivenesswas low.

149Ogle and Donnelly 2004.150Karsentry 2006.151World Bank 2009. 152MARD 2009c. In recent years Malaysia has been the

largest supplier of wood products, followed by theUnited States, China, Lao PDR, Cambodia, andThailand.

153According to Nguyen Ba Ngai (2007), appropriateplantation sites—close to consumption markets—are either already allocated or unallocated butconsisting of poor sites in scattered locations. Largeand centralized areas are located in remote andmountainous regions, where transportationconditions are difficult and far from markets.

154FAO 2009.155Vietnam News 2009.156FSC 2010.157FSC chain-of-custody certification verifies that

products from forests certified as meeting thestandards set by the FSC for responsible forest


management are not mixed with products fromuncertified forests at any point in the supply chain.

158EIA and Telapak 2008; Forest Trends 2009; WorldBank 2010.

159SeeWorld Bank (2010) for a discussion of themalpractice that enable the illegal timber trade tocontinue and flourish.

160Nguyen Ba Ngai et al. 2009.161Sunderlin et al. (2008) showed that slightly over 70

percent of districts that contained high forest coveralso had a high rate of poverty.

162Tran Kim Long 2008; Sunderlin and Huynh Thu Ba2005; Nguyen Quang Tan et al. 2008.

163Vietnam Forestry University 2005; Swinkels and Turk2006.

164The Forest Protection and Development Law of 1991provided for the involvement of different actors inforest management; the Land Law of 1993recognized the rights to lease, exchange, inherit,mortgage, and transfer land-use titles; the revisedLand Law of 2003 recognized the legal status ofcommunities in land tenure; and the revised ForestProtection and Development Law of 2004recognized legal status of communities in foresttenure.

165Nguyen Quang Tan et al. 2008. 166Katila 2008.167These shortcomings have been well documented:

slow and poor forest land use planning (MARD2009b); inequitable allocation—Kinh migrants andprominent ethnic minorities living in district townsand commune centres were better positioned tobenefit from land allocation programs in contrast tothe poorer ethnic communities living in moreremote areas (Humphreys and Vu Thi Hien 2008);elite capture—overallocation for massorganizations, employees of SFEs, and well-offindividuals (Sunderlin and Huynh Thu Ba 2005;Nguyen Quang Tan et al. 2008; World Bank 2009);undemocratic and non-transparent land allocationdecisions (MARD 2009a); inadequate collaborationbetween forestry and land administration agencies(MARD 2009b); shortcomings in benefit sharingarrangements, investment support, and technicalassistance (MARD 2009b); and unclear rights andawareness of opportunities among recipients(Vietnam Forestry University 2005; Nguyen QuangTan et al. 2008; MARD 2009b).

168Swinkels and Turk 2006.

169Humphreys and Vu Thi Hien (2008) refer to ethnicminorities in the Northern Highlands lacking“political capital”—the capacity to effectively use“voice” to influence decisions in social and politicalarenas and, related to this, the lack of localinstitutions through which their voices can be heardand information shared.

170According to Vu Thi Hien, Centre of Research &Development in Upland Area (personal information,August 2010): During a recent consultationworkshop on REDD+, representatives of localauthorities and local people from 10 provinces in thenorth of Vietnam agreed that local people have pooraccess to the policy and that dissemination ofpolicies on forest and forestland to local people islimited (laws and policies just arrive at the communelevel and not much information is going tohouseholds, even some commune officers do notfully know the policies and laws).

171Data for 2009 show that out of the total of 13 millionha of forest, about one third are being used andmanaged by non-state economic sectors(households approximately 3 million ha; localcommunities 0.2 million ha; the armed forces 0.2million ha; and joint-ventures and other entities 0.8million ha), and two thirds are being used by stateentities (state owned enterprises 2 million ha;protection forest management committee 2.3million ha; special use management committeealmost 2 million ha; and people’s committees 2.4million ha). Source: MARD’s statement of foreststatus in 2009, as of 31 December 2009, as per Dr.Ngai, personal communication, September 6, 2010.

172According to MARD (2009c) data, the area of forestallocated to communities was 181,226 ha by end of2007, most of which was poor and young forests.

173The full explanation of REDD+ reads: ReducingEmissions from Deforestation and ForestDegradation in Developing Countries; and the roleof Conservation, Sustainable Management ofForests and Enhancement of Forest Carbon Stocksin Developing Countries” (REDD+).

174In particular the UN-REDD Programme, based onexperience built up by GTZ-sponsored projects inDak Lak, Dak Nong, and Son La provinces.

175World Bank 2010.176Taking the corporate form or a one member Limited

Liability Company (with state as the solemember/owner) or a Joint Stock Company with thepossibility of shareholding by employees and others(as well as the state)

177World Bank 2009.


178WCMC 1992. Vietnam contains all or part of fiveEndemic Bird Areas as defined by BirdLifeInternational and that the entire country is part ofthe Indo-Burma Biodiversity Hotspot, whosebiological richness is fully detailed in CEPF (2007).These are both important and authoritativeindicators of biological richness.

179New scientific discoveries included 222 species ofplants between 1992 and 2002, and four species oflarge mammals between 1992 and 2005 (WorldBank 2005).

180Nguyen Hoang Nghia 2004.181See World Bank 2010a for details.182Dang Huy Huynh 2005.183In categories Endangered, Vulnerable, Rare, and

Threatened, following the Red Data book of Vietnam(MoSTE 1996; MoNRE 2007).

184In categories Critically Endangered, Endangered,and Vulnerable following IUCN Red List ofThreatened Species (www.redlist.org).

185MoNRE 2009.186Includes 30 National Parks, 48 Nature Reserves, 12

protected areas and species habitat, and 38protected landscape areas, with a total area of 2.06million hectares, accounting for 6.25 percent ofphysical area of the whole country.

187Jonathan Eames, BirdLife International, personalinformation, July 2010.

188ICEM 2003a.189A review of national experience with protected areas

and development in Vietnam (ICEM 2003b) foundthat despite achievements, most protected areasremain “paper parks,” with little conservationmanagement taking place on the ground. See alsoPolet et al (2006) with respect to PA reform.

190Emerton et al. (2006) refer to problems of longdelays and frequent readjustments in public sectorbudgeting procedures, recurrent budgets that allowfor little more than salaries, and capital expenditurethat mostly focuses on heavy infrastructure, withlittle funding for conservation activities.

191For example, ranger stations are managed by theprovince rather than the SUF.

192Between SUFs, FPD, police, environment police,border army, customs, and other relevantinstitutions.

193Wunder et al. (2005) contend that payments in forestprotection contracts from the state to households

typically make up 1–2% of total household income(with a few exceptions). Even if the landowner hadproperty rights and a significant degree of land usechoice, the amount offered would normally beinsufficient to fully “compensate” the opportunitycosts for foregone alternative uses.

194MoNRE 2009; McNally 2010.195FoE 2001.196Examples given by McNally (2010) include the

following: Hydropower developments: ADB (2009)carried out a Strategic Environmental Assessment ofthe Hydropower Master Plan in the context of thePower Development Plan VI. This examined thelikely impacts of 21 large-scale dams (with a capacityover 4,610 MW) that are planned. It was estimatedthat the land area lost would be around 21,133 ha(including 4,227 ha of natural forests and 1,367 haof plantations). The total resource value of the forestlost (including environmental service functions) wasestimated to be $72.4 million. Agriculturalexpansion: Current and future polices and plans forthe expansion of agriculture (in particular, rubber)point to a large-scale expansion of rubber and to alesser extent cashew, as highlighted in the first draftof the MARD Five Year Plan of 2011–2015 as well asin Prime Minister’s Decision 750/2009/QĐ-TTg dated3 June 2009 (on Approving the planning ondevelopment of rubber tree up to 2015, with a visiontoward 2020), which provides for the developmentof up to 100,000 ha of new rubber plantations in theCentral Highlands on unused land and throughclearance of poor natural forest.

197For example, controls to restrict the import of illegaltimber in the United States (Lacey Act) and theEuropean Union (EU FLEGT Action Plan and EU DueDiligence Regulation).

198Various studies have shown that the level ofincentive required for a farmer to protect anddevelop forests varies, depending on options,circumstances, and nature of the incentive. A studyby Bui Dung The and Hong Bich Ngoc (2006) foundthat in areas where there is underemployment andwhere much paid work is seasonal, resource-poorfarmers with limited options to earn money from theland they work were willing to participate in a pilotpayment for environmental services (PES) schemewhere the average payment that householdsreceived was approximately VND 230,000 ($15) peryear for protection of an area averaging 1.5 ha.Similar findings were made from recent PFESpiloting where the payment of VND 270,000 ($15)per hectare per year under the scheme, comparedwith VND 100,000 ($5) under Programme 661,


resulted in increases in forest patrolling and a 50percent decrease in the number of reportedviolations (UN REDD 2010; Peters et Al. 2009).However, Phuc Xuan To of Forest Trends contendsthat a farmer can earn $400 per year with onehectare of corn; with PES, however, he’ll get about$20, and that’s not enough to stop deforestation(Phuc Xuan To, Forest Trends, 2010:http://www.ecosystemmarketplace.com/pages/dynamic/article.page.php?page_id=7605&section=news_articles&eod=1). In contrast, Wunder et Al. (2005)found that higher payment levels for reforestationand tending newly planted forest (up to VND 2.5million per hectare or $160) seemed to be workingwell, both because they made a real difference tohousehold livelihoods and because they werecoupled with technical assistance.

199Tim Boyle, UNDP, personal information, August2010.

200VINAFOR provides low-interest loans to householdstogether with guidance for planting; the contractdefines the price (in line with the market price attime of sale) and quantity to be sold to VINAFOR,leaving farmers free to use or sell any surplus.

201Lam Son Sugar Joint Stock Corporation jointlyowned by the Vietnam government (37.5 percent),employees (32.4 percent), and its farmer suppliers(22.5 percent) (balance uncertain).

202Katila’s (2007) analysis of demand and supplyscenarios for the Vietnamese forest sector rejected a“self-sufficiency” scenario because it is unfeasiblefrom an investment viewpoint (there would not beenough funds for expanding the plantations andindustry); because there would not be enoughquality land available for plantation expansion; andbecause it would have negative impacts on thenational economy and would not be economicallya sustainable option in the long-term, becauseVietnam would be producing on a large scale manyproducts in which it does not enjoy a comparativeadvantage.

203The separation of public and private functions andtransformation of remaining SFEs into autonomous,commercially viable businesses based onsustainable forest management.

204MARD 2009c.205This chapter focuses largely on marine fisheries,

given the sector’s role as the largest driver of changein marine ecosystems and marine-based economies.Aquaculture is given wider consideration in thechapter on water resources, as is the general issueof coastal zone management.

206This list includes coral reefs, sea grasses, mangroves,inland marshes, estuaries, coastal lagoons, dunes,and beaches.

207Per capita fish consumption in Vietnam hasincreased 2 kilograms over the last two GeneralStatistics Office (GSO) Vietnam Household LivingStandard Surveys (VHLSS) 2006-2008.

208GSO 2009.209See Ministry of Fisheries and World Bank 2005, p. 3;

Nguyen Thi Dieu Thuy and Symington 2008, p. 2;Pomeroy et al. 2009, p. 1.

210This figure is from 2008 when fuel subsidies wereoffered to all registered vessel owners as a responseto increases in oil price increases, resulting inheightened registration efforts. A final number of130,000 was the total qualifying for fuel assistance.However, many vessels can be assumed to have notregistered and remain “off the books” butoperational (including the numerous non-motorized “coracle” boats used in artisanal fisheries,which has been estimated at 30,000 or more).

211Pomeroy et al. 2009, p. 2.212Key instruments include Decision No.358-TTg dated

29 May 1997 on preferential taxation on theexploitation of marine products in offshore areas,Decision No. 393-TTg of 9 Jul 1997 containingregulations on investment capital control andutilization, and Decision No. 251/ 1998/ QD-TTg of25 Dec 1998 on the approval of the marine productexport program to the year 2005. These policiesgenerally supported preferential loans to offshorefishers to upgrade their vessel capacity and installmodern equipment and efficient fishing gear.Private businesses (including foreign-investedbusinesses) exploiting the offshore fisheries weregiven reduced tax reductions during the first threeyears of business.

213See VIFEP and WWF Vietnam 2009.214There are no vessel quotas or closed seasons. Under

Vietnam’s “open access” system, vessels fromdifferent provinces are permitted to fish in any areaof the country provided the depth is greater than 30meters (classified as the “offshore” area). Areas under30 meters depth are generally meant to havepriority for home province vessels for inshorefishing. However, strong competition betweenneighboring provinces and even local communities,combined with illegal vessels and poorenforcement, means that vessels are routinely foundoutside of their restricted zones.

215According to Hassan et al. (2001) and Dang Van Thi


et al. (2002), trawl surveys of demersal fish estimated1.1 tons of biomass per square kilometer (comparedwith 2.8 tons in the mid-1990s) as well as dramaticshifts in catch composition plus low numbers offormerly abundant, large long-lived fish species.According to Nguyen Chu Hoi (2003) and NguyenThi Dieu Thuy and Symington (2008), average fishdensities have greatly reduced, and several commoneconomically valued fish species, such as sardine,lobster, abalone, scallops, and squid, havesignificantly decreased in abundance.

216According to 2008 MoLISA data, the rate of povertyin coastal versus non-coastal provinces is almost thesame, but this average hides some interprovincialdifferences. Provinces such as Thanh Hoa and NgheAn have high poverty rates and absolute numbersof poor people, offset by wealthier provinces suchas Khanh Hoa and Long An. In addition, some of thecoastal provinces do in fact have very high rates ofpoverty. The issue is that there are likely greatdisparities in poverty rates within coastal provinces,or even within district/communes. See also NguyenThi Dieu Thuy and Symington (2008).

217At the time of writing, detailed and reliable data onprofitability were not available. Based on publishedreports, included those referenced in this chapter,there are strong indications that the fisheriesresource is strained and that profitability isdeclining, particularly for inshore fisheries. Otherindicative data—for example, the large number ofboats that remained onshore during spikes in fuelprices (until the government started tosubsidizes)—suggest very small operating margins.This makes job diversification schemes moreattractive, particularly for small-scale fisheries, andreinforces the need for good information, whichrequires attention and investment.

218Decision No. 10/2006/QD-TTg2006.219See Morgan et al. 2007.220On 29 September 2008, the Council of the European

Union adopted EC No. 1005/2008 establishing a“community system to prevent, deter and eliminateillegal, unreported and unregulated fishing.” Theregulations were set to come into effect on 1January 2010. Under the Illegal, Unreported, andUnregulated (IUU) Regulation, the importation offishery products into the European Community willbe allowed only when the import is accompanied bya catch certificate, completed by the master of thefishing vessel and validated by the flag state of thevessel.

221The new legislation had immediate negativeimpacts for fisheries in Vietnam. Tuna sales dropped

20 percent in early 2010 from postponed shipmentsand a decrease in contracts for export to theEuropean Union. However, the new IUU regulationsprovided an opportunity for Vietnam to accelerateprogress in meeting international standards oncatch documentation and addressing IUU, and theycontributed to the government’s decision to enterthe Western and Central Pacific FisheriesCommission, initially as a Co-operating Non-member (seehttp://english.vietnamnet.vn/biz/201001/Seafood-prices-drop-under-IUU-effects-889404/).

222Harvest targets are set by provincially leddevelopment plans that emphasize economicgrowth targets. Even with better data, estimates ofmaximum economic and sustainable yield may havelittle bearing on harvest levels and controls onfishing unless agreements are reached at a higherlevel and unless local enforcement follows.

223See Tietenberg 2008.224Nguyen Thi Dieu Thuy and Symington (2008) report

several characteristics of vulnerability in Vietnamesefishing communities, including dependence ondepleting resources, lack of capital and/or credit toinvest in new gears or occupations, increaseddisparity between poorer and wealthier fishinghouseholds, low levels of income stability,decreased competitiveness of local fisherscompared with those from “outside” with bettergear, poor access to markets and/or newtechnologies, and socioeconomic indicators belownational targets or averages (particularly averagehousehold income, poverty rates, and education).

225The intermediary system in Vietnam, while muchmaligned, provides an essential service in that mostsmall-scale fisheries would not operate without thefinancial support of the traders. The negativeaspects of this system (for example, limiting theability of individual fishers to gain access to marketsdirectly and/or adjust their activities according tomarket conditions) will only improve if fishers startto organize into producer groups and become moreengaged in value chains and markets.

226See Nguyen Thi Dieu Thuy and Symington 2008.227Decree No. 79/2003/ND-CP of July 7, 2003,228According to Nasuchon (2009), Vietnam’s coastal

population is projected to increase to over 30 millionby 2020 (from around 20 million in 2000). The coastalpopulation density was approximately 255 personsper square kilometer in 2005 (compared with theoverall population density of 246 persons per squarekilometer). Creel (2003) estimated that approximately


1,000 people migrate to Vietnam’s coastal cities eachday.

229Coastal tourism in Vietnam is growing rapidly (seehttp://www.nea.gov.vn/html/Baocao_hientrang/VN_SoE/overview/environmental_management_and_legislation.htm).

230See Burke et al. 2003.231See the VDR Forest Management chapter for further

discussion on mangroves.232See Pollnaca et al. 2005.233The realistic scope for alternatives will vary

substantially along the coast, depending upon theparallel development of tourism, manufacturing,aquaculture, mariculture, etc.

234Farming of such low trophic species tends to requirerelatively less fishmeal feed (therefore not drivingoverfishing of “trash fish” industries nor likelycontributing to an overall net loss of seafoodprotein, as is typified in the culture of higher trophicspecies) and also far fewer chemical inputscompared with higher trophic species.

235Under the project “Integrated Management ofLagoon Activities,” funded by the Italiangovernment, with technical execution by the Foodand Agriculture Organization.

236See http://czm-soctrang.org.vn/Publications/E N / W C D / 5 . % 2 0 S t e v e n % 2 0 S w a n % 2 0 C o -management%20VN%20experiences%20EN.pdf.

237See Pomeroy and Guieb 2008.238Under German Technical Cooperation support.239See Schmitt 2009.240See http://www.mrcmekong.org/Catch-Culture

/vol15_1May09/clams-and-cockles.htm.241See http://www.msc.org/track-a-fishery/certified

/ p a c i fi c / v i e t n a m - b e n - t r e - c l a m - h a n d -gathered/assessment-downloads-1/12.10.2009-Ben-Tre-Clam-Fishery-Final-Report.pdf.

242For example, circle hooks and turtle de-hookers inlongline fisheries and use of bycatch reductiondevices in trawl fisheries.

243Sumaila and Pauly 2006; VIFEP and WWF Vietnam2009.

244See VIFEP and WWF 2009. Studies indicate thatfisheries subsidies in Vietnam have in many casesqualitatively affected overfishing, both directly andindirectly. Triggered initially by the economicreforms of “Doi Moi” which sought to expand access

to world markets, subsidies for fuel and vesselupgrading have particularly contributed toovercapacity. Vietnam fisheries subsidies up until2006 totaled $316,633,000, with only $48,537,000classified as “good” subsidies. “Good” subsidies areassociated with programs leading to investment innatural capital assets to a social optimum—that is,maximizing economic rent. Alternatively, “bad”subsidies include all forms of capital inputs andinfrastructure investments from public sources thatreduce cost or enhance revenue. (It should be notedthat the subsidization of fishing is also pursued as ameans to maintain at-sea presence and bordersecurity).

2 4 5 h t t p : / / e n . w w w . i n f o . v n / s c i e n c e / 1 5 2 -environment/4648-460-bln-vnd-earmarked-for-marine-reserves.

246Including likelihood of local stakeholder supportand feasibility for co-management in addition to theMPA’s potential to provide positive benefits formarine biodiversity.

247The NOAA-WWF-IUCN marine protected area (MPA)guidebook “How is Your MPA Doing?”(http://www.wdpa.org/ME/PDF/HowMPA.pdf) hasbeen translated into Vietnamese and applied atsome MPA sites, though not yet in a systematicmanner across the entire network.

248“Reef resilience” refers to coral reefs that are able to recoverafter experiencing a stressful event such as bleachingcaused by elevated temperatures. Through carefulplanning, MPAs can be designed and zoned in ways thatprotect coral communities that are more likely to remainrelatively unchanged in the face of a major disturbance orevent such as bleaching. See http://www.reefresilience.org/Intro_to_Resilience.html.

249The use of circle hooks in replacement of traditional“J hooks” in longline fisheries has been provedregionally to reduce the mortality of sea turtles byas much as 80 percent, while not negativelyaffecting target (tuna) catch rates.

250Vietnam’s longline Observer Program was launchedin 2007 by the Ministry of Agriculture and RuralDevelopment and WWF Vietnam, with an initialcoverage of 10 longline vessels deploying onboardobservers and incorporating circle hook trials inselected vessels. The program has provided a newand important opportunity to collect basic fisheriesdata (such as catch rates and species composition),as well as encouraging the adoption of circle hooksas a means of reducing bycatch. The program is nowbeing linked to efforts aimed at providing market-based incentives (such as price premiums andpreferential sourcing) for tuna vessels using circle


hooks and/or observers. Seehttp://wwf.panda.org/who_we_are/wwf_offices/vietnam/?185281/Fisheries-Bycatch-Reduction-Program-Catches-On.

251The Democratic Republic of Congo is an example ofa nation rich in mineral resources that has failed overmany years to translate this natural resourceendowment into sustainable development. Chile orBotswana have used their mineral wealth wisely andhave derived significant development impacts andoutcomes.

252Ministry of Natural Resources and Environment-Vietnam Mining Presentation by dated 15 Oct 2008in Regional Mining Seminar in Singapore. Oil andcoal contribute more than 90 percent of theproduction output of the MQI sector annually inVietnam.

253Vietnam Statistical Yearbook, 2009.254World Bank staff estimates, 2009.255It is important to note that many issues related to

mining and minerals development in Vietnam arenot discussed in this chapter: the role of state,particularly state-owned companies; small-scale andartisanal mining; investment promotion andnegotiations with large companies; competitiveposition of Vietnamese minerals internationally;infrastructure considerations for mineralsdevelopment; detailed considerations in terms ofmining taxation and fiscal policies as well as taxadministration; and overarching issues such theimplications of the climate change agenda andglobal warming on development of Vietnam’sminerals.

256MoNRE “Report summarizing the 13 years ofImplementation of Mineral Law 1996”, 2009 fromMONRE submitted to NA. MOIT “Report on exportedminerals, 2007.”

257Mining Working Group of Companies, VietnamBusiness Forum, Position Paper dated 1 December2009.

258Recommendation from: Workshop Report: MineralDevelopment and Sustainable Development, Hanoi,May 2010.

259An example is ilmenite exploited in central coast ofVietnam. Most companies export ilmenite (46percent Ti2O3), which is the lowest level ofprocessing in the titanium processing chain.

260A total of 128 separate legal documents (laws,ordinances, decrees, decisions, directives, andcirculars) have been promulgated to regulate themining industry in Vietnam. Separately, an

additional 26 legal documents have been preparedby government agencies and submitted to higherauthorities for adoption and promulgation.

261The Investment Law 2005 is the merger of theForeign Investment Law 1987 (amended in 1992,1996, 2000) and the Law on Private investmentPromotion 1996.

262Source: Sustainable Development Impacts ofInvestment Incentive: A Case Study for the MiningIndustry in Vietnam.

263Decree 27 December 2005 and Prime Minster letter11 April 2006.

264Wuhan, “Local permit widespread”, at Public SecurityPolice Online, at http://www.cand.com.vn/vi-VN/kinhte/2010/7/133523.cand dated 08 July 2010.

265The government has also pursued an activeprogram to disseminate various documents andlegal texts to the general public and to conductsensitization campaigns on the rules andregulations of the minerals law. Since 2006 MoNREhas dedicated a Web site and on-line trainingsessions on the minerals legislation.

266MoNRE’s various departments are geology, mining,finance, and international cooperation.

267Other state enterprises in the heavy industriesinclude the Vietnam National Cement Corporation,the Vietnam Chemical Corporation, and the VietnamNational Steel Corporation.

268Decree No. 80/2006/ND - CP dated 9/8/2006 of theGovernment of the Socialist Republic of Vietnam ondetailing the implementation of some articles of the2005 Law on Environmental Protection; Decree No.21/ 2008/ ND- CP dated February 28, 2008 of theGovernment concerning partial changes in somearticles stipulated in Decree No. 80/ 2006/ ND- CPdated 9/ 8/ 2006; Circular No. 05/2008/TT - BTNMTdated 08/12/2008 of the Ministry of NaturalResources and Environment concerning guidelinesfor assessment of strategic environment andenvironmental impacts and commitment toenvironmental protection; Decision No.13/2006/QD- BTNMT dated 08/9/2006 of theMinister of Natural Resources and Environmentconcerning issuance of Regulations on Organizationand Operation of an Appraisal Council.

269Environmental Department, MoNRE.270Normative regulations concerning, for instance,

erosion, sedimentation, and ecological diversity.271Interview with Director of Environmental

Assessments, MoNRE, May 2010.


272Bui Quang Binh, “Mining areas of environmentalresearch,” at http://www.tuanvietnam.net/2010-06-11-cuu-moi-truong-vung-khai-khoang, 22 May2009.

273Source: Vinacomin. Estimate based on a strippingratio (the amount of sterile material to be excavatedto produce 1 ton of coal) of 7.5 tons.

274Report on the Research project of PhD Dao DanhPhuong, Nguyen The hung, Nguyen The Bau, DoanVan Hai, Mine Science and Technology Journal No.1/2009.

275Report on the Research project of PhD Dao DanhPhuong, Nguyen The hung, Nguyen The Bau, DoanVan Hai, Mine Science and Technology Journal No.1/2009.

276Decree 63/2008/ND_CP dated 13 May 2008.277Vinacomin reports, 2009.278World Bank Community Development Agreements

Project, COCPO, 2010.279Vu Xuan Nguyet Hong (CIEM) and Nguyen Thi Lan

(ILSSA), “Economic Governance and Policy-MakingProcess in Vietnam”, June 2010; Decree63/2008/ND_CP dated 13 May 2008 onenvironmental Protection fee applicable to mineralmining

280See: www.eiti.org.281The German classification nomenclature is used in

tandem with the English nomenclature, as this isfrequently used in Vietnamese documents. Coals areclassified by content of volatile matter expressed asa percentage by weight. Thus, lignite contains 45–65 percent volatiles; anthracite 7–12 percentvolatiles. This correlates reversely to the calorificvalue, expressed as kilojoules per kilogram: lignite28,470 and anthracite 35,300.

282Thai Nguyen, Hai Duong, Bac Giang, Son La, QuangNam, Quang Ninh, Nghe An, Lang Son, and severalareas such as U Minh Thuong, U Minh Ha, and RedRiver Delta.

283Nguyen Thanh Ha, Invert the structure of coalconsumption from in 2010, on Trade Magazinedated 10 Jan 2010 at http://tintuc.xalo.vn/00-941362442/dao_nguoc_co_cau_tieu_thu_than_tu_nam_2010.html and Report on Production volumeof Department of Distribution, Vinacomin, 2008-2009.

284Source: Vu Xuan Nguyet Hong (CIEM); Investmentfrom 2005 to 2009: VND 4,100 billion to 33,100billion; owner’s capital from VND 5,546 billion to19,583 billion; before tax profit: 2005 = 3,130 billion,2010 = 3,200 billion. Profit to capital ratio hasdecreased four times over this period.

285Lao dong newspaper, The fight against illegal coalin Quang Ninh, what does the coal industry say?,No.93 dated 25/04/2008.

286In 2009, the minimum wage in Vietnam is 0.65million VND/month whereas the average salary forVinacomin employees is 6.16 million VND/month.Source: Department of Labor and Salary ofVinacomin and Statistical Yearbook over the years.

287Forecast of human resources demand for coalindustry by Department of Labor and Salary ofVinacomin, 2010.

288See: Vinacomin, Mine Science and TechnologyInstitute, monitoring project 2008.

289Dao Danh Phuong, Nguyen The hung, Nguyen TheBau, Doan Van Hai, Mine Science and TechnologyJournal, No. 1/2009.


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