PHAM Trong Anh, PHAM Minh Anh & NGUYEN Thi Thu Nga

Abstract

This paper investigates regional initiatives to address poverty in Vietnam and their impact on the economy against the backdrop of the socio-economic challenges exacerbated by the Covid‑19 pandemic. The studied regional initiatives include the ASEAN Community Vision and the National Action Plan (NAP). The research objective is to assess the impact of these initiatives on Vietnamese society and their effects on individuals, businesses, and the economy. The research methodology involves analysis, comparison and evaluation of the impacts of each initiative on specific target groups, from various perspectives, and assessment of their overall impact on the economy. The study’s findings reveal that regional initiatives have had significant positive impacts, contributing to improving the conditions of vulnerable groups in society. However, the regional solutions exhibit shortcomings in adequately considering the differences among countries affected by them. In conclusion, based on empirical evidence, we provide evaluations of the effectiveness of regional solutions and propose recommendations to enhance their effectiveness.

Keywords: Poverty Alleviation, Regional Initiatives, Economic Development, ASEAN Community Vision 2025, Sustainable Development Goals.

Résumé

Cet article examine les initiatives régionales visant à lutter contre la pauvreté au Vietnam et leur impact sur l’économie, dans un contexte marqué par les défis socio-économiques exacerbés par la pandémie de Covid-19. Les initiatives régionales étudiées incluent la Vision de la Communauté de l’ASEAN et les Objectifs de développement durable (ODD). L’objectif de la recherche est d’évaluer l’impact de ces initiatives sur la société vietnamienne ainsi que leurs effets sur les individus, les entreprises et l’économie. La méthodologie de recherche repose sur l’analyse, la comparaison et l’évaluation des impacts de chaque initiative sur des groupes cibles spécifiques, sous divers angles, et sur l’évaluation de leur impact global sur l’économie. Les résultats de l’étude révèlent que les initiatives régionales ont eu des effets positifs significatifs, contribuant à l’amélioration des conditions des groupes vulnérables au sein de la société. Toutefois, ces solutions régionales présentent des lacunes dans la prise en compte des différences entre les pays touchés par ces initiatives. En conclusion, sur la base de preuves empiriques, nous proposons des évaluations de l’efficacité des solutions régionales et formulons des recommandations pour renforcer leur efficacité.

Mots-clés : réduction de la pauvreté, initiatives régionales, développement économique, Vision de la Communauté de l’ASEAN 2025, Objectifs de développement durable.

   

Poverty is a global issue that affects millions of people around the world.^[1] It poses a great challenge to the development of each region, each country, and each locality in the economic, political, and social aspects, especially for human beings. Therefore, this issue is of great concern to most countries in the world and needs to find initiatives to address it. In Vietnam, two prominent regional initiatives have been implemented: the ASEAN Community Vision 2025 and the National Action Plan, both of which aim to eradicate hunger, reduce poverty, protect the environment, and promote peace and prosperity by 2030. These initiatives aim to create a cohesive community in terms of politics, economic integration and have many other solutions to develop, which have had certain impacts and influences on the economy and the poverty alleviation in Vietnam. This paper is structured to first provide an overview of these initiatives and their specific objectives within the Vietnamese context. Subsequently, it analyzes the impact of these initiatives on poverty reduction and economic development, detailing both achievements and existing limitations. Finally, the paper offers strategic recommendations to enhance the effectiveness of regional initiatives, followed by a concluding section that synthesizes key findings and policy implications for sustainable development in Vietnam.

1. Implementation of Regional Initiatives in Vietnam

1.1. The ASEAN Community Vision 2025

The Kuala Lumpur Declaration on the ASEAN Community Vision 2025 is a document outlining the ASEAN roadmap for the next decade, providing the basis and framework to link ASEAN during 2016-2025.^[2] This is a broader vision and strategy aimed at strengthening regional communities to achieve an ASEAN with political cohesion, economic links and shared social responsibility, based on a true ASEAN rule of law, towards the people and people centered. With the goal of “Our People, Our Community, Our Vision”, an ASEAN integration is expected to bring higher living standards and social progress to the peoples of ASEAN more rapidly.

In their Joint Statement on the ASEAN Community Vision 2025, the countries in the region have made commitments to promote hunger eradication, poverty reduction, and sustainable development, the ASEAN countries have unanimously agreed to build “[…] a community with the effective participation of the business sector and related sectors, sub-regional development projects and cooperation, and greater economic opportunities to support poverty eradication”.^[3]

To concretize that goal, ASEAN countries continuously make commitments under, for example, the Strategic Framework of Action on Rural Development and Poverty Eradication 2021-2025, the ASEAN Development Outlook and the Forum for Research and Action on Poverty Eradication under the ASEAN Socio-Cultural Community… Especially, in the High-Level Declaration “ASEAN is the Center of Growth” (Jakarta, September, 2023), the goal of eradicating hunger, reducing poverty, and sustainable development is oriented by the countries with specific measures such as: (i) Promoting global supply chains, trade and investment through effectively implementing the Regional Comprehensive Economic Partnership (RCEP) and the new generation of ASEAN+1 free trade agreements (FTAs); (ii) Accelerating the Digital Transformation, towards the ASEAN Digital Economy Community 2045; (iii) Enhancing the Green Economy, towards carbon neutrality and net zero emissions; (iv) Promoting the Blue Economy and (v) Promoting the Creative Economy and developing the Inclusive Economy.^[4]

At the same time, the ASEAN Community Vision also outlines three main pillars for the community to help promote the economy of all member countries to develop, integrate, compete effectively and enhance the central role of ASEAN to bring the whole community forward comprehensively and sustainably. The three pillars include:

(1) ASEAN Political-Security Community

The main statement in this pillar is that the member countries orient themselves to build their community into a community of “unity, inclusiveness and self-reliance”; “always cohesive, capable of responding and playing an appropriate role in dealing with the challenges to peace and security in the region, as well as playing a central role in shaping the regional security structure, while deepening relations with external partners and contributing to global peace, security and stability.^[5]

(2) ASEAN Economic Community

The common goal of the whole bloc is to transform ASEAN into “a cohesive and closely linked regional economy, promoting high and sustainable economic growth; increasing trade, investment and job creation; enhancing regional capacity in responding to the challenges and trends on the global scale; accelerating the agenda of a unified market through strengthening the commitments on goods trade; including effectively resolving the non-tariff barriers, integrating deeper in the service trade sector, and facilitating the flow of investment, skilled labor, entrepreneurs and capital”^[6]. At the same time, “enhancing economic connectivity and cross-sectoral integration through improving the frameworks and policies in the strategic sectors […]”^[7] as well as focusing on “[…] orienting towards the people, putting the people at the center, bringing about the balanced and comprehensive development and growth […]” by “[…] the effective participation of the business sector and the related sectors, the sub-regional development projects and cooperation, and the greater economic opportunities to support poverty eradication […]”.^[8]

(3) ASEAN Socio-Cultural Community

With the orientation of “being an inclusive, sustainable, self-reliant and dynamic community”,^[9] ASEAN countries make commitments to realize by 2025 a “[…] responsible and inclusive mechanism for the benefit of the people, sustained by good governance principles […]”^[10] to create “a community dedicated to the participation of all classes and with social responsibility”. At the same time, ASEAN countries commit to ensure “[…] equal access to opportunities for all people, and promote and protect human rights for women, children, youth, elderly, people with disabilities, migrant workers and other vulnerable and marginalized groups” and “[…] protect the environment through effective mechanisms […]”^[11] to “[…] adapt and respond to the vulnerable fluctuations in the economy and society, disasters, climate change as well as the emerging threats and challenges […]”.^[12]

1.2. The National Action Plan

The National Action Plan (NAP) originates from the United Nations Sustainable Development Goals (SDGs). The SDGs, or Global Goals, are universal goals designed to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030 within each member United Nations (UN) member country. The NAP are based on six themes: dignity, people, planet, partnership, justice and prosperity. Includes 17 goals and 115 specific targets covering most issues such as social development, climate change, economic inequality, innovation, sustainable consumption, peace, fairness… At the same time, the goals are also interlinked and success in one goal can address issues related to other fields.

The 17 SDGs have been integrated and concretized by the Vietnamese Government into the Socio‑Economic Development Strategy (2011-2020) and the Socio-Economic Development Plan (2016‑2020) focusing on four main areas (investing in people; ensuring adaptability to climate and environmental sustainability; prosperity and cooperation; promoting justice, peace and comprehensive governance).^[13]

With the support of the UNDP, Vietnam has developed the National Action Plan (NAP)^[14] according to Decision No. 622/QD-TTg dated May 10, 2017, of the Prime Minister to review the current development strategies, policies, and programs to see how they are aligned with the SDG. This plan was used to develop the SDG goals of Vietnam (VSDG) with the consultation of the ministries, provincial agencies, civil society and development partners.^[15] Although most of them are quite similar, these goals have some differences from the global SDGs, such as:

1. Poverty eradication: Vietnam only sets the goal of reducing poverty for poor households while the UN SDG aims to reduce poverty per capita. Vietnam has not integrated specific poverty reduction targets for gender, vulnerable groups, children and geographical location. However, Vietnam is assessed to be capable of completing SDG 1 on time, even for some specific targets before the 2030 deadline of the 2030 Agenda.
2. Zero hunger: The global goals integrate gender, vulnerable groups and children, but the goals of Vietnam are more general.
3. Health and well-being: Although quite similar, the goals of Vietnam only set goals for all SDGs but lack specific indicators for some of them such as SDG 3.5, 3.9.
4. Ensuring quality education: Vietnam’s education plans have not yet focused clearly on ensuring universal access for all groups, and most of the new goals are only planned until 2020
5. Gender equality: Some indicators have not been adjusted for the local context.
6. Clean water and sanitation: The national goal does not integrate the inclusive development factors into the water-related goals.
7. Affordable and clean energy: Vietnam’s goal has not collected data on energy concentration for economic development (VSDG target 7.3).
8. Decent work and economic growth: This goal is expressed by Vietnam in the plans of the Government at many levels but still lacks specific indicators to measure comprehensive development.
9. Industry, innovation and infrastructure: The aspects of the concept of “Inclusive” development as well as the reliable, sustainable, and robust aspects of the infrastructure have not been mentioned in the current policies of Vietnam. At the same time, there is a lack of specific indicators for evaluation.
10. Reduced inequalities among countries: The indicators of financial health, the proportion of people discriminated against, have not been collected systematically.
11. Sustainable cities and communities: Some data such as the size of informal settlements in urban areas, housing quality, indicators related to public transport, participation in the decision-making process on urban planning… have not been collected.
12. Responsible consumption and production: Sustainable production is more concerned while sustainable consumption is still not focused in Vietnam. There is no specific policy for sustainable production and consumption as well as low social awareness, lack of technical and financial support.
13. Climate action: The concept of resilience is also understood in a general way, without full implications and quantitative methods for each specific object.
14. Resources and marine environment: SDG target 14.3 on ocean acidification is a new focus for Vietnam that needs attention.
15. Resources and land environment: The focus on forest ecosystems is not consistent with the efforts for aquatic, marine, coastal or desert environments.
16. Peace, justice and strong institutions: Some indicators proposed by the United Nations are not easy to collect in Vietnam such as the rate of violence victims, the crime reporting rate, illicit financial flows and corruption, and small arms distribution.
17. Partnerships for the goals: Vietnam has promoted multilateral trade systems; and strengthened global partnership relations with the country relatively well.

From the stipulated in the United Nations Sustainable Development Goals (SDGs), Vietnam has developed and implemented national policies tailored to the political, economic, cultural, and social characteristics of each locality across the country, named the National Action Plan (NAP). Through the implementation of policy groups under the ASEAN Vision 2025 program and the NAP, Vietnam has initially achieved some successes in promoting economic and social improvements in various regions of the country. Firstly, the living conditions of the people have clearly improved. From the statistical data shown in Table 1 on the access to living conditions of households nationwide, it can be seen that household rules for the use of electricity for daily life and production, access to clean water, safe sanitation, and the use of quality goods and products are all at high levels, over 96%. These figures not only show that the Vietnamese government has been gradually achieving the goals set out from the NAP and ASEAN Vision 2025 by improving health, living conditions, and quality of life for the people, reducing disparities in access to basic living conditions between rural and urban areas. Regarding education in Vietnam, according to current statistics, the literacy rate among 15-year-old is nearly universal, and the gender gap in education access and the discrepancy between the literacy rate of rural residents and urban dwellers are relatively small. Therefore, it can be seen that there is a positive impact in ensuring equality in education and gender equality in access to education for all citizens.

The successes from implementing the contents of the NAP and ASEAN Vision 2025 have not only improved the quality of life for the people, ensured social security, but also created a motivation for rapid and sustainable economic growth.

2. The Impact of Regional Initiatives on Poverty Alleviation and Economic Development in Vietnam

2.1. Achievements

Regional initiatives such as the ASEAN Vision 2025 and the National Action Plan by 2030 have complementary impacts on poverty alleviation and economic development for Vietnam.

Typically, the ASEAN Economic Community (AEC) is one of the crucial pillars of ASEAN’s economy. When Vietnam joining AEC, it had a large common market with a population of more than 650 million and a total GDP of 3,657 billion USD through economic linkages based on unified production such as free trade in investment, services, labor, capital… In addition, the basic goal of the AEC is to create a highly competitive economic region and fully integrate into the global economy, so Vietnam has had many opportunities for economic growth in general and stronger economic development. From there, it also contributes to the sustainable poverty reduction and hunger eradication in Vietnam.

During the period of 2020-2023, the world’s economic and political situation underwent many complex fluctuations, along with the Covid-19 pandemic and climate change, which seriously affected the economic growth of all economies. However, Vietnam’s economy still maintained growth with a rate of about 4.64%^[16] and no year had negative growth.

The main activities that drive the economy such as exports and imports are always maintained and increased. Vietnam’s export market still maintains its diversity and its growth over the year. Exports to the main markets which are FTA partners increased: Exports to ASEAN reached 34 billion USD, up 17.8% compared to 2021. This is one of Vietnam’s largest markets with many agreements such as: Agreement on Trade in Services (ATISA), ASEAN Framework Agreement on Facilitation of Goods in Transit (AFAFGIT), and especially the ASEAN Economic Community (AEC), inside that, many agreements that have been signed: ASEAN trade in goods agreement (ATIGA), ASEAN Framework Agreement on Services (AFAS), ASEAN Comprehensive Investment Agreement (ACIA). With these agreements, ASEAN countries in general and Vietnam in particular have enjoyed great economic incentives such as: tariff reduction almost to zero, countries in the bloc are easily free to exchange because procedures or free flow of services from country to country, creating a vibrant and bustling economic model similar to the EU; In addition, exports to Canada reached 6.3 billion USD, up 19.8%.^[17] With the advantages of CPTPP such as: cutting – reducing tariffs, detailed instructions on export procedures and especially customs taxes that have special incentives, in 2022 Vietnamese products will be exported to Vietnam. Canada has seen a clear increase, for example: Iron and steel increased by 79%; machinery and electrical equipment increased by 36%; garments and accessories increased by 19%; footwear increased by 11%; furniture and wooden furniture increased by 19%… and total exports to Canada reached 6.3 billion USD, an increase of 19.8%.^[18] By 2022, the export turnover of goods is estimated to reach 371.85 billion USD, up 6.5%, accounting for 25.6% of total export turnover; the foreign-invested sector (including crude oil) reached 276.76 billion USD, up 12.1%, accounting for 74.4%.^[19]

2.2. Foreign Direct Investment Capital into Vietnam

Vietnam’s foreign direct investment (FDI) attraction activities also increased in this period. Through the implementation of regional initiatives, effective implementation of the goals and vision of the Vietnam Sustainable Development Goals VSDG as well as participation in many international trade agreements, Vietnam’s total FDI capital in the years has continuously increased. In 2022, the total FDI capital registered in Vietnam reached nearly 27.72 billion USD, the implemented FDI capital reached a record of 22.4 billion USD, up 13.5% compared to the same period in 2021. This is the highest FDI capital implemented in 5 years (2017-2022). Accumulated in the period of 1986-2022, Vietnam has attracted nearly 438.7 billion USD of FDI capital; of which, 274 billion USD has been disbursed, accounting for 62.5% of the total registered investment capital still in effect.^[20] By 2023, FDI capital into Vietnam reached 36.61 billion USD (as of December 20, 2023), disbursement reached 23.18 billion USD – the highest level in the period of 2018-2023, up 32.1% over the same period, including total newly registered capital, adjustment and contribution capital to buy shares, buy part of the capital contribution of foreign investors. New registered capital increased by 20.19 billion USD and the number of new registered projects increased by 3,188 projects – a very noteworthy point. The number of new projects increased by 66.3%, much higher than the growth rate of total new investment capital (up 43.6%).^[21]

Leading among them is Singapore, one of the countries within the ASEAN bloc, with a total investment capital reaching $6.46 billion by 2022. Following that are South Korea and Japan, with investment amounts of $4.88 billion and $4.77 billion, respectively. These foreign investments are primarily concentrated in the following sectors: processing and manufacturing industries, real estate business, production sectors, electricity distribution, and specialized scientific and technological activities. Notable projects include the Heineken brewery, which was inaugurated in September 2022 in Vung Tau; the Samsung Electro-mechanics Vietnam project (Thai Nguyen), which saw two capital increases: $920 million (first increase) and $267 million (second increase); the Samsung Electronics HCMC CE Complex project, which increased its capital by over $841 million; and electronic manufacturing plants for network equipment and multimedia sound products in Bac Ninh (increased by $306 million), Nghe An (increased by $260 million), and Hai Phong (increased by $127 million).^[22] Recently, Singapore’s mega-project in Vietnam is the liquefied natural gas (LNG) power plant.^[23]

From the above, it is evident that foreign investors have a special interest in and trust in Vietnam’s investment environment. Moreover, the continuous influx of foreign investment into Vietnam and the ongoing projects have created more jobs and boosted domestic consumption. This is reflected in the two charts below:

Source: General Statistics Office of Vietnam, “Vietnam Labor Market Situation in 2023” (2024).

Except for the years 2020 and 2021, which were affected by Covid-19, all other years have shown growth figures compared to the period before 2018. Moreover, this growth has remained resilient despite the post-Covid-19 impact, as it continues on an upward trajectory.

In 2019, the entire Tax sector achieved a total budget revenue of 1,276.4 trillion VND, surpassing the estimated target by 9.3%. Specifically, the total corporate income tax (CIT) paid by companies listed in the V.1000 (top 1000 highest tax-paying enterprises) for 2019 contributed 61.5% of the total state budget revenue from CIT, equivalent to 118.1% compared to the amount paid by V.1000‑listed companies in 2018. And consistently from 2019 to 2022, the top 10 companies with the highest CIT payments include three foreign-invested companies: Samsung Vietnam, Samsung Electronics Vietnam Co., Ltd., and Heineken Vietnam Brewery.^[24]

From these factors, Vietnam has achieved a stable budget for government activities related to providing public services, infrastructure, education, healthcare, and especially social welfare.

The multidimensional poverty rate in Vietnam during the 2020-2022 period has consistently improved. In 2020, the government doubled its investment resources for poverty reduction compared to the previous period. Approximately 21% of the state budget was allocated to social welfare, the highest proportion among ASEAN countries. During the COVID-19 pandemic, direct support was provided to 13 million people across various dimensions.^[25] In 2022, the state budget allocated about 23 thousand billion dong to implement comprehensive support policies for the people such as health insurance support; exemption, reduction of tuition fees, support for learning costs; support for electricity, legal aid; support for vocational training, job connection; support for housing, clean water and sanitation; poverty reduction in information.^[26] Specific social security measures were issued in a timely manner to support poor households and near-poor households severely affected by the COVID-19 epidemic such as policies to support money, food, health care, computer support, internet service for online learning for poor children; support for living water costs; support for poor households under the social protection object.

Table 1: Multidimensional poverty rate in the period 2020-2022 (%)^[27]

From the above data, it can be easily seen that the poverty rate in Vietnam is improving over the years. However, there is still a large gap between urban and rural areas when the rural area’s multidimensional poverty rate is usually higher than the urban area by about 5 units. At the same time, by 2022, the urban multidimensional poverty rate tends to increase.

According to the Food and Agriculture Organization of the United Nations (FAO), the malnutrition rate of Vietnamese people in 2020 was 5.7%, down 0.5 percentage points compared to 2019. However, the situation of moderate or severe food insecurity in the population tends to increase. In 2020, the rate of moderate or severe food insecurity in the population was 7.6%, up 1.1 percentage points compared to 2019 while the rate of severe food insecurity in the population was 0.6%, up 0.1 percentage points compared to 2019. The cause is due to the impact of climate change, natural disasters, environmental pollution, COVID 19 epidemic, the process of industrialization, urbanization that has taken place strongly in the past time has seriously affected the lives of the people.

Figure 1: Percentage of households accessing basic living conditions in Vietnam (%)^[28]

The proportion of households accessing basic living conditions also improved over the years. By 2022, in addition to the indicators of the proportion of households using electricity for living and the proportion of households with durable goods unchanged, the proportion of households accessing the remaining 3 basic living conditions all tended to increase compared to the previous period. Specifically, the proportion of households with solid houses reached 50.3% (up 0.6 percentage points compared to 2020), the proportion of households with sanitary toilets reached 96.2% (up 2.2 percentage points compared to 2020), the proportion of households with sanitary water sources reached 98.3% (up 0.6 percentage points compared to 2020). This clearly shows that the social security policies of the Vietnamese Government have been and are promoting the impacts when maintaining these indicators regularly improved. However, it can be seen that the proportion of households with solid houses still accounts for a low rate when only accounting for half of the households with solid houses.

Figure 2: Literacy rate of population aged 15 and over (%)^[29]

According to the General Statistics Office, the literacy rate of the population aged 15 and over in 2022 reached 96.1%; this rate in 2021 was 95.7%, slightly higher than the level of 95.4% in 2020. In addition, there is still a difference by gender and region, in which, the literacy rate of the female population is 95.1% lower than 2.1 percentage points compared to the male population (97.2%); of the rural population is 94.8% lower than 3.5 percentage points compared to the urban population (98.3%). To achieve this result, the universal education policies have always been implemented and maintained by the Vietnamese Government until now. The result of mobilizing children of primary school age to school was maintained stably in 2022. According to the report of the Ministry of Education and Training, the proportion of students attending primary school and attending school at the right age of primary school are respectively 101% (101.1% for boys and 100.8% for girls) and 98% (97.9% for boys and 98.1% for girls). The proportion of students recognized as completing the primary school program reached 99.6%, there was no big difference between female, male and ethnic minority areas. The proportion of students attending lower secondary school, the proportion of students graduating from lower secondary school, the proportion of students completing lower secondary school, the proportion of transferring from primary school to lower secondary school in 2022 reached respectively 98.4% (97.6% for male and 99.2% for female); 98.1%; 86.9%; 99.9%.

2.3. The Points Are Still Limited

Besides the achievements, Vietnam’s poverty eradication and reduction still has some shortcomings.

2.3.1. Challenges in Multidimensional Poverty Reduction: Urban-Rural Disparities and Labor Market Dynamics

The multidimensional poverty rate has decreased but the gap between urban and rural areas is still a big challenge for the government.

In the period of 2019-2023, only the year of the Covid-19 pandemic caused a lot of disruption to the labor market in urban areas, causing the unemployment rate in urban areas to be higher than rural areas, while in the whole cycle, the unemployment rate of workers in the age group in urban areas is always lower than rural areas.^[30]

Comparing with the data in Table 1, it can be seen that while most of the poor people in Vietnam are concentrated in rural areas, the employment rate and the activities to create jobs have not yet been focused much on this area. This makes the unemployment rate in this area still a problem that needs to be solved. The lack of stable income makes poverty reduction in this area of Vietnam increasingly difficult. Moreover, we see that although the trend of poverty reduction in rural areas tends to decrease in the period of 2020-2022 (Figure 1), looking back at the context of the labor picture at that time, this may not be the real index. In 2020 and into 2021, when the Covid-19 epidemic broke out strongly in Vietnam, the trend of workers leaving the city to avoid the epidemic took place in Vietnam, along with many types of online work being deployed, making many workers have jobs to bring their work away from urban areas to rural areas to avoid the epidemic. By 2022, when the epidemic situation improved, the jobs in the city were reopened, then this wave of migration was reversed, however, due to the speed of workers looking for jobs in urban areas too fast compared to the recovery speed of jobs, from which it can be seen that the multidimensional poverty rate in urban Vietnam in 2022 increased more than in 2021 while the trend in rural areas is still decreasing. This also continues to pose challenges for Vietnam in the sustainable poverty eradication and reduction when continuing to maintain the current poverty reduction rate in rural areas while avoiding the urban people from becoming poor again.

2.3.2. Challenges in Vietnam’s Economy: FDI Dominance, Skilled Labor Shortage, and Domestic Enterprise Competitiveness

Through the implementation of regional policies such as the ASEAN vision or VSDG, Vietnam’s economy has improved a lot but the main driving force for Vietnam’s economy still depends on the FDI enterprise group. For example, in the export activity in 2022, the FDI enterprise group increased by 11.8% compared to 2021 while the export of the 100% domestic capital enterprise sector only increased by 6.8%. In some groups of high-value goods such as phones or components or computers, machinery and equipment, the FDI enterprise group even accounted for 99.67%, 98.31% and 93% of the industry respectively.^[31]

Meanwhile, the proportion of Vietnamese workers with diplomas and certificates by the end of 2023 is only 27.0%, up 0.6 percentage points compared to 2022. Vietnam’s untrained labor force is still very large (about 38 million people).^[32] This is not a small challenge when the fields with good positions and incomes are difficult for Vietnamese workers to meet.

At the same time, the number of domestic enterprises in Vietnam is mostly small and medium enterprises. Competing directly with FDI enterprises in important fields until now is still a big challenge for the country.

3. Some Recommendations to Promote Regional Initiatives in Vietnam

One is, to focus more on developing the economic sector associated with rural areas. As analyzed above, Vietnamese enterprises are mostly small and medium enterprises, their strength is not in heavy industries, service and agriculture are the strengths of these subjects. Moreover, most of the goods that Vietnam can export billions of dollars are in the agricultural sector such as rice, forestry or fruits. Therefore, this can be considered more correct for Vietnam when aiming to link domestic enterprises with rural areas. This linkage can be through forms of end-to-end linkage, output guarantee or focus on developing economic models associated with agriculture such as cooperatives. This not only helps to take advantage of the unskilled labor force that is still redundant at present but also creates more livelihoods for workers in rural areas, helping these workers have jobs, stable income to ensure life. From there, the steps to eradicate hunger and reduce poverty in Vietnam will become more sustainable.

Moreover, linking enterprises with rural areas also helps to create the premise and basis for Vietnam to move towards modernizing agriculture, bringing the achievements of modern science and technology into agricultural production, increasing productivity while reducing the burden on the environment. This helps Vietnamese agriculture have the premise and basis to develop sustainably, aiming to support Vietnam to achieve the goal of building a zero-emission economy, minimizing the impacts of agricultural activities on the environment, thereby also achieving the United Nations’ sustainable development goals.

Two is, Vietnam needs to pay more attention to resources for training activities, including vocational training and training of high-level workers. Currently, Vietnam’s education and training system still focuses mostly on universal education for the people. This shows that Vietnam’s literacy rate is always high. But the employment data shows that Vietnam’s gap lies mostly in the high-level training sector when the labor force with qualifications only accounts for less than 1/3 of the total labor force of the whole economy. This is increasingly being affected by the money‑making jobs from the online platform that are expanding, causing the trend of learning a trade or participating in higher levels of education among Vietnamese youth to decrease. When searching on social networks, the headlines or debates of young people such as whether to go to college pose a bigger question for this issue. This comes from many reasons, it may be because the training programs of some occupations are not really linked to the practical occupational activities of the learners or learning according to the trend of society instead of choosing according to their own abilities, making many young people confused when sitting on the school bench. Therefore, the Vietnamese Government needs more drastic measures to tighten higher education. Currently, according to the regulations of the Law on Higher Education, quality accreditation is mandatory for all higher education institutions and training programs. Quality accreditation of training programs is currently carried out with the set of standards for assessing the quality of training programs at the levels of higher education issued together with Circular No. 04/2016/TT-BGDĐT dated March 14, 2016, of the Minister of Education and Training. This set of standards is basically translated from the set of standards for assessing the quality of training programs of the ASEAN University Network – Quality Assurance (AUN-QA) version 3.0, consisting of 11 standards and 50 criteria. By the end of May 2023, there have been 802 programs accredited according to the standard in Vietnam, but the average score of the criteria is quite low.^[33] The 10 criteria with the lowest average score are all core criteria, directly related to the training activities that create the quality of the training program such as the objectives and outcomes of the training program, the description of the training program, the structure and content of the teaching program, the approach in teaching and learning, the evaluation of the learning outcomes of the learners, improving the quality and output results. In the trend of realizing the ASEAN Vision by 2025, aiming to bring Vietnam’s education and training to the same level as other countries in the region, Vietnam still needs to further strengthen the solutions to improve the quality of education and training, and the core issue is probably changing the strategic vision of those responsible for building training programs when they have to link the training program more closely with the needs of employers as well as equipping learners with more adaptive skills to the changes and requirements of future careers. From there, it can help to improve the quality of Vietnam’s labor force, allowing them to access jobs with higher levels and pay levels, thereby having a better financial life.

Three is, Vietnam needs more drastic policies in improving the social welfare system, especially the social welfare system for workers. Currently, the social welfare system for workers in Vietnam mainly focuses on the compulsory social insurance system including social insurance, health insurance and unemployment insurance. However, this system has not proven much of its effectiveness. The type of insurance with the highest contribution rate in this system is social insurance. Regarding social insurance, in the report assessing the situation of implementing the policy of enjoying social insurance once according to Resolution No. 93/2015/QH13, the Ministry of Labor – Invalids and Social Affairs said that in the period of 2016- 2021, the whole country had 4,058,317 workers requesting and being resolved to enjoy social insurance once, on average each year there were nearly 700 thousand people enjoying social insurance once, the number of the following year was always higher than the previous year with an average growth rate of about 11.6% per year.^[34] Among them, the main beneficiaries of social insurance once are young workers, from over 20 years old to 40 years old (accounting for about 77.5% of the total number of people enjoying social insurance once). The explanation for this situation is mainly due to the low average monthly payment for workers and the requirement of a minimum contribution period of 20 years to receive (this is a quite long period of time). Meanwhile, many young workers work in the private sector, if they are in a situation of losing their jobs, between the burden of maintaining the insurance fee and canceling and receiving insurance once, clearly very few people want to maintain the insurance fee. Therefore, the situation of having social insurance for Vietnamese workers is still low, thereby creating a burden of living costs for these individuals later. Meanwhile, private social security channels are not well developed in Vietnam. According to the current law on personal income tax, workers in Vietnam are only supported to reduce a maximum of 1,000,000 VND into the taxable income of individuals on 1 month when participating in voluntary pension funds, meaning that the average income per capita of Vietnam in 2023 is 4,284 USD/year, they are only reduced by about 10% of income for 1 year for paying voluntary pension funds. This does not encourage people to participate in these forms and therefore Vietnam does not have any reputable voluntary pension fund for this activity. With the above situation, workers will be very likely to become poor again when they no longer have the ability to work and earn money. Therefore, the Vietnamese Government needs to reconsider and help adjust the operation of the social insurance fund more effectively as well as loosen the mechanism to create conditions for private social security funds to develop, thereby helping workers in general have a sustainable financial cushion for eradicating hunger and reducing poverty.

Conclusion

In the difficult context of the Covid-19 pandemic, regional initiatives such as the ASEAN Community Vision and The National Action Plan play an important role in poverty reduction and have a positive impact on the economy. This study focused on analyzing in detail the impact of regional initiatives on different groups of subjects, thereby clarifying their undeniable role for the vulnerable groups in society and how they promote sustainable development of the economy. The profound impact of these initiatives on the whole society has helped narrow the gap between rich and poor in accessing basic living conditions and improving education, as well as improving living conditions for the classes with differences in education level and living circumstances. However, the study also pointed out that there are still many challenges that reduce the effectiveness of these initiatives. One of the notable points is the lack of uniformity among the regionals participating in the initiative and the difference between these regionals and the specific conditions that they face when implementing the initiative. From Vietnam’s experience, optimizing and adjusting regional initiatives to suit local conditions is an effective solution, making them practical and realistic policies in everyday life. The study also suggested that continuing research and monitoring of regional initiatives is necessary and needs to be carried out in a long-term process. This is necessary to be able to find effective methods and strategies to solve current challenges, overcome the consequences of the past and prevent the future. Although regional initiatives have brought significant results, there are still some shortcomings that need to be overcome. This emphasizes the need to continue improving and refining these initiatives so that they can truly bring the greatest benefits to the community.

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