As widely agreed in the literature, decentralization has a strong causal relation to various social and economic outcomes, VIETSURVEY team has retrieved bold evidences in the expenditure assignment and its poverty impact at province, district and most importantly commune levels in Vietnam.

Given vivid proximity and closeness to people, the commune and hamlet owned investment and expenditure have shown convincing effectiveness in terms of representing people needs and priority, streamlining overlapping expenditure coordination, reducing transaction cost and last but not least supporting the poor in the substantive and practical way.

TestThe fight against the permanent poverty became doable in line with decentralized system and mechanism where people and grass root officials both know who are the poor among them, their survival conditions and developmental prospects. Resources are extended to the one who need it and adapted to high volatility of market and social conditions. More importantly, the poverty became the community’s concern rather than burdensome to central government social protection. People, enterprises, and social organizations are then willing to help the poor with their multifaceted resources and capitals. The social support and poverty reduction activities hence can be designed in a cost effective and efficient way on top of community foundation and contribution. 

There are a number of reasons that the decentralization process is far from expectation from Vietnam. Among the known causes, the poor economic condition and weak negotiation position of most provinces in Vietnam can be named. Could the local government balance their revenue-expenditure, the great hesitation to changes from the central government is still a vertical constraint. And apparently the central government seems reluctant get their hands off their sub-national levels via expenditure and revenue control. Surprisingly, grass root capacity which used to be blamed as a constraint to fiscal decentralization is no longer a main concern as they have been capacitated through a gradual process under various initiatives from local governments and development partners. 

We found that bottom up initiatives would not transform to a reform without central synergy as transparency and predictability in terms of budget allocation and sources and grass root participatory planning process proven to be the key determinants to the decentralization process in Vietnam. The central government should mean what they say and do what they plan in inter-governmental budget transfer is a key to effective decentralized policies in the country. The question is that when all above mentioned factors can reach a critical mass for a structure reform which pushes poverty away from our land? To that end, can both central and local initiatives be ways out? What policy recommendations shall be made? Read more from our coming research.

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