Vietnam became the 150th member of the World Trade Organization (WTO) in November 2006. with WTO commitments, there will be opportunities and potential adverse impacts on access to rural credit and financial service. The poor are probably only small participants in the boom, but will often suffer significantly in the bust. Several previous researches indicated that domestic financial liberalization, through giving up control of interest rates and removing credit subsidies, has not translated into high level of savings, but decreased access of the poor to rural credit. The study on “Study on Possible Impacts of Post WTO Accession on Microfinance and Access to Rural Credit of the Poor in Vietnam ” aims to assess the opportunities and probable effects of trade liberalization on financial services for the poor in Vietnam. The scope of the study will highlight the accessibility of financial services for the vulnerable poor while analysing the opportunities, challenges and possible risks in the context of WTO accession. The legal framework in connection with the financial services and MFIs in Vietnam will be also reviewed to draw the possible policy gaps. Under the ActionAid Vietnam support and the fund from Italy, the study will be used as advocacy work for pro-poor policies and monitoring the possible impact of economic integration, post WTO accession.

CDI is undertaken the study with literature review and field study in Quang Ninh, Son La, Ninh Thuan provinces and to work with M7 (Microfinance Group) www.m7group.org .

Final Report is under processing, but the brief presentation for further comments and participation is attached >>

What are the impacts of economic integration and free trade to the migrant workers?

Vietnam economy is changing fast…..

n         Economic integration opens for more markets, increase competitiveness and competitive advantages for Vietnam’s industries

n         Private sector grows faster under the support of the Government policies

n         Emerging social issues from rapid labor mobility from rural to urban, workers lack of knowledge and skills; living and working conditions. etc.

The impacts are likely negative…

n         Low investment on working conditions and long working hours have NEGATIVE impacts to WORKERS’ HEALTH and PRODUCTIVITY

n         Low wages and bonus and uncompliance with Labor Code created labor disputes and strikes which have NEGATIVE impact on PRODUCTION and LABOR FORCES

n         More jobs offered but unstable

n         The recent dumping initiated by EC on footwear export, dumping by US on aquaculture export will probably put a million laborers at job risks..

Free Trade creates shocks to migrant female workers

n         Very poor living conditions in dormitory and rented houses: lack of clean water, unsanitary and unsecured, vulnerable to HIV/AIDS.

n         Lack of community support, limited access to local health services, education and community social activities.

n         Long working hours (77-83% works from 8-12h/day)

n         Reported abusive behavior (physical and verbal abuse in many foreign invested companies)

n         Work place: unsafe and unhealthy to workers with heat, dusk, gases, lack of sanitation facilities, lack of drinking water

“We do not plan to continue their present jobs in the long term in cities...” Many migrant workers say...

So what policies are needed?

•         Develop skillful labor forces

•         Reinforce corporate responsibility for social benefits for workers through labor inspection: insurance, contracts, better working conditions

•         Develop clearer and consistent in legal framework: Amended Labor Code, Law of Enterprise, Tax Law..

•         Improve tripartite dialogues: government, employers, trade unions .. by Guideline and practices

•         Facilitate market institutions

•         Provide sufficient information

Paper #1: How to make governance work better in Vietnam? @CDI. May 2007

This brief paper is a contribution to the Conference on Transparency and Governance held by Center on Asia and Globalisation, Lee Kuan Yew Public School of Policy. It takes an initial look at what are the existing governance issues and challenges. The author argues that the driver of change needs to encompass aspects of state society relations. It then suggests practical tools for pushing boundaries of good governance through strengthening transparency mechanism and monitoring.

For details, please download.....

Paper #2: International NGOs with Good Governance in Vietnam: Realities and Prospective. @CDI August 2007

In Vietnam, INGOs have been moving to more governance work in the last 5 years, which is built on the success of the services and assistance to communities in various fields, as well as to build on their relevant expertise. Role of INGOs and perception on INGOs by the Government has also been changed towards more positively participation into governance areas. INGOs have shown active and some experience sharing in linking community work into policy making.

For details, please download.....

Integration into the global economy has been acknowledged as the obvious trend of any country. However, linkages between trade, development and poverty reduction are still debatable, especially for a developing country like Vietnam.Moreover, Vietnam is in the process of WTO accession and a deeper integration with multilateral and bilateral negotiations. Therefore, it is so important to have a comprehensive view with various dimensions to the effects of trade liberalization on development and poverty reduction for more appropriate policy recommendations.

Intensified integration into the world economy and pro-poor nature are the two salient features of Vietnam’s success in the last two decades. On average, the real GDP per capita of Vietnam grew by 5.9 per cent per annum between 1993 and 2002 and only five countries in the world have experienced a faster increase in GDP per capita over the last decade. International trade displayed a much faster rate of growth. Over the same period, the value of exports and imports grew on average by 17.5 per cent annually. Strong economic performance goes hand in hand with significant reduction of poverty. As the size of the economy roughly doubled between 1993 and 2002, the fraction of the population living in poverty declined by half, from 58 per cent to 29 per cent. Vietnam’s achievements in terms of poverty reduction are one of the greatest success stories in economic development.