URBANIZATION POLICY AND RESEARCH AGENDA FOR VIETNAM 2003 by Dr. JIBGAR JOSHI

URBANIZATION POLICY AND RESEARCH AGENDA FOR VIETNAM

JIBGAR JOSHI

This report is prepared to make the inevitable urban transition in Vietnam a good one unlike in other places. It is intended to raise issues that need to be dealt with to shape urbanization in Vietnam in a way that its socio-economic vision and environmental goals can be achieved. It will raise issues related to economic resilience, livability and poverty reduction. The transition in Vietnam should not be guided by the global economy as such. Its preparedness to exploit the external as well as domestic opportunities as a concomitant effect of the transition is critical. This report is organized in four parts. The first part gives a broad premise, some sort of an overall scenario where urbanization policy will have to stand and take roots. It is necessary to rely on the process of evolution and develop it gradually to the extent that it influences investment decisions. This part focuses on areas where there is already a substantial consensus among the development partners and stakeholders. It gives a general context and background and set a vision for 2020. The general trend and expectation in terms of poverty, good governance and sustainability are discussed in brief. The next part based on the premise, deals with issues, problems and challenges that will come in the process of policy building. Part III deals with the elements of urbanization policy and gives an outline of the policy based on spatial organization. Part IV is the main output of the report. As the policy outlined in the preceding part is very tentative, it identifies areas where further works, studies and research are required to make the urbanization policy relevant and effective for Vietnam.

PART I: THE GENERAL PREMISE

The growth pattern in Vietnam has so far been pro-poor. The size of the economy doubled during the period from 1993 to 2002. The population living in poverty has also halved. Both have 7% annual rate. Vietnam’s development during the last decade has been spectacular. This is mainly due to Dui Moi. Land use right certificates to rural people meant a transfer of wealth at a massive scale. This clearly indicates that the government policy has been fairly egalitarian. In order to sustain the pace of development, it is necessary now to create institutional base for a more egalitarian system. There is a clear indication that Vietnam is committed to move towards that direction. CPRGS has the following objectives, as for instance, Ensure grass roots democracy. Ensure budget transparency. Improve the income of the poor significantly. Improve the access of the poor to basic social services, production and resources. Expand the official social safety net (health) and diversify the voluntary safety net (schools, insurance for agricultural crops, agri-extension). Ensure job security. Resolve fully the problem of child labour and street children. Ensure that there are no slums and temporary houses in all towns and cities by 2010. Ensure that 100% of all wastewater is treated in all towns and cities. Ensure that 100% of solid waste is collected and disposed off safely. Ensure that air and water pollution comply fully with national standards by 2005. Provide basic infrastructure to 100% of the poor communes by 2010. Provide essential infrastructure, especially water supply and environment in poor areas in cities and towns. Besides there are targeted programs for the women, minority and disaster prone areas.” “The low hanging fruits are often harvested first.” (Forthcoming joint report on Poverty). Rural Remote Mountain may not be accessible. Poverty will remain mainly rural. Urban will have increasing share of the poor in the time to come. The future expansion will be less pro-poor. Industries are facing difficulties in being integrated with the global market (Vietnam News, Nov. 24, 2003). Integration with the world economy will help the economic growth poles but disparity in income earnings will increase. Moreover the market has made social goods more costly. There is a need to increase entitlements for the poor. The following points will briefly represent the current premise on which an urbanization policy should be based:

1. Integration with the global economy is necessary. It will lead Vietnam towards progress and prosperity. For this, its major cities must develop as strong growth poles in the ASEAN region. More than economic growth, Vietnam should be internally strong, powerful and dominant. It should have a resilient economy based on self-reliance and empowerment. (Douglas, 2001, 2002).

2. Urbanization is easily understood and accepted as an inevitable process. Policies refer to the urban vision where up to 45% of the total population will be living in urban areas in 2020. (Cour; CPRGS). Everyone believes that the urban population will be around 45% by 2020. But what constitutes urban is not very clear. Where the population will be located is also not clear. We may not be able to locate population as we like. Neither can we predict where the poor will be located. Only few of them will be living in big cities and industrial parks.

3. Recognizing that it may not be easy to locate them as the urban vision would like it to be, the research so far done on the subject seems to have theoretical bias. But yet, everyone agrees intermediate cities are the best locations for housing more and more people. It is not clear what constitutes intermediate cities.

4. Lots of research on the concept of poverty has been done. The measurement of poverty is complex. This is natural. We will not finish our exploration on the matter. Perhaps it is not good to dig deeper on the poverty of the poor. We will be finding ourselves on a bottomless pit. All we should know is that the increase in the relative poverty is not sustainable. Relative poverty as shown by gini coefficient by regions and within regions, for example, cities, rural communes, remote mountains, should be the basis for policy interventions.

5. Targeted pro-poor projects could have only limited impacts.

6. Urbanization should be studied at different levels. Every part of the nation is urbanizing in its own way. In the process, opportunities are created but they are not shared equally. (Douglas; Cour). Hence deliberate policy is required.

7. Costs of urbanization and ecological footprints have not been fully assessed.

8. Future costs of urbanization are likely to increase at a rapid rate because of depletion of resources. And livability of cities will decrease.

9. Urbanization policy should not be limited to what is generally understood as the urban sector, as it deals with population distribution in response to socio-economic opportunities that are created through pubic investment in national infrastructure, rigorous application of policies on trade and transit, industry, rural development, and investment. It should have strong influence by all economic sectors and by space at different levels. It should link space with investment planning.

PART II: ISSUES, PROBLEMS AND CHALLENGES

How can adverse impacts of globalization in terms of livability and poverty reduction be minimized in the coming years?

How can the integration process of the economy of Vietnam be sustained in the wake of growing competitiveness in the ASEAN region?

How should the long-term sustainable use of domestic resources and the impacts of globalization be considered in the process?

How can the space-economy of Vietnam be organized to achieve regional balance and exploit the potentials derived form rural- urban linkages? What are the spatial and environmental implications of poverty? Sustainable poverty alleviation will not be possible without understanding such implications.

How can rural economy be transformed? How should livability and sustainability be addressed in the management of urban areas, big cities, in particular?

How can a more resilient and vibrant economy be built at local, sub national and national level of development? Is it another manifestation of urban-rural linkages?

How can space be linked in macro-economic planning and investment decisions? How to produce social goods and make them accessible to the poor as the main source of entitlements? How can key industries be identified at different regions and protected against market distortions actuated by capital mode of production system? Should we protect? If yes, how do we ensure that we are not protecting unviable industries? How can coordination among agencies and sectors be ensured to achieve integration and institutional coherence?

Given the fact that urban transition will lead to a better economic performance, how can poverty be reduced through good governance in the transition? What opportunities exist for linkages and interactions between urban centres of different sizes and different places? What mechanisms can be developed for evaluating existing linkages in terms of growth, equity and sustainability? How can the opportunities created by urbanization and rural-urban linkages be enhanced?

PART III: URBANIZATION POLICY

The pattern of urbanization process as will be witnessed in the future will give a holistic picture. But development approaches are difficult to be interwoven into an integrated whole. It is therefore pertinent to look at the elements of the process. At least six important elements of urbanization policy could be identified. They are as given below:

ELEMENTS

For presenting it as a cross-sectoral multi-dimensional and overall spatial policy, it is necessary to identify the elements of the policy on sustainable urban-industrial development. These should include the following:

  • Space: spatial planning framework
  • Poverty alleviation and socio-economic vision
  • Integration and Economic Resilience
  • Investment planning, city marketing and lead activities (different regions should specialize in different activities with strong economic linkages and multiplier effects)
  • Environment and sustainable development

Institutional arrangement and good urban governance including infrastructure and service provision

SPACE

Spatial planning framework should consider a multi-level planning system that includes: National level Regional level and city regions (the concept of a region as a economic planning unit is losing favour amongst development planners) Provincial Level and urban regions Urban level and rural regions Village level. The framework should be based on Urban system, city size and population distribution Inter-city relationship Rural-urban linkages Managing urbanization should be dealt at different levels: Growth poles for the global economy. Growth poles as engines of national development for directing national development with emphasis on poverty alleviation, economic resilience and livability. Growth centres at different levels for regional development and for linking different areas including rural and urban areas through city regions, intermediate cities, and local growth centres like industrial parks etc. Urbanization policy should help to create spatial system integrating different spaces together, urban and rural areas in particular. Urbanisation policy should also articulate the role of urban centres as follows Service centres for rural areas (system/hierarchy of urban centres provides an excellent framework to locate different hierarchy of services (example from health post to hospital) across the nation in a more cost-effective manner) Non-firm employment (not necessarily in cities and towns but in rural environment): This is very important. As the rural economy transforms from subsistence to a mechanized one, rural labour force will be released from agri employment. Urban productivity is much higher than rural productivity (everywhere in the word). In this sense urban economy could generate extra wealth a part of which can be used to finance rural development.

RURAL-URBAN LINKAGE:

Urbanization can be used to reduce the dependence of big cities on external resources. It can release people’s initiative towards productive enterprises for generating such resources. The linkage potentials available at small towns are much more difficult to tap. Urban centres should also serve the hinterland from where resources are drawn for the urban consumption. It seems the potentials of rural urban linkages are not well understood in Vietnam like in many other transitional economies in the region. The development of rural areas will depend on the urbanization through the creation of non-agricultural jobs and modernization of agriculture. Through the process, wealth will be created for further development. The same area will be able to hold more people. Through urbanization, the peripheral conditions within cities can also be improved through the creation of intermediate cities against further concentration in bigger cities. The integration of peripheral regions will increase the size of domestic market and also raise the national output. Inter- space disparity can be reduced, when backed by self- reliant policies at the rural local level. The synergies of the relationship should be exploited. Poorer regions will not be able to spend in social overhead capital. They are less attractive for private investment. Improved public investment programs. Unemployment level is very low. Social good are also located in urban spaces. They also need infrastructure and services. Cities are not just export driven industry. They should care for low-income settlements and provide dynamism and vitality.

POVERTY ALLEVIATION AND SOCIO-ECONOMIC VISION

Poverty alleviation should be the most important goal of urbanization policy for the following reasons (economic growth is essential for poverty alleviation, not that we can achieve the latter when we achieve a high growth rate. I suppose there is a trade-off between the two and that is where lies the crux of the problem) This is the most influential Vietnamese Vision type of the thing This is very much related with MDG. As it is not adequately linked with Urbanization; location specific response at different levels is required. Calorie-based poverty line will have decreasing influence as the relative disparity increases. It will be in the interest of the market to satisfy the basic needs of all and pretend to have full employment for ensuring industrial growth. The poor will soon be concentrated in overcrowded villages and big cities not able to produce new entitlements as demanded by urbanization. A safer way to deal with poverty may be to relate it with the ability to satisfy needs and aspirations, or put it bluntly, ability to achieve what people want or need. They should however be based on the assumption that human beings are honest, good by nature and do not like to create externalities on others to suffer. It is our institutional shortcomings that people especially in urban areas while dealing with this common property have to be too competitive and rather dishonest in using the common property that externalities just crop up. This implies dealing with poverty should also be linked with good self-governance. By fulfilling their needs, the ability of others should not be diminished. Ability of all to satisfy their needs can be ensured if globalization could be made to produce adequate social goods. What used to be difficult to produce two decades ago has become much simpler, for example food. The global market can produce most of the basic needs much easier. Instead of dealing with poverty directly, Vietnam should be committed to produce alternative forms of entitlements for the poor in the face of rapid urban transition – produce social goods and make them easily accessible to all in an equitable manner. The spatial implications and meaning of poverty is thus critical. This will direct the future pattern of migration. For understanding what poverty should mean in the face of impending urban transition, the Mike Douglas’ reports should be very helpful. The poor will be located not only in isolated and remote countryside but also congested slums in the cities. If poverty alleviation programs had to be effective they must focus on the poor irrespective of whether they are rural and urban. Responses to allocate poverty have naturally to be situation specific. The joint report on Poverty based on seven RPA will be very much helpful. RPA helped to roll out CPRGS to provinces.

INTEGRATION WITH THE GLOBAL ECONOMY AND RESILIENCE

With the integration of the economy of Vietnam with the global economy, disparity has increased and further integration may lead to unsustainable ways of resource extraction. The process of urban transition and further integration will bring further development creating enormous wealth. For generating wealth, the existing resources of all kinds will be further exploited. The replicability of good things will be doubtful if more attention could not be given to environmental sustainability and social equity. A two-pronged strategy to shape the transition becomes plausible: To institute mechanisms for an egalitarian distribution of the generated wealth by increasing access of all to the created benefits. To closely monitor the costs of urbanization and to fully realize the costs. The first can be ensured by bringing all the people close to the development process. People should be made able to participate in the process. Their ability will depend on their assets and resources including skills, training, property and income. The second can be achieved through the use of urban development tools, including the following: Increase competitiveness in the supply of infrastructure and services, Equitable pricing and fiscal policies, Cost sharing using innovative approaches like land readjustment. Use of Multisectoral investment planning and the impact of investments on spatial form. Both of these have spatial dimension. And require the recovery of costs incurred in major investments in infrastructure. Cost recovery is important. Pro-poor social welfare programs can facilitate it. In the process of urbanization all settlements are urged to be upgraded.

SELF-RELIANCE AND EMPOWERMENT

Emphasis should be given to make the local economy stronger and more self-reliant. and more powerful. This is a precondition to reap the benefits of urban transition for further development. The focus of the policy will be to shape and manage the transition so that cities at different levels could be built to promote local development instead of exploiting the rural areas. A well articulated national urban system should be envisaged for shaping urbanization in Vietnam in order to provide equal opportunities to all. This is a condition for sustainable development ensuring poverty alleviation and regional balance. The policy should play a key role in empowering weaker and vulnerable section and communities to urbanize their rural areas rapidly keeping the cost of urbanization to the minimum. Over the last decade, it is clearly seen that disparity in bigger cities are much more compared to smaller settlements. Even if jobs are created there at relatively lower costs, jobs may not bring sufficient incomes for LIG to lead a life of dignity and basic urban amenities have become less and less affordable for this group. To measure only the monetary costs and income derived from the job and the financial costs of creating a job is not a sufficient criteria of investment decision in Vietnam.

INVESTMENT PLANNING

In order to link urbanization policy with investment, the concept of growth poles can be used. To sustain competitiveness, investments in growth poles must promote local potentials of associated region for autonomous innovation. Otherwise short-term experiences cannot be replicated. The strategy should aim at integrating local advantages with the global needs. Big cities attract investment. So they are growth poles. Major cities will function as the dominant growth poles to be the engines of economic growth in Vietnam. They should however be made to pay the due environmental prices for all the resources they draw from sub national regions. It is necessary that urbanization policy should influence investment decisions. Where to locate investments are more important. Rural urban linkages, urbanization potentials, are all linked with growth pole strategies. The goal is to exploit the opportunities created through the inevitable urban transition to activate the whole economy through building sustainable urban centres at various levels for the people of Vietnam.

ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

For pursuing these goals, it is necessary to understand ecological footprints and the concept of limited goods. Externality should be strongly dealt with. Land itself is not given any value in economic cost benefit analysis but the declining utility of land can be considered. Externalities should be measured. Environment linked with land needs to be considered. The cost of degrading land and associated environment. With the loss of natural resources, the total ability will diminish and absolute poverty will increase. Livability will decrease and relative disparity also increases. It is necessary to assess the environmental and social costs of urbanization and development Projects, which are feasible in the short run, will not be so in the long run. Big projects could have enormous adverse impacts on social welfare and environment. Environment is the most important part of sustainable development. Both the ability to satisfy needs overtime and ability to produce more depends on how far environment and natural resource base can be sustained. Urban management should create good working and living environment to the residents of the city. It should deal with externalities like pollution

GOOD URBAN GOVERNANCE

A very important element of an effective urbanization policy is the development of local institutions to ensure strong local government action. A fair distribution of wealth created by urbanization is possible only through good governance. The cost of urbanization and social impacts should be equitably shared and pricing of infrastructure and services should not exclude the weaker section. Good governance will help to provide: Equal access to social goods and services Enhance ability to satisfy needs over a longer period, Entitlements in the form of technology, knowledge, skills, assets, social goods, and Equal access to environmental resources

URBANIZATION POLICY

The policy outlined below is linked with spatial organization. At different levels, priorities will change and mechanisms for synthesis and integration will also differ. NATIONAL LEVEL: The national economic performance will depend on the functioning of the major cities. They are HCMC and Hanoi in particular. These major cities tend to serve as the periphery of the global system. They supply the necessary inputs that the global capital demand. While serving as the periphery to the global system they bring sufficient capital to the country. The capital transfer can be increased through their competitiveness. They should be developed as good locations. HCMC has one third of the national production. Nearly 100,000 people migrate to it every year. It has spatial polarization increasing. The density is 23,000 and in some crowded places even 80,000 per sq. km. These should be made to function as growth poles in the ASEAN region. They should at the domestic front be the engines of growth. Investments should aim at transforming them from periphery to growth poles in the global system. At the same time the social and environmental impacts of big investments should be known. Ecological footprints and externalities should be worked out. In order that these do not help to drain out the resources out of Vietnam, as the engine of growth they should be made to play a lead role in the transformation. For this they should be more closely linked with sub national region to use the urbanization potentials. They should play a key role to build up a resilient economy. Infrastructure and services should be linked with competitiveness for the global market, developing satellite towns and the formation of city regions will provide adequate green areas in between nodes for livability. Growth poles will link the domestic potentials of Vietnam with the global market. HMC and Hanoi are the growth poles in the international arena to produce social goods. They have to be significant and be able to supply the basic inputs for the proper functioning HCMC and Hanoi are the growth poles in the international arena to produce social goods. They have to be significant and be able to supply the basic inputs for the proper functioning of the global market. But all these resources necessary for the global system cannot originate only in these poles. While there are no ways to immediately change policies so far as FDI or SOE are concerned, it is possible to lay down rules for their operation so that regional planning within the national boundary may play a positive role. This is necessary for sustaining the competitiveness of Vietnam in the global arena. Otherwise big cities will not be sustainable. Livability will dwindle rapidly and economic resilience will diminish. Along with the creation of jobs, adequate attention should be given for improving the living and working environment of low-income group. To sustain their competitiveness in the global market, they should be able to tap internal resources on a sustainable basis. This will help to ensure resilience.

REGIONS:

Whether dealing with poverty or economic growth, national aggregates do not make much sense. At the regional level, along with the poverty analysis, resource potentials and comparative advantage should e more fully ascertained, For each of the regions, Vision 2020 could be envisaged to ensure that regions do not compete among themselves but complement each other through functional specialization to present Vietnam as a powerful economy in the global market. The works of MOC should be integrated with the investment planning and priorities. The identification of key sectors with high multiplier effects and development of infrastructure and services for enhancing the performance of key sectors should be the basis of regional development. Natural resource management and identification of resource regions is a critical element at this level. Integrated vision 2020 in terms of poverty and resource use should help to use synergies.

INTERMEDIATE CITIES:

These are considered as appropriate locations for absorbing migrants for new urban development or extension and for locating activities critical for establishing rural urban linkages of different forms. They are medium sized cities, good for resource exploitation. The potential could be easily tapped. As city building is a dominant economic sector by itself, vast urbanization potentials could be stored here. As focal points for rural urban linkages, diffusion of technology, innovation, and technical vocational schools and as centres for new types of entitlements, they should be developed. People can be led to participate in the whole process using innovative tools like land readjustment, action planning. They should be designed as zero poverty zones. They provide skills for urban jobs. All these demand strong local governance. The tools for synthesis here are multi-sectoral investment plans, integration of environment, infrastructure and population into a spatial plan. Rural urban linkage is important. They should tap that part of the migrants who would otherwise land into sprawl settlements along the road or in slums of congested areas of big cities. Intermediate towns and small towns will help to release opportunities due to rural urban linkages. Self-reliant, sustainable enterprises with good multiplier effects and linkages should be identified at this level. These should be capable of establishing functional linkages with other economies. There are 61 provinces. The spatial basis for their development will be smaller cities and urban regions. Community development and integrated actions are important at this level.

SMALLTOWNS:

They are to be developed as local growth centres with the objective of creating local self-reliant communities. They will play a key role in the development of local economies. Industrial parks and local growth poles (Cour) could also describe them.

RURAL URBAN LINKAGE: Linkage potentials are real. By integrating rural and urban areas, opportunities coming out of urbanization can be tapped. They are generally undermined and overshadowed by the capital mode of production system. Market distortions and pricing policy generally make rural goods comparatively cheaper and urban areas are made to exploit their rural counterparts. Exchange of resources, flow of goods in equitable manner and environmental accounting are the right policy options. Investment should be complementary. Investment made in urban areas should provide urban amenities, markets for the benefit of rural people. Smaller regions like rural regions should be considered to deal with self-reliant communities. Placement of services and infrastructure make them accessible to the rural people. Mixed land use, rural regions in between settlements should be thought out. Rural urban continuum should be the basis of policy intervention.

PART V: RESEARCH AGENDA

BASIC RESEARCH

  • Research on migration and population dynamics in line with Cour’s work. This should analyze census data and show changes with a view to reflect spatial differentiation in income earnings and should help understand the changing space economy of Vietnam as it experiences intensive urbanization.
  • Research on policy adjustment and integration of urbanization with respect to current polices on industrialization, rural development, poverty alleviation and infrastructure development

POVERTY AND ENTITLEMENTS (AS MEANS OF EMPOWERING THE POOR AND VULNERABLE)

  • Research on the urban poor — their living, working and economic conditions, employment, health, nutrition, community organization and their participation in city building process.
  • Research on assessment of urban skills, other sources of entitlements for local empowerment and community building to make the development process local need based and community driven.

URBAN MANAGEMENT, FINANCING AND GOVERNANCE

  • Research on urban management in terms of service and infrastructure delivery relating also with affordable standards and access and pricing polices.
  • Research on urban financing including land readjustment, land development, infrastructure provision, cost recovery
  • Research on institutional development to create strong local government ensuring good urban governance through transparency and accountability. It should cover decentralization. Research on good practices and learning regions.

ENVIRONMENT

  • Research on pollution control and sustainable urban management. Research on ecological footprints and externalities

REGIONAL BALANCE AND LINKAGES

  • Research on spatial balance to address how can urbanization avoid concentration in one or two mega cities and is protected from adverse workings of the world economy.
  • Research to address how HCMC and Hanoi retain their competitiveness in the global market while contributing to a resilient economy. In the context of sustainable development, how far is the integration with the global economy a sustainable proposal?.
  • Research on urban-rural linkages of all forms and economic, environmental and demographic linkages in particular.
  • Research on the role of cities and towns for spatial balance and linkages.

ECONOMIC LINKAGES AND MULTIPLIER ANALYSIS

  • Research for the identification of lead activities just like crafts and industrial villages. Are they sufficiently propulsive?
  • Linkage analysis and multiplier effects.
  • Impact studies of major infrastructure investments on wages, prices and income. Also environmental impacts.

Besides research should address the following:

  • Redefining poverty with its spatial implication and also poverty as being exclusion and marginalized from development process.
  • Whether urban rural potential is a myth or reality incase of Vietnam.
  • Assessment of use of opportunities created by urban transition and rural urban linkages.
  • Assessment of local institutions, political interests, potentials, assets, resources, and other entitlements for making a break through in the development of local economy. Are infrastructure and services being allocated in a manner that is likely to match economic growth potential at different levels? Which location and types of investments are most likely to succeed in winning global investment manufacturing?
  • Criteria to check whether the projects as a whole constitute an integrated investment cum spatial plan. What are the unintended cross-sectoral and spatial impacts of development in each sector?
  • Impacts of longer terums spatial development on the resilience of the national economy.
  • Impacts of Foreign direct investments (FDI).

As a first step in research, it is suggested that an urban region be selected to study the following: Natural resources and changes in land use Rural urban linkages Lead activities and regional investment pattern Changes in spatial form and settlement system Poverty and population dynamics Emergence of growth centers and market towns Cost o providing infrastructure, services and housing Alternate forms of entitlement, ( e.g., vocational training,. urban skills, information) Urban development and land readjustment projects Provision of infrastructure and services and governance Based on the output of this initial research, research agenda given above can be refined. The agenda for research will help to facilitate debate and consultations. The research along with the debate and deliberations that will take place in the consultative forums at different levels and definitely in the meetings of Urban Fiorum will help to continuously improve the urbanization policy for Vietnam. It will also sustain the policy as a powerful tool for guiding investments in Vietnam, whether foreign or domestic, whether private or public to achieve the socio-economic vision of Vietnam.