Understanding ethnic minority poverty in Vietnam

1. Understanding ethnic minority poverty in Vietnam Country Social Analysis Study The World Bank April 2007

2. EM Poverty in VN • Vietnam has made great strides in reducing the poverty rate, from nearly 60% of the population in 1993 to less than 20% in 2004. • However, despite overall gains, ethnic minorities have experienced lower rates of poverty reduction than the general population. • In 2004, ethnic minorities accounted for only 12.6% of the total population, but they made up 39.3% of the poor population (VHLSS 2004).

3. The poorest provinces are in the Northern Mountains (NM) and the Central Highlands (CH) - which have the highest EM populations * Lai Chau and Dien Bien were previously one province, Lai Chau, at the time of the 1999 Population and Housing Census. More up to date figures are not yet available until the next decennial census. Source: Turk 2006 presentation using VHLSS 2004; 1999 Population and Housing Census

4. Poverty and Ethnicityare Spatially LinkedEthnic minority groups are concentrated in geographical regions with high rates of poverty Source: WRI 2002

5. But within these poor regions, Kinh have experienced greater poverty reduction Ethnic minorities, North West Mtns Ethnic minorities, Central Highlands Kinh, Central Highlands Kinh, North West Mtns Source: Swinkels and Turk 2006

6. Kinh do better than EMs in “lagging regions”CSA data supports previous PREM research (Swinkels and Turk 2004, p.7) showing that poverty reductions within “lagging regions” have been greater for Kinh than for EMs. Source: CSA survey 2006 (Chi-sq.=.00, R=.000)

7. Ethnicity and Poverty in “lagging regions”Most ethnic minorities in CSA study sites have significantly fewer high value assets than Kinh. Source: CSA survey 2006

8. The Ethnic Dimensions to Poverty Persists • PREM research shows that “those who are able to prosper in the more remote parts of the country are likely to be from the Kinh majority population rather than from an ethnic minority group.” (Swinkels and Turk 2004, p. 1) • Analysis of the 1993 and 1998 VHLSS shows “even if minority households had the same endowments as Kinh households, this would close no more than a third of the gap in living standards”(Baulch et al 2002, p. 17) • However, these previous studies, based primarily on VHLSS data, have not been able to fully explain the main factors as to WHY ethnic minorities remain poorer than Kinh.

9. Previous Explanations Previous explanations (Baulch et al 2002, p. 11) have suggested two possibilities: 1) People may be poor because they lack endowments, such as land, physical capital and human capital. 2) People may be poor because their knowledge, customs or culture result in lower returns on endowments.

10. Endowments vs. Returns • Van de Walle and Gunewardena (2001) find that about half of the difference in expenditure per capita between Kinh and EMs is due to differences in endowments, with the remainder likely caused by lower returns on endowments among EMs. • They conclude that “there are systematic differences not attributable to where you live… if we look solely at communes where both groups live, [endowments] no longer account for any of the difference in average consumption. These results lead us to conclude that fundamentally different models generate incomes for the majority and minority groups.” (p. 204)

11. Implications of previous research • Even if ethnic minority groups had the same endowments as Kinh, significant poverty differences would still exist. • There is an ethnic dimension to poverty that goes beyond a “lagging regions” explanation. • Our CSA analysis set out to understand how the cultural differences between Kinh and EMs explain higher rates of EM poverty.

12. CSA Approach and Methodology • Survey team did fieldwork in three provinces representative of the three main regions where EMs live: the Northern Mountains (Ha Giang Province), the Central Highlands (Dak Lak Province), and the North Central Coast (Quang Tri Province). • The CSA combined detailed qualitative work in villages (focus groups, interviews, oral histories, mapping, PRA), with a quantitative survey (n=364), spread equally among the provinces. • We also interviewed and discussed EM policy issues with local, commune, district, provincial and national policy makers, and reviewed secondary and policy literature. • A gender survey was also carried out with 180 women of various ethnicities.

13. CSA Findings: How ‘Difference’ becomes Disadvantage • CSA analysis identifies six main interlocking factors where ‘differences’ between ethnic groups result in clear disadvantages for ethnic minorities, with consequent livelihood impacts: • less access to education - more limited mobility • unfavorable credit options - poorer returns from markets • less productive lands - stereotyping / misconceptions • It appears that these factors strongly influence livelihood outcomes, preventing ethnic minorities from achieving greater economic progress.

14. The Pillars of the ‘Cycle of Disadvantage’ for EMs Lower Education Stereotyping and misconceptions Less Mobility Lower Livelihood Outcomes Lower market access / lower income from goods sold Less Access to Formal Credit Less productive landholdings

15. Pillar One: Education There are significant differences in level of education between Kinh and EM respondents, with Kinh attaining more education across the board Source: CSA survey 2006. (Chi-sq=.000, R=.000)

16. Educational attainment by region The significant difference between EMs and Kinh in educational attainment remains when we control for regional variations Source: CSA survey 2006. For comparison purposes – low cell counts make significance testing inaccurate (Chi-sq and R all below .03)

17. Educational difference between all ethnic groups Kinh are the only ethnic group with a sizable percentage (26%) of respondents having attained a high school education Source: CSA survey 2006. For comparison purposes – low cell counts make significance testing inaccurate (Chi-sq=.000, R=.061)

18. Ethnicity and educational outcomes are linked A much higher percentage of ethnic minority children start school late or drop out of school before completion. Source: CSA survey 2006

19. Why do EMs start school late and drop out early? • The most common reason for starting school late mentioned by EMs surveyed was because children were not ready for school (26.9%). Lack of Vietnamese language skills in young children and lack of pre-school preparation were identified in the qualitative research as factors. • The most common reason for dropping out was because the household lacked money for school fees (39.8%). • Qualitative research suggests that EM students who start late are also more likely to drop out early due to embarrassment at being older and a general lack of confidence.

20. Role of parents in education • It appears NOT to be true that EM parents don’t understand the value of education: nearly all households reported that pulling children out of school is their very last option when faced with food and cash scarcity. • Furthermore, nearly 90% of Tay, Dao and Thai HHs reported attending parent meetings or the PTA. Tay, Dao and Thai parents were also more likely to speak Kinh and have higher educational attainment themselves. • Other EMs reported less frequent parent involvement, such as the Hmong (45%), Mnong (49%) and Van Kieu (55%). This was attributed to the lack of Kinh language skills among these parents. • Thus the educational attainment of parents has an impact on their ability to be involved in their children’s education, with potential effects on the success of their children in school. • This may indicate the need to especially target school and education efforts on those ethnic minorities who are less likely to use Vietnamese at home and who have higher rates of adult illiteracy.

21. Implications of Pillar One • Education has a significant impact on a household’s economic status. Less education means higher rates of illiteracy among EMs, resulting in less opportunity, less likelihood of off-farm employment, and less access to a multitude of government and other services. • A VASS study based on VHLSS data from 1993-2004 finds that the difference made by higher levels of education are statistically significant: having a vocational training certificate accounts for over one million VND (US$60) additional income, and a degree of higher education accounts for over two and half million VND (US$150). (VASS 2006 p. 26) • Yet in 2005, less than 2,000 EM nation-wide were admitted to tertiary education, according to the Ministry of Education.

22. Pillar Two: Mobility and Migration EMs are less likely to be mobile. They visit areas outside their village less often than Kinh and travel shorter distances Source: CSA survey 2006.

23. The Advantages of Mobility How do ethnic minorities view their own lack of mobility? In one multi-ethnic village in Dak Lak composed of indigenous Ede, migrant Nung and migrant Kinh, PRA revealed that Ede believed the Nung were more ‘organized, well planned and decisive’, having benefited from seeing agriculture in other areas before they came to Dak Lak. The Ede also believed the Kinh households had a ‘wider social network’, leading the Kinh to be more proactive in networking with local authorities, and local and regional traders, as well as having contacts with Kinh in other regions to learn from.

24. Ethnicity and Migration Kinh are more likely to have migrated

25. Ethnicity and Migration: Differences between Kinh and EMs • Kinh migrants are more likely to have come farther distances in their migration: Kinh in the uplands have come from many areas, including as far away as the Red River Delta and the South Central Coast. • While 35% of minority HHs reported they had a household head or spouse born in another village, minority ‘migrants’ are more likely to have simply moved within the local commune or district. • This is particularly true given policies since 1968 to ‘sedentarize’ ethnic minorities by moving them to state-built villages; minorities reporting that they live outside their home village have often simply been moved by these programs a few kms away from their original villages.

26. Some Minorities Have Migrated Longer Distances… • Many minorities in Dak Lak and Quang Tri had to temporarily migrate from their birth village due to the disruptions of the Vietnam War (1961-1975). Many minorities in Ha Giang had to temporarily migrate during the Vietnam-China border war of 1979. • The only long-distance migration among minorities comes from some EM groups (Thai, Dao, Hmong, Tay, Nung) in the Northern Mountains who migrated in the 1990s to the Central Highlands to seek larger plots of land. Many of these EMs traveled in groups from their home villages. • The Pa Co of Quang Tri also report inter-provincial migration, but only with the neighboring province of Thua Thien Hue, because of cultural preferences for Pa Co spouses from outside the home district.

27. Access to land after migration is more favorable to Kinh Most ethnic minorities clear their own land after migration, while the majority of Kinh have money to buy their land (which as a result is often better quality land). Kinh are also more likely to receive government land allocations after migrating. Source: CSA survey 2006. (Chi-sq.=.000, R=.000)

28. Ethnicity and Sponsored Migration An example of how official migration programs may favor Kinh at the expense of EMs Since 2003, Quang Tri province has encouraged Kinh migrants to come to the border areas of the province, arguing that the migration will help minorities “progress faster as they will be near Kinh”, in the words of a district official. This program promised the Kinh who moved upland many preferable polices to increase production. In the first year of the program, each Kinh household that moved was promised 3 ha of land, 3 million VND in cash, 10 million in construction materials for a house, 5 million VND in food equivalent, and 500,000 VND in moving/travel expenses. To encourage the Kinh migrants to take advantage of their new lands, the state bank has recently started a program to provide credit for the planting of rubber. Those who plant rubber can get up to 24.5 million VND in loans. By comparison, investment in ethnic minority sedentarization schemes has usually been capped at 1 million VND in government investment per household (IEMA 2005). This provincial policy focus on investing in Kinh migrants, rather than directly investing in EM communities, may have impacts on the different poverty rates found in the provinces.

29. Implications of Pillar Two • Much poverty investment has focused on infrastructure (roads) to increase access and mobility for remote areas. However, the CSA research suggests that mobility is more than access to roads. • While roads are important, in order to take the most advantage of roads, EMs need to have places to go (markets, schools, training centers), people to talk to (contacts) and relationships/networks. • Without Vnese language skills, without contacts outside the village, and without wider networks of people to work with/help them outside their commune, EMs cannot take advantage of roads and infrastructure to increase mobility and subsequently improve livelihoods in the same way that Kinh can. • Analysis of VHLSS data has shown that, given the above disadvantages, rural roads have mainly benefited Kinh and Chinese –not other ethnic minority groups. (VASS 2006 p. 27-28)

30. Pillar Three: Access to Credit Ethnic minorities, at much higher rates than Kinh, report a lack of credit as their biggest production constraint.

31. Ethnicity and access to credit Ethnic minorities have access to smaller loans than Kinh Source: CSA survey 2006. (Chi-square = .002, R = .002)

32. Cash crops, ethnicity and access to credit In CSA data, the difference in loan size is most pronounced in Dak Lak, a region where both majority and minority groups are involved in coffee production, which requires significant capital. Significantly higher percentages of Kinh in Dak Lak get the larger loans needed for coffee farms. Source: CSA survey 2006 (Chi-square = .052, R = .011)

33. EM lack of formal credit has a high cost Comparing Ede and Kinh coffee farmers in Dak Lak The credit situation is particularly acute in the Central Highlands, which are more cash crop oriented than other minority regions. There, the lack of access to larger loans has driven many Ede to take their coffee production loans from the informal system (private traders and agricultural supply stores) which can provide much larger loans much faster and with much less paperwork (one day versus several months for the formal system). These loans are highly risky, however, as they involve very high rates of interest and short term loan periods which cannot usually be extended without potentially forfeiting the collateral put up for the loan (usually a land tenure certificate). When coffee prices dropped in the year 2000, many Ede with these short term private loans could not pay. In many cases the traders took the Ede land which had been put up as collateral, or Ede had to sell other lands to pay the debts, leading to some increasing landlessness among Ede. The Kinh, who also had to face the same drop in coffee prices, appear to have been more likely to have had their loans from the former bank sector, and provincial and central policies were adopted to let banks extend loan terms during the coffee crisis with the interest on these extended loans being subsidized by the government. Thus there was less land forfeiture among those with formal loans during this period.

34. EMs lack access to the banks that issue larger loans More EMs borrow from the Bank for Social Policies (VBSP), which has a smaller maximum loan size (5 million VND) than the Bank for Agriculture and Rural Development (VBARD) or other banks (which regularly lend 10 million VND or more).

35. Why can’t some EMs access the formal credit system? • Of EM households which had never obtained bank loans, half mentioned that the reason was they did not have collateral. EMs without land tenure certificates have trouble accessing loans (IEMA 2006). • VBSP Bank credit officers usually set a fixed number of eligible clients for each village, regardless of eligibility or need. This is a result of the limited funds of VBSP’s local branches, as they are completely dependent on allocations from central levels. • Targeting to the poor has been hampered by the inclusion of the non-poor in credit. VBSP is supposed to target credit to those on village lists of poor households, but an IEMA study found VBSP providing credit to the non-poor in all study villages. In this study of EM access to credit in the northern mountains, 31% of VBSP loans went to high income groups while only 11% went to the poorest (IEMA 2006).

36. Ethnicity and buying on credit in the informal sector Fewer ethnic minority households have access to buying on credit from the informal sector (private traders, moneylenders) for household purchases Source: CSA survey 2006. (chi-square = .000, R = .000)

37. Ethnicity affects interest rates in the informal sector Ethnic minorities may get less informal credit than Kinh, but they are far more likely to have to pay interest when they purchase on credit Source: CSA survey 2006 (Chi-square = .007, R = .007)

38. Purchasing on Credit The cycle of indebtedness facing many EMs Through PRA with Kinh moneylenders, we found that informal lending can lead to a cycle of indebtedness and dependency. For example, Kinh traders in one commune in Dak Lak lend money to Mnong prior to the corn planting season when cash is needed to buy inputs. The Kinh will lend cash but then convert the amount to be repaid to corn equivalence. For example, if the price of the previous year’s crop was VND700,000/ton, the Kinh traders lend Mnong HHs VND700,000 (US $42) then collect one ton of maize from them after the harvest. The traders never accept repayment in cash as they make their money on the rise in prices from season to season. For example, last year the price was 700,000/ton but in 2006 it was 1,400,000/ton (US $84). So with repayment in maize the traders get 100 percent interest in the course of 6 months, but if they worked with cash they could only get 30 – 35% interest (after 6 months). In 2005’s corn season, in one village alone, 56 households borrowed from a Mrs. S (a Kinh trader from another village) and repaid in 84 tons of maize (equivalent to VND109,200,000 – US $6,558). If half of this is interest profit, her yearly income from lending alone is over 50 million VND (US $3,279).

39. Implications of Pillar Three • The lack of access to affordable credit has serious implications for EMs ability to expand agricultural production, diversify livelihoods, and invest in new activities like trade or services. • Results of a household survey among EMs in 2005 showed that credit and savings schemes had positive impacts on income of ethnic minority households when they could access them. 78% of the surveyed households that borrowed money from VBSP and VBARD said the credit had had a positive impact on their household (IEMA 2006).

40. Pillar Four: Poorer, Less Productive Landholdings • According to recent VHLSS (2002/2004), overall size of landholdings are often higher for EMs than for the for Kinh. However, while these landholdings may be larger overall, they are often less productive than Kinh lands. In the CSA survey EMs reported smaller landholdings of the most profitable and productive land types than Kinh. • CSA data shows significant differences between ethnic minority groups and Kinh in the amount of wetland, industrial crop land, and upland areas cultivated.

41. Irrigated rice land holdings are small across the board Somewhat surprisingly, the majority of Kinh respondents reported that they were not cultivating irrigated rice land Source: CSA survey 2006.

42. Industrial crop area is smaller for EMs The majority of EMs respondents do not cultivate industrial crops, and those who do concentrate on smaller plots than Kinh respondents Source: CSA survey 2006 (Chi-sq.=.000, R=.000)

43. Upland swidden fields are very important to EMs Upland swidden fields are essential to EM production, with over half of HHs cultivating over a third of a hectare. Source: CSA survey 2006 (Chi-sq.=.000, R=.000)

44. Implications of Land Use Patterns for EM Policies • Simplistic assumptions that Kinh know wet rice agriculture and must have brought it with them when they migrated to the uplands, explaining their higher success rates in economic development in minority areas, are not borne out by the CSA data. We see that more than half of Kinh in minority areas don’t bother to cultivate wet rice. These Kinh focus on high value industrial and fruit trees, and trading and other services. • Yet it is common to see Vietnamese state policy interventions focused on wet rice development in minority areas, the assumption being that wet rice can be intensified and more productive than non-irrigated swidden fields. • CSA data indicates that investment in extension and infrastructure for wet rice may be misguided, given rice’s low productivity and low profits in many upland areas. Even most Kinh are not focusing on wet rice, so why should minorities?

45. Upland Lands: The need for agricultural services • Upland swidden fields remain extremely important for most HH - yetthe extension services focus mostly on lowland Kinh models of production (wet rice, fruit trees). • More than half the HH surveyed had never been to an extension training, and the large majority had never seen a production model or used new techniques from extension. • PRA with those who did go to trainings revealed that the content often concerned irrigated rice, hybrid corn, and fruit trees (only hybrid corn is regularly grown in upland fields). There is also a heavy emphasis on technical advice and subsidies regarding chemical fertilizers and pesticides -- which are not often used on upland fields. For example, in one Ede village where more than 90% of HHs grew coffee and wanted extension on improving coffee yields, the only extension they got was a ‘demonstration model’ of new hybrid wet rice seeds (which failed to grow in the local conditions). • More research and extension to address the needs of upland field farmers - like terracing, soil erosion protection, intercropping, SALT techniques, and new non-irrigated, drought-resistant crops - were requested by farmers in PRA meetings.

46. Have sedentarization programs had the intended impact? • Since 1968, the policy of the Vietnamese government has been to eliminate ‘shifting cultivation’ among ethnic minorities. This policy has been justified with concern over deforestation and the belief that upland swidden fields (fields that are used and fallowed in cycles) are less productive than permanent fields of wet rice and other crops. The sedentarization policies of the GOV have moved hundreds of thousands of EM households into state-built villages or into more lowland areas, and has invested millions of dollars into eliminating the use of swidden fields. • Yet in our CSA, the importance of swidden to EM livelihoods remains clear. 28% of HH using uplands reported their fields had grown compared with five years ago, while only 17% said it had decreased (the rest stayed the same). Pa Co and Van Kieu were most likely to have expanded swidden fields, due to lack of production from other lands and a reported preference for swidden produce. • However, there is a worrisome trend that 25% of HHs using swidden fields reported shorter fallow times, while 8% reported longer, and the rest said there was no change. • These trends confirm the 2005 IEMA study which found that sedentarization programs to halt the use of swidden and upland fields are ineffective and unrealistic, given these fields’ importance to household livelihoods.

47. Forestry Policies Also Not Effective in Improving EM Livelihoods • Since 1993, the GOV has had policies in place to transfer land use rights for forestry lands to individual households and away from the state, which previously managed forests in State Forest Enterprises (para-statal logging companies). • This process of Forest Land Allocation (FLA) can involve essentially permanent and privatized land use rights (Red Books) as well as less secure or long term contracts to manage forestry land. Some FLA comes with payments to the HH to protect the land (usually around 50,000 VND/ha/yr - around US$3) while other forms of FLA involve no financial payments or investments. • Overall, the goals of FLA were to increase forest cover in the uplands and to assist upland HHs in finding new sources of income from forestry activities (timber, fuelwood, non-timber forest products) • However, the CSA confirms other recent studies (such as Dinh Duc Thuan 2005) that indicate FLA has had almost no livelihood impact for EMs.

48. Forestry land and ethnicity While 26.6% of all respondents received FLA, there are significant differences between allocations to different ethnic groups Source: CSA survey 2006. (chi-square = .000, R = .000)

49. Forestry Land and Region • FLA is very skewed regionally. Less than 1% of Dak Lak HHs had FLA, while 67% of HHs in Ha Giang did. • Furthermore, less than half of all recipients of FLA in the survey got a Red Book that establishes the most secure tenure claims. • Evidence from many sources (VHLSS, TECOS, our CSA) indicates that the government (primarily through the State Forest Enterprises) continues to control much of the forest estate in the Central Highlands. More than 45% of Dak Lak’s total land area is still controlled by SFEs and state farms (GSO 2003). • Less than 2% of the total forest cover of the four provinces of the Central Highlands has been allocated to individual households to use, while the figure is 46% in the Northwest (TECOS 2006).

50. Forestry land incomes are small and impact few EM HHs Only 9.4% of those with FLA reported that it contributed to the HHs overall household income and livelihood. Sale of fuelwood accounted for most of this income from FLA Source: CSA survey 2006. (Differences between groups are not significant here: all groups reported low earnings.)