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UNCLAS SECTION 01 OF 05 HANOI 001114 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV 
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO 
STATE PASS USAID FOR CHAPLIN/ANE 
BANGKOK FOR USAID 
 
E.O. 12958: N/A 
TAGS: ECON EAID VM ETMIN HUMANR
SUBJECT:  CENTRAL HIGHLAND ETHNIC MINORITIES LEFT BEHIND IN 
VIETNAM DEVELOPMENT IN SPITE OF GOVERNMENT INTERVENTIONS 
 
REF: A) 04 HCMC 001491; B) 04 HCMC 000210; C) 04 HCMC 001493; 
D) 04 HCMC 001581; E) Hanoi 
 
This cable contains sensitive information.  Please do not post 
on the Internet. 
 
¶1.   (SBU) Summary:  Vietnam has experienced rapid economic 
development since beginning its Doi Moi (Renovation) reforms in 
1986 and achieved rapid poverty reduction throughout the 1990s. 
But between 1998 and 2002, while other regions continued to 
show reductions in poverty, the Central Highlands showed 
virtually no progress.  Conditions among the poorest in the 
region, mainly ethnic minorities, worsened. The Government of 
Vietnam (GVN) has demonstrated a sincere commitment to 
alleviate poverty in general and to develop the Central 
Highlands in particular.  However, an emphasis on 
infrastructure over capacity building, a solidly top down 
approach, problems with land allocation and communication 
barriers caused by language and ethnicity have all impeded 
socioeconomic development in the region.  The GVN continues to 
adhere staunchly to the goal of expanding industrial 
agriculture, which it sees as the way to stimulate the region's 
growth potential.  Land and forest allocation, seen by the 
international community and by Vietnamese poverty specialists 
as the pivotal challenge to the Highlands' socioeconomic 
development, is not an area the GVN has adequately dealt with, 
this reflects the GVN's preference to focus on policy intention 
rather than on execution.  End Summary. 
 
¶2.   (SBU) A separate report, the third in this series, will 
explore the outlook of international donors, agencies and NGOs, 
as a whole and separately, toward assistance in the Central 
Highlands.  The report will also highlight some particular 
areas of intervention that address some of the gaps identified 
in this report and suggest some possible entry points for U.S. 
assistance in the region. 
 
A Picture of Poverty 
-------------------- 
 
¶3.   (SBU) With the highest incidence of poverty of any region 
in the country, the Central Highlands provinces have shown 
almost no progress in poverty reduction over the last four 
years and also have developed a growing income gap between 
ethnic minority and Kinh populations.  According to the 
internationally accepted methodology of the General Statistics 
Office and the World Bank, the incidence of poverty in the 
Highlands is 52 percent compared to 29 percent for the country 
as a whole.  Poverty is defined as monthly per capita 
expenditure for food and necessities of less than about USD 
11.50 for 2004. (Note: From 1998 to 2002, the Central 
Highlands' share of poverty in Vietnam doubled from five to ten 
percent. Across Vietnam, ethnic minorities make up 14 percent 
of the population but 29 percent of the poor.  Many ethnic 
minority groups in the Central Highlands have poverty rates of 
80 to 90 percent. 
 
Dominant Development Priorities for the Central Highlands 
--------------------------------------------- ------------ 
 
¶4.   (SBU) Three key themes have dominated the Government's 
socioeconomic development approach for the Central Highlands: 
resettlement, including the sedentarization of ethnic 
minorities and planned in-migration to develop New Economic 
Zones (NEZ); land and forest management and allocation; and 
hunger eradication and poverty reduction programs. 
Resettlement (See ref E) is closely linked to the development 
of industrial agriculture, as NEZs were largely organized from 
lands the GVN viewed as unused or under utilized into large 
state agricultural or forest enterprises.  (Note:  Industrial 
agriculture refers to modern farming methods that depend on 
synthetic fertilizers, seed technology, large amounts of 
irrigation, and modern processing and transportation systems. 
Ideally implemented on a large scale, the principle is to 
achieve effective productivity through the use of technology. 
End Note.)  Since 1993, as part of forest protection policy, 
the GVN has attempted to transfer forest land to households to 
manage.  The GVN also began to reallocate arable land to poor 
and ethnic minority households as a part of its poverty 
alleviation strategy.  According to poverty experts at the 
World Bank and Asian Development Bank, resolving disputes over 
land use determination, borders and land allocation is the most 
significant challenge to resolving ethnic minority tensions and 
barriers to socioeconomic development. 
 
Major Government Interventions 
------------------------------ 
 
¶5.   (SBU) With the growing attention to poverty reduction in 
the 1990s, the GVN created a series of National Targeted 
Programs (NTP) which were intended to reach the poor in 
different ways.  The following section outlines the chief GVN 
socioeconomic development interventions that affect the Central 
Highlands. 
 
--Hunger Eradication and Poverty Reduction Program (HEPR). 
Begun in 1998, this program coordinates and integrates nine 
sectoral anti-poverty projects directed at poor households, 
including targeted support to ethnic minorities.  This program 
includes targets in infrastructure, special subsidies, 
sedentarization and resettlement, agricultural extension, 
credit, health and education, and job creation.  Executed by 
the Ministry of Labor, Invalids and Social Affairs (MOLISA); 
HEPR expenditure in 2003 was estimated at USD 60 million.  The 
GVN is currently drafting a new HEPR plan through 2010. 
 
--Support for the Most Difficult and Remote Communes (Program 
135).  Launched in 1998, Program 135 focuses on improving 
village and communal infrastructure and was intended to work in 
conjunction with projects in other sectors.  Executed by the 
State Committee for Ethnic Minorities (CEM), its expenditure in 
2003 was estimated at USD 95 million.  Currently, about 10 
percent of total investments in HEPR and Program 135 are 
directed to the five provinces of the Central Highlands. 
 
--Central Highlands Program.  In 2001, Decision 168 called for 
a long-term regional policy for socioeconomic development of 
the Central Highlands and set specific targets for economic 
development, poverty reduction, infrastructure and social 
services.  It also addressed the need to open markets and 
called for teachers and health workers to learn local 
languages.  Total expenditure for Program 168 in 2003 was 
estimated to be USD 18.2 million. 
 
--Health and Education.  In 2002, the Prime Minister's Decision 
139 established province-level health care funds for the poor 
to provide health cards for ethnic minority and poor 
individuals, which entitle them to free medical treatment.  The 
GVN has also waived school tuition and construction fees for 
disadvantaged children and has subsidized boarding schools for 
ethnic minorities in remote locations. 
 
--Land for Ethnic Minorities.  In 2001, Decision 132 created 
the Land Allocation Program for the Central Highlands, which 
was intended to provide poor indigenous communities with arable 
land by reclaiming new land and buying existing land from 
larger landholders.  Because of difficulties in reclaiming land 
and land disputes, the GVN readjusted land reallocation 
regulations in Decision 134 in July 2004.  Decision 134 sets a 
policy to give production land, residential land, housing and 
clean water for all poor ethnic minority households, with a 
deadline of 2006.  While reducing the amount of land to be 
allocated to each household, this decision also extended these 
benefits to poor ethnic minorities in regions other than the 
Central Highlands and attempted to streamline procedures for 
provincial authorities who are responsible for managing 
allocation. 
 
--Reforestation.  Two Prime Ministerial Decisions, 327 (in 
1993) for the Re-Greening of Barren Hills, and 661 (in 1998) 
beginning the "5 Million Hectare Reforestation Program" (5MHRP) 
have guided efforts to rehabilitate degraded forest lands. 
Project 327 provided direct payment to households in exchange 
for forest protection and for state forest enterprises to 
establish forest plantations.  Because of weaknesses in Program 
327, the 5MHRP was created in 1998 to run until 2010 to 
increase nation-wide forest coverage to up to 43 percent of the 
total land cover, provide job opportunities to the rural poor 
and ethnic minorities, and increase the supply of forest 
products. 
 
--Grassroots Democracy.  Decree 79 of July 2003 clarified and 
set up a legal framework for increasing community participation 
at the local level, as described in Decree 29 of May 1998.  The 
principles of grassroots democracy at the commune level 
established through these decrees are: "People know, people 
discuss, people implement, people monitor" the activities of 
the local government.  According to the decree, the people 
should be fully informed of land use planning, socioeconomic 
development plans, budgets and expenditures.  They should 
discuss things such as the budget, expenditures and 
construction of infrastructure, and they should participate 
directly or through elected representatives or mass 
organizations. 
 
Gaps in Translating Policy into Practice 
---------------------------------------- 
 
¶6.   (SBU) Most poverty specialists and donors agree that while 
the GVN has made progress in overall poverty reduction, results 
have been meager for the level of investments poured into the 
Central Highlands.  Observers attribute this gap between policy 
and practice to a number of factors in two broad categories, 
the first questioning the appropriateness of the measures or 
priorities pursued in the Central Highlands and the second 
identifying weaknesses in policy execution and implementation. 
(Ref A describes examples of GVN initiatives at work in Dak Lak 
Province.) 
 
Construction over Human Capacity Building 
----------------------------------------- 
 
¶7.   (SBU) Three leading strategies in boosting socioeconomic 
development have been industrial agricultural development, 
rural infrastructure development and social services subsidies. 
However, within these broad areas, national priorities heavily 
favor building rural infrastructure over human capacity 
building.  Thus, money has gone to material improvements such 
as schools and commune health centers, but has not translated 
into improved service delivery in health and education.  At the 
same time, resources go to build irrigation systems or create 
seed subsidies rather than to train farmers.  Investment in 
infrastructure has meant improved facilities in the region, but 
the benefits have not effectively reached the rural poor. 
Instead, urban based Kinh and government staff tend to benefit 
most from projects that largely favor commune centers and those 
who are better off. 
 
Industrial Agriculture Aggravates Conditions 
--------------------------------------------- 
 
¶8.   (SBU) The economic development priority of industrial 
agriculture has emphasized growth targets over sustainable 
development.  The aggressive push to develop coffee plantations 
in the 1980s and 1990s brought in more Kinh migrants and 
exacerbated historical ethnic tensions, increased the 
vulnerability of the poor who invested in coffee, and increased 
the value of land which added to competition for land use 
rights (LURs).  New immigrants, both Kinh and ethnic minorities 
from other regions, have come in and accumulated cultivated 
land, in part by purchasing land from local ethnic minorities. 
Over time, however, local minorities, who lack the skills to 
compete with the new immigrants, have become increasingly 
marginalized. 
 
Addressing Ethnic Dislocation 
----------------------------- 
 
¶9.   (SBU) Successive regimes and periods in Vietnam have in 
turn promoted self-awareness, autonomy and division between 
Kinh and ethnic minorities in the Central Highlands.  There is 
wide agreement in the international community and in the 
Vietnamese research community that in this context, the 
confounding issues of ethnicity, culture and tradition can 
cause social and economic problems to become political 
conflicts.  Development interventions that do not recognize 
ethnic minority traditions or belief systems, even while they 
are trying to change them, risk further isolating ethnic 
minorities rather than helping them find alternative ways to 
adapt to the demands of a market society. 
 
¶10.  (SBU) In discussions with GVN and other Vietnamese 
counterparts, the most common perception of ethnic minorities 
in the Central Highlands is that they cling to "backward" 
farming practices that lead to food poverty and environmental 
degradation and that they lack the work ethic and motivation to 
take advantage of rich natural resources and government 
subsidies. The general solution according to this view is that 
they must be taught the correct Kinh lifestyle.  Another view 
is that the historical changes in social structure and land 
ownership have broken communal safety nets and forced ethnic 
minorities to struggle at a subsistence level, while their 
social and linguistic dislocation has made it more difficult 
for them to access benefits of the National Targeted Programs. 
(Ref B details ethnic minority disadvantages in land and 
employment opportunities in a village in Lam Dong Province.) 
Shared by most of the academic and NGO community, this view has 
yet to influence GVN policy.  A third outlook suggested by 
poverty specialists is that many local government officials are 
either carpetbaggers or corrupt, and are not interested in 
relinquishing their control over state agricultural and 
forestry enterprises or in alleviating ethnic minority 
problems. 
 
Top Down and Uncoordinated Planning and Implementation 
--------------------------------------------- --------- 
 
¶11.  (SBU) Many in the international community argue that the 
local authorities have learned to rely heavily on both central 
policy guidance and budget support, perpetuating a welfare- 
based rather than a rights-based approach to socioeconomic 
development.  This approach has resulted in little local 
investment in goals or activities and a high degree of 
dependency on external resources.  There is also shared 
perception in the international community, particularly among 
NGO personnel, that the top down delivery has focused on 
meeting target numbers rather than addressing local needs.  As 
a result, assistance has been thinly spread, where some get 
water, some get health care, some get education and some get 
agricultural extension, without any community receiving a 
coordinated approach needed to help lift it out of poverty. 
 
¶12.  (SBU) Asian Development Bank (ADB) and Action Aid poverty 
specialists who helped conduct Participatory Poverty 
Assessments (PPA) in the Central Highlands in 2003 reported 
that with the top down approach, there is a striking gap in 
knowledge at the center of actual implementation at the local 
level.  GVN ministries measure the success of Program 139 by 
counting the number of health cards issued.  But PPA findings 
show that many who have the health care are still forced to 
pay, either because the local authorities want to mobilize 
local contributions, or because of simple corruption.  More 
problematic is the failure of top down interventions to ensure 
proper service delivery at the grassroots level.  As a result, 
under the Reallocation of Land Decree, land repurchase was set 
at such a low price that no one was willing to sell to the 
Government, severely limiting land resources for the program. 
Provinces and districts also assigned teachers to ethnic 
minority villages who spoke a local ethnic minority language, 
but not the same one spoken in the village.  Although many 
students are exempted from tuition fees, the quality and 
relevance of their education has not improved. 
 
Language and Communication Barriers 
----------------------------------- 
 
¶13.  (SBU) A very serious shortcoming of development 
interventions in the Central Highlands is that no program or 
project requires the use of local languages.  Official GVN 
policy asserts that all nationalities in Vietnam should learn 
and use the national language.  While this is a barrier that 
all ethnic minorities face, the Highlands' multi-ethnic 
concentration and isolated residential patterns deepen existing 
language barriers.  Few of our GVN interlocutors were willing 
to stray from the party line on the use of Kinh Vietnamese, 
even to accelerate preschool education or agricultural 
extension training.  The refusal by the GVN to deal with the 
language and communication barrier directly will continue to 
limit the effectiveness of any behavioral change communication 
or development activities, and will further intensify the 
region's social and economic exclusion. 
 
Consequences of Limiting Foreign Access and Expertise 
--------------------------------------------- -------- 
 
¶14.  (SBU) Donors, UN agencies and NGOs have repeatedly 
encountered sensitivity surrounding access to the Central 
Highlands mainly by having key staff, including evaluation 
consultants, be denied access.  Another access issue affecting 
capacity is the limited presence of international NGOs. The 
lack of these NGOs providing grassroots development in the 
Highlands has accentuated the top down approach and its 
associated difficulties.  More broadly, the highly proscribed 
access to the region has helped maintain the region's and, in 
particular, the rural poor's isolation and lack of exchange 
with outside people and ideas. 
 
¶15.  (SBU) Donors and NGOs have also noted contrasting signals 
from the GVN on openness to foreign assistance in the region, 
with a gap between the central and provincial positions.  Both 
the Canadians and the European Union pointed to Deputy Prime 
Minister Vu Khoan's frank remarks on the Central Highlands at 
the June 2004 mid-year Consultative Group Meeting, 
acknowledging the mistakes of the Government in resettling Kinh 
people into the region to develop the coffee industry, and 
welcoming both visitors to the region and foreign assistance. 
Provincial authorities are seen to be far more conservative and 
are often the greatest obstacle in planning international 
visits and assistance.  The Japan International Cooperation 
Agency (JICA) reported that Kon Tum officials initially refused 
their forest protection assistance and only came around after 
strong central level support for the project.  NGO 
representatives reported having to rewrite project proposals to 
assure the provincial GVN that foreign staff would not work 
directly in the provinces. Dak Lak's provincial leadership told 
us point blank that it was not interested in USG assistance, 
although local leaders in Gia Lai and Kontum provinces told us 
that they welcomed USG development aid (refs C and D). 
 
MARINE