Minutes of the ISG Annual Plenary Meeting 2004 - 9 November 2004
"Growth for Poverty Reduction in Agriculture and Rural Areas"
(For fulltext in Vietnamese, click here)

Objectives of the Meeting:

• To share information on efforts made to the development of the agriculture and rural sector;
• To discuss how to better mobilise business sector and public sector for growth and poverty reduction in rural areas;
• To discuss how to better coordinate among active partners in agricultural and rural development sector.
  

Composition:

• Ministries: MARD and its affiliates, MOFA, MPI, GSO, MOF, SBV, MOT, MOHA, MONRE, MOLISA, MOFI.
• Provinces (PPC/DARD): representatives of regions/groups of poverty rating/levels of agriculture commercialisation, ISG policy dialogue platforms
• International Donors and Organisations/NGOs
• Domestic NGOs
• Business sector (SOEs, foreign invested and domestic companies, cooperatives, VBARD, Bank for the Poor)
• International and national researchers, consultants, experts working in the sector.
  

Meeting programme, documents and references.

A. OPENNING SESSION

Introduction of the Plenary Meeting and participants

Dr. Le Van Minh, MARD ICD Director General, Vice Chairman of ISG Steering Board, introduced the ISG Plenary Meeting 2004 entitled "Growth for Poverty Reduction in Agriculture and Rural Areas".

Participating in the plenary meeting were more than 200 representatives from international donors, NGOs, national relevant agencies, non-state organizations, and media agencies.
A tentative programme of the meeting was introduced and then approved by the Chairmen and the participants.

Opening remarks by MARD Acting Minister:

Dr. Cao Duc Phat welcomed all the delegates.

Dr. Cao Duc Phat highlighted that Vietnam's agriculture and rural development sector is phasing in a new round of development. In a new context with different conditions, both international and domestic, it is required greater efforts, new methodology approaches and tools to success new achievements. The theme of the Meeting this year "Growth for Poverty Reduction in Agriculture and Rural" which does not only cover almost activities of the sector but relates to efforts of many other sectors and various international and national partners.

The MARD Acting Minister also emphasized the role of good mobilization and coordination of resources, which are the key to growth.

Regarding the preparation of the 5-year plan 2006-2010, the result-based and CPRGS planning method shall be considered for application. Sector's policy development to aim at achieving sector-wide and national orientations, priorities, and strategies should be consultation thoroughly with related partners and its beneficiaries.

In the resources allocation to serve the growth and poverty alleviation, new tools such as public investment program, the medium term expenditure framework and the budgets shall be mobilized and incorporated with renovated governance, improvement of public services, renovation and equitization of the state owned corporate organization are contributing to the attraction of resources from the private sector to put into the growth and poverty alleviation.

In the renovation and development process, supports from international community are crucial. It is supplement the shortage of financial sources but providing knowledge, experience, expertise, technology and more importantly, opportunities for cooperation and collaboration.

The Minister reaffirmed the role of ISG process as a policy and experience dialogue forum, which provides opportunity to discuss, reach agreement and take action that, all together, will bring mutual benefit to the poor and rural.

Opening remarks by Mr. Frans Makken:

Mr. Frans Makken highlighted that ISG is an excellent and a very good dialogue and coordination platform for the Government and donor community. Much progress by ISG has been witnessed.
He reminded the participants on the ISG Work Plan 2004-2006, agreed by the ISG Steering Board and funded by the four core donors, including AusAID, Danida, the Netherlands, and Sida. The work plan identifies 7 key areas of the ISG process in the period 2004-2006:

• Facilitation of policy dialogue within and between MARD and donors.
• Coordination in formulation of foreign-funded programs/projects.
• Development and coordination of thematic studies.
• Support to ICD.
• Information collation and dissemination.
• Capacity building and management processes (appropriate training and other capacity building activities).
• Monitoring and evaluation (in ISG process).

He appreciated the efforts by ISG for an improved information system: ISG Newsletter, ISG Monthly Briefings, ISG website, ODA database, and other publications. This system serves very well the information sharing among the development community, including international donors, NGOs, provinces, and various Vietnamese agencies.

He emphasised that the theme "Growth for Poverty Reduction in Agriculture and Rural Areas" of the ISG Plenary Meeting is very appropriate in the context of MARD's preparation for its 5-year plan 2006-2010, and the inputs from the meeting will be useful for the coming CG meeting in early December 2004. He recognised MARD's challenge in merging the CPRGS in the 5-year plan. Experiences in the forestry sector, water sector, and other sub-sectors in the form of partnerships, programs and cooperation activities of MARD would contribute in a meaningful way to the plan.

B. MORNING SESSION:
VIETNAM'S AGRICULTURE AND RURAL DEVELOPMENT: VISION TO 2010

Report of Ministry of Agriculture and Rural Development (MARD):

Dr. Cao Duc Phat presented the report "Growth for Poverty Reduction in Agriculture and Rural Areas: Some identified issues for the Agriculture and Rural Development in Vietnam".
In the report, the Minister focused on five key issues:

1. Major issues for agriculture and rural development sector
2. The tools for resources allocation - public expenditure with the medium framework
3. Renovation in governance and improvement of public services
4. Renovation and equitization of state owned enterprises
5. Formulation of the 5 year plan 2006 - 2010

(For more information, please read the report delivered to the participants at the Meeting and/or click here for Meeting programme, documents and references).

Questions and answers (All the participants were invited to make comments to the report of MARD)

Dr. Paula J. Williams, CTA of FSSP: FSSP is a partnership between MARD and 24 international donors, NGOs, and international research originations. FSSP is supporting MARD preparing a new strategy on the forestry sector, which will be submitted to the Government next June 2005. Regarding MARD's preparation of the 5-year plan, how MARD would link/relate the strategy and the plan?

Dr. Cao Duc Phat expressed his sincere thanks to the donor community for their support to MARD to develop new Forestry Development Strategy. The Ministry also has the concerns as the one raised by Dr. Paula William. The Ministry looks forward to receiving more comments and recommendations from the consultants working in the sector. The 2006-2010 plan is under preparation with consideration of new ideas from sub-sector strategies. If the strategies are finalised, it will be streamlining into the five-year plan of the Ministry.

Dr. Le Van Minh informed the Meeting about the "Renovation of planning process in agriculture and rural development sector" workshop which chaired by Dr. Phat and Director of Planning Department. The workshop is a preparatory step for 2006-2010 plan of the Ministry. At the workshop, comments and recommendations have been made to issues of the sub-sector strategies in MARD. In the time to come, the Ministry would like to receive more comments and recommendations from related partners through Thematic Ad-hoc Groups (TAGs) in the ISG process. Comments and recommendations will be synthesized and submitted to the Minister for consideration.

Presentation by the Work Bank Hanoi

Mr. Stephen Mink, WB Lead Economist: made a presentation on "A proposed framework for achieving growth and poverty reduction in the 5-year plan 2006 - 2010 of the agriculture and rural development sector".

Main issues include (i) Overview: Achievements, poverty, agricultural growth dynamics; (ii) 3 Pillars: markets, natural resources, inclusion of the poor; (iii) 2 Alignments: public expenditure; institutions; and (iv) concluding observations.

Concluding observations were presented:

• Critical role of result-oriented planning, M&E and strengthened use of evidence-based policy analysis.
• Short-term dialogues in context of MARD's preparation of five year plan 2006-10, PRSC IV and rural medium-term expenditure pilot (MTEF).
• Aligning and coordinating donor supports.
  

Some implications for VN/WB Program:

• Realigning towards Pillar I
• Linking Sector and Policy Works with Investment Lending and Policy/Institutional Reform
• Be more flexible in project design, shorter & simpler projects, with improved implementation readiness
• Balance between large-scale and small-scale, commune based projects, hard-and software

(Full-text of the presentation was already sent to the participants and available on the ISG website)

Questions for Dr. Stephen Mink:

1. Dr. Le Van Minh: What should be done by the agriculture and rural development sector to stimulate FDI into the sector? Regarding to WTO accession, how should the sector deal with issues such as taxation (levy rate of agro-products, should the Government continue to reduce the rate?)

2. Mr. Gia, Vice-Chairman of Vietnam Tea Association: The Association is facing difficulties in attracting FDI sources to improve the seedlings, processing technologies, which then contribute to the improvement of product quality and support to poverty reduction of the poor in mountainous areas.

3. Mrs Bui Ngoc Linh, Sida: ODA funding approaches of the World Bank, Why the World Bank does not changed from project approach into sector-wide approach?

4. Ms. Carole LY, Technical Adviser, MISPA-ICARD: the links between (growth, employment, poverty…) in population living in rural areas? Role of the state in central and local levels? Issues of off-farm employment?

Answers by Dr. Stephen Mink:

1. Regarding FDI mobilization: more services should be developed to serve production; constraints in land market for investors should be removed; credit market should be equal, should not in favour of SOEs only. Information flows are also very important factors.

2. The other issues are taxation on agriculture: Trade protection in agriculture is really low compared to other sectors (industry for example). This may prevent foreign investors who still seek benefits of the protection from investing in the sector. However, it is not recommended to use trade barriers to make investment into agriculture sector more attractive, because it prevents resources allocation.

3. Regarding the comments from the tea association, there have been some work done on value chains in the tea sector with the making the markets work for the poor with the ADB.

4. For Sida's question: regarding programme/project design, WB is trying to move in the mentioned direction (sector-wide approach), particularly in two areas: one in the forest sector support programme (FSSP); and the other regarding target national programmes; WB has made some efforts in: capacity building at some national levels, planning and managing budgets; running procurement system, etc.

5. Regarding MISPA's questions: We should look up to the sector view as a whole picture: This situation (the poor does not have benefit from growth) is not true in all places. Central level should facilitate and working through partnership with locals.

Morning Open Discussion

Suggested topics for discussion:
1. Trade-off between resources concentration for growth and for poverty reduction
2. Strengthen coordination of resources utilisation:
- Private investment and public expenditure
- Domestic and external resource
- Participatory approaches and mobilization of resources from community (agriculture, irrigation, forestry, rural water supply and sanitation…)

Mr. Andrew Rowell, Counsellor Development Cooperation, Australian Embassy: how MARD is approaching preparation for the 5-year plan?

Dr. Cao Duc Phat: The Ministry issued a guidance document for planning. The document required the local authorities pay special attention to develop plan with comprehensive objectives. In agriculture, attention should be paid to improvement of quality, efficiency and competitiveness. In forestry, the objective should focus on generating incomes for farmers. Attentions should also be paid to development of off-farms industries, social and equality development issues between regions.

In terms of methodology, continue to renovate management mechanism and policy, which include the implementation of Vietnam's commitments with ASEAN and WTO, in order to stimulate the integration process of Vietnam. Therefore, the main orientations are to be effective and to generate incomes for farmers. Besides, science and technology development as well as human resources are crucial.

A part from that, a number of important issues should be focused on such as further decentralisation, enabling investment conditions, socialisation of public services and renovation of governance system.

Difficulties of MARD: vertical coordination between central and local levels; human resources and capacity; resources forecast for next five years, including state budget and international aids for the sector. The issue should be clarified.

Mr. Cuong, Deputy Director of Forestry Protection Department: forest plays a very important role to the environment. Investments for forestry and reforestation are insufficient. The facts show that the more forest (including protection forest and special forest) the farmers have, the poorer they are while many other sectors benefit from the forest. Therefore, other sectors (e.g. hydro power) should make contributions to the farmers. We would like to have further collaboration with other sectors to deal with this issue.

Mr. Thong, IUCN: MARD is preparing 2006-2010 plan, issues such as sustainable management and development of natural resources, bio-diversity and conservation should be taken into consideration.

Mr. Huong, Deputy Director of Construction Management Department, MARD: ADB and WB funded projects made great contributions to the sector's development. In the WB's presentation, viewpoint of investment to the hydraulic works are bigger than to the other but less effective is not clear. This viewpoint should be further studied. Project cycle of a hydraulic works investment project is long, normally 5 to 10 years. Investments for hydraulic works will need more capital to supply water for production, draught mitigation, forest fire protection which then contribute to poverty reduction.

Dr. Le Van Minh: Investment for hydraulic works is direct investment to the people's life, therefore, investment to these hydraulic works should be considered.

Mr. Tung, Policy Adviser, CARE international: Investment to hydraulic works are really crucial. However, it should be more comprehensive in terms of more investment should be paid to improvement of operation and maintenance of the existing system.

Mr. Tu, Director of Legislation Department: regarding to the development of legislation system, in the next five years, an agriculture legislation system should be built, which include two major laws on agriculture and dyke management and flood control. Besides, ordinances on salt, animal husbandry, and fertilisers should also be developed. Improvement of legislation system, law dissemination, education, information and implementation monitoring should be streamlining into the five years plan of MARD.

Dr. Le Van Minh: The Minister requested ICD to cooperate with Department of Legislation to develop a plan to improve legislation system of the sector for the next five year. The plan will be discussed in ISG forum to get comments and recommendations when it is ready.

Morning Session wrap-up:

Mr. Frans Makken wrapped up the meeting with some comments as follows:

• Much information was exchanged in the morning session. Challenges facing the sector were also expressed in MARD report.
• There remain some problems with funds, and lack of long-term commitments, particularly from donor's side.
• We are facing natural disasters, and the current drought is an example.
• A very interesting analysis was made by Mr. Stephen Mink, from which new things can be learnt.
• The agriculture is a vulnerable sector, which is increasing the challenges and duty of MARD in dealing with issues/problems in a very responsible and sensible way.
• I am happy with Dr. Phat's comments on the 5-year plan that the role of "quantitative goals" must change; these goals should be formulated much more in terms of "impact on income for the poor".
• There remain some constraints in attracting investment to the sector, which is increasingly becoming a low value sector.
• Several good solutions were presented by MARD and WB, for example, equitization of State-owned enterprises, and increase of market orientation, better financial information system, better use of targeted programmes, better monitoring and evaluation, etc. The private sector plays a very growing role in the agriculture sector. It absorbs growing labor forces.
• The importance of forestry sector, irrigation and water supply was mentioned in discussions and presentations.
• It is very important to deal in an effective and responsible way with the second 5-year plan. Approaches for the plan were discussed and commented by many participants. Good orientation by MARD was disseminated to the provinces in the preparation for the plan.

At 12:45: the participants joined a luncheon hosted by MARD Acting Minister.
Participants resumed at 13:30 for the afternoon session to be chaired by Mr. Frans Makken.

C. AFTERNOON SESSION:
ROLE OF PUBLIC SECTOR AND PRIVATE SECTOR FOR GROWTH AND POVERTY REDUCTION

Under this topic, some presentations and briefings were made:

1. Presentation: FDI Case of Tate&Lyle, Nghe An Province, By Mr. Peter Nielsen, Director of Tate&Lyle Co. Ltd.
2. Briefing: "Cluster Development for sustainable growth and poverty reduction in rural areas - Manufacturing Industries for Agricultural Tools and Machinery and Food Processing Equipment", by Mr. Nobuya Haraguchi, UNIDO Vietnam.
3. Briefing: "Non-state investment, trading and services providing in agriculture and rural sector in An Giang", by Mr. Doan Ngoc Pha, Deputy Director, An Giang's Provincial DARD.
4. Presentation: "Contribution of households and cooperatives to the agriculture and rural development sector of Vietnam" by Mrs. Chu Thi Hao, Deputy Director General, MARD Department of Cooperatives and Rural Development.
5. Briefing: "Collaboration Groups in An Giang Province" by Mr. Nguyen Thanh Tung, Policy Advisor, Care International.

(For details, see the presentation which was sent to the participants at the meeting and now available on the ISG website)

Questions and answers

Ms. Carole LY: made a question to CARE's presentation that who should support the Collaboration Groups?

Mr. Tung: At the provincial level, social organisations could provide assistance to the establishment of the Group are Farmers' Union, Women's Union. These organisations could provide guidance on the process and procedures. Services provided by Collaboration Group should be supported to disseminate to the business sector, for example, the Trade and Development Promotion Centre in An Giang province. Department of Agriculture and Rural Development (DARD) is an important agency in terms of providing science and technical consultations to the Groups.

Mr. Pha: Regarding to the establishment of Collaboration Groups, Commune People's Committee (CPC) will issue establishment decision based upon the proposal of households. CPC also decided the mandate of the collaboration groups. The collaboration groups will represent its members to do the business, trading, applying for loans, signing contract with partners. Then, each household will do the transactions by themselves. In fact, the collaboration groups itself have no legal status.

Presentation by ADB

Mr. Bradford Philips, Country Director, ADB, introduced ADB program AST and about the formulation of the Agriculture Commercialisation and Poverty Reduction project, and Mr. Alan Johnson, Consultant, made the presentation in details.

(For details, see the presentation which was sent to the participants at the meeting and now available on the ISG website, or www.markets4poor.org )

Afternoon Open Discussion

Proposed topic and question for discussion:
How public sector and private sector can be mobilised for growth and poverty reduction? (From perspectives of Government Agencies; Donors and International Organisations; Business sector; Consultants and Experts…)

Mr. Rob McGregor, First Secretary, and Australian Embassy: the presentations provided an understanding that private sector investment is low in the agriculture and rural development sector of Vietnam. What are the factors that contribute to the low level of the private sector investment in the agriculture sector? What are Government strategies on this issue?

Dr. Cao Duc Phat: MARD consider small and medium enterprises (private sector) are an important driving force for the development of agriculture and rural areas. The force controls a large portion of the markets and is able to absorb advanced technology. Since these enterprises developed, it could help farmers produce raw materials, participate in the processing and sell the final products. The Ministry intends to create favourable conditions and facilitate the development of small and medium enterprises in agriculture and rural areas.

The small and medium enterprises can be varied in different forms such as private farms, private enterprises, and joint-stock enterprises. The issuance of the Business Law creates an enable environment for the enterprises in the urban areas, however, it's only worked in the urban areas. Therefore, MARD assigned appropriate agencies to further study to re-evaluate the situation and to have recommendations.

Currently, MARD is preparing a Decree to submit to the Government for issuance to stimulate the development of off-farm industries and services in rural areas, mainly via small and medium enterprises.

In the aspect of FDI, MARD plans to have discussions with foreign investors to evaluate the strength and weakness of the sector and to find out the obstacles and barriers that prevent the investors from investing to the agriculture and rural areas.

Mr. Laurent Msellati, Rural Sector Coordinator, WB: Fostering market orientation will be centre of WB future programmes in Vietnam. It is also the Pillar 1 of the new strategy as mentioned in the WB presentation, and also at the heart of the ISG Plenary meeting today. How the Government intend to establish an enabling environment for developing new forms of organizations in rural areas? (Cooperatives or collaboration groups are only examples of this form of organization in the rural areas).

Dr. Cao Duc Phat:

MARD is committed to the reform toward market oriented that it has followed for the last 18 years. Experiences gained from the last 18 years prove its effective. In fact, the market is a basic driving force to stimulate the success of rural economy in the past years. It is not only limited with the domestic market but integration with the world market.

Therefore, in the time to come, MARD will continue to renovate management mechanism and policy to enable markets development.

Regarding to the establishment of collaboration groups, MARD intends to encourage all the forms of business which relevant to Vietnamese laws. Currently, the following forms of business are accepted by the legal system: Limited company, joint-stock company, and joint venture, one member limited. MARD intends to diversify the development of cooperative economy both in terms of forms and size.

MARD will have opened and enable policies to create a level playing field for the establishment and development of all types of business.

D. CONCLUSIONS:

On behalf of the MARD, Dr. Cao Duc Phat concluded the Meeting with following statements:

• The Meeting obtained its set objectives because of well preparation of the presenters and active, frankly and opened participation of the participants.
• With the presentations of MARD and the others and discussion sessions, the Meeting focused on mobilisation of resources from public sector for growth and poverty reduction. The participants of the Meeting agreed that it is necessary to have stronger support to the agriculture and rural development sector, however, it is recommended to have revision on the structure and better management for more effective.
• It is necessary to continue to invest for hydraulic works on the basic of in-depth evaluation the effectiveness of each construction. Investment should be more comprehensive and paid more attention to maintenance and operation in order to improve the effectiveness of the hydraulic works.
• Increase investment volume for supporting services including science and technology studies and transferences. It is also recommend having necessary revision, especially in management to improve the effectiveness in this area.
• Continue to renovate management mechanism and policy to stimulate production toward market oriented and international integration. Reform state-owned enterprises (SOEs); improve social security networks, sustainable management of natural resources. Continue to develop pro-poor policies, settle special issues of the ethnic minorities.
• It is necessary to re-structure the institutional structure of the sector to better deal with the market changes.
• The participants of the Meeting agreed to mobilise the participation of the business sector through reform of SOEs, encouraging and enabling private and foreign investment, development of cooperative and collaboration groups, especially the pro-poor ones.
• Important comments and recommendation suggested in the reports. The development of enterprises, cooperatives play an important role in job creations, incomes generation poverty reduction.
• The Meeting discussed on the issue of better coordination among partners participate in agriculture and rural development process. Presentations of The World Bank and others expressed their concerns and focused on the role of planning. Participants called on better cooperation and coordination form this crucial step as MARD is preparing its 2006-2010 plan. Issues to be addressed of MARD should be more frequently discussed.
• The Meeting attracted participants from many countries as well as from different provinces, it is implied that the participants are interested in and appreciate ISG process.
• MARD would like to thank the participants for their supports to the Plenary Meeting in particular and to agriculture and rural development process as well as poverty reduction in Vietnam.

The Meeting ended at 16:15.

Ha Noi, 9th November 2004
Approval of the Chairman

(Signed)

Dr. Cao Duc Phat
Acting Minister of MARD

Note: All the relevant documents, programme and background/references are available on the ISG website; or you can contact ISG Secretariat at isgmard@fpt.vn

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