Vietnam: Support production development under the National Program for sustainable poverty reduction

Circular 15/2017/TT-BTC of the Ministry of Finance of Vietnam applies to entities receiving support for production development, livelihood diversification, and scaling up poverty reduction models in poor districts, extremely difficult communes under Program 30a, extremely difficult communes, and extremely difficult villages under Program 135. These entities include workers from poor households, near-poor households, recently escaped poverty households, residents, household groups, and communities in poor districts and extremely difficult communes in coastal areas, and extremely difficult communes and villages under Program 135.

According to the Circular, special priority targets are ethnic minorities from poor households, labour-capable disabled individuals from poor households, and women from poor households. It also creates conditions for persons post-drug rehabilitation, those with HIV/AIDS, and women victims of trafficking returning to poor households to participate in the projects.

Principles and conditions for support

The support principles stipulated in the Circular ensure transparency, democracy, gender equality, participation, and commitment from the people in project formulation and implementation. It aligns with local economic-social development plans, land use, agricultural production, and new rural construction plans.

For scaling up poverty reduction models, the selection of models should showcase regional distinctiveness, comparative advantages, or associations between poor households, communities, and enterprises for production development, industry development, product processing, and consumption. It may also be linked to national defense and security consolidation.

It must be suitable for conditions, characteristics, and needs of poor, near-poor, and recently escaped poverty households. Priority is given to households with adequate physical infrastructure, labor, and production materials that meet project requirements and committed to registered content. Poor and near-poor households must register to escape poverty and near poverty. Avoidance of environmental pollution is mandated.

In project implementation, non-poor households participating in production development and poverty reduction model scaling must self-fund. The state budget only supports poor, near-poor, and recently escaped poverty households.

Funding sources for Program implementation

The Circular specifies that central budget allocates funds within the annual state budget estimates of Ministries and central agencies to perform assigned tasks under the Program; supplements with target-based funding for localities unable to self-balance the budget and Quang Ngai province for program project implementation;

Supplements with target-based funding for localities self-balancing the budget for maintenance of poor districts under Resolution 30a/2008/NQ-CP of Vietnam's Government, poor districts approved by competent authorities under the mechanisms and policies of Resolution 30a/2008/NQ-CP, coastal and island extremely difficult communes (abbreviated as coastal area extremely difficult communes).

For local budget, localities self-balancing the budget (excluding Quang Ngai province): self-balance 100% of the funds for the Program for 2016-2020 (excluding localities with poor districts and coastal area extremely difficult communes supported by the central budget for maintenance). The minimum allocation is equal to the average support level from the central budget for non-self-balancing provinces.

Localities receiving central budget support must proactively allocate funds along with the central budget support for efficient project implementation as stipulated in Decision 1722/QD-TTg, prioritizing additional capital for mountainous, border, island regions, ethnic minorities, and poor districts and communes approved by competent authorities.

Localities must allocate counterpart funds according to the ratio: central budget support from 50% to under 70%, minimum counterpart equal to 10% of total central budget support for the Program; central budget support under 50%, minimum counterpart equal to 15% of total central budget support for the Program.

Localities receiving over 70% central budget support proactively allocate funds and integrate other legal resources to achieve the Program's objectives and tasks.

Support methods

The Circular clarifies the support methods for production development, livelihood diversification, and scaling up poverty reduction models through community-proposed projects (Exception for production land support and forest care and protection contracts which can opt for project-based support or direct support according to current regulations).

The community may include household groups, cooperative groups represented by political-social organizations or villages, certified by the communal People’s Committee (where non-poor household participation in groups or cooperatives is capped at 30%). Community representatives are group leaders elected by community members. Non-poor households participating in the project are experienced economic households proposed by the community;

Based on approved estimates, implementing agencies collaborate with relevant units to develop and submit projects for approval by the Minister or Central agency head (for projects directly implemented by Ministries or Central agencies); the Provincial People’s Committee Chairman submits to the same-level People’s Council (for local projects) for approval according to decentralization with contents: project name, model type (if any), implementation duration (maximum 3 years), implementation area, number of participating households (including specific numbers of poor, near-poor, recently escaped poverty, and non-poor households), project activities, project cost estimates, funding sources (state budget support, preferential credit loans, integrated policy funds, and household counterpart funds), expected project effectiveness, responsibilities of each lead and coordinating agency;

Depending on specific conditions and capacity to mobilize other legal funds, the Minister, Central agency head, or Provincial People’s Committee Chairman may decide to recover part of the state budget support (in cash or in-kind) from participating households, rotating within the project area to fit specific models and local poor household conditions, enhancing their responsibility and ensuring wider participation of poor, near-poor, and recently escaped poverty households.

The recovery form and amount are clearly defined in the project approval decision.

Additionally, expenditure content for production development, livelihood diversification, and scaling up poverty reduction models is stipulated: for projects implemented by Ministries and Central agencies: maximum 500 million VND/project.

The Minister or Central agency head decides the specific support level suitable to each project’s condition, characteristics, and policies, current spending norms; for local projects: Provincial People’s Committee presents to the same-level People’s Council for determination of specific support levels fitting local conditions, project characteristics, local budget capacity, and policies, current spending norms.

Source: Finance Magazine

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