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Old July 17th, 2009, 08:02 PM
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Default Vietnam Urbanization: Objectives, Policies and Programs


In the case of Vietnam, there appears to be less clarity in regard to urban policy than in the other nations reviewed. However, review and reconsideration of appropriate urbanization policies by the Government of Vietnam is underway.

The Ministry of Construction’s 1999 decree on urbanization predicts an urbanization level of 45% by 2020, a full 10% higher than the UN rate. It is unclear whether this reflects an advocacy of accelerated urbanization, as in the Chinese case, or whether it reflects expected high rates of migration to Vietnamese cities over the next twenty years driven by market forces. If an advocacy of accelerated urbanization, it represents a break with past national development policy that focused on rural development and viewed rapid growth of cities cautiously.


In January 2001, the Ministry of Construction (MOC) put forward the following objectives for urban development in Vietnam:

(i) Decreasing densities in urban cores of large cities and increasing peri-urban densities, possibly through development of satellite cities.

(ii) Relocating polluting factories from inner cities to outer areas through tax incentives and regulation.

(iii) Stemming squatter settlements through formulation and enactment of construction standards and enforcement of codes.

(iv) Improving provision of urban services

(v) Implementing measures to increase supply of urban housing

(vi) Reducing loss of prime agricultural land resulting from poorly managed peri-urban development.35 Governance and Institutional Dynamics Vietnam is a unitary state, thus central agencies have significant powers in coordinating urbanization. The Ministry of Construction has been formally designated as the lead Ministry on issues of urban development. The MOC continues to master plan the urban system, planning for an urban system composed of two national “megacities”, three smaller national cities, eleven regional cities, 50 provincial cities, 1,867 district towns, and 20 new towns by 2020 with a total population of 46 million. This official plan encourages urbanization in smaller settlements, rather than the dominant national cities.

Although the system appears very centralized, there is considerable flexibility at lower levels.

Provincial and district authorities are evaluated on their capacity to promote development, measured in terms of GRDP growth, similar to the Chinese case. However, at the local level, financial capacities are low and personnel often inadequately trained.

Policy Initiatives

(i) The national Ministry of Construction has been formally designated as the lead ministry on issues of urban development (1999).

(ii) The Government recently began promoting an existing, but unimplemented, decree that obliges local assemblies to consult residents about administrative decisions.36 For example, the Prime Minister has called for the setting up of telephone hotlines to take complaints about inefficient or corrupt civil servants at the local level.

(iii) The Government intends to attract additional FDI by encouraging transnational corporationsto locate in industrial estates being established by national and provincial governments under the auspices of national and provincial Industrial Zones authorities.

(iv) The Government has indicated that it intends to remove the distinction between local people and immigrants in urban areas.

(v) Improving urban environments on a sustainable basis is a priority both at national and local levels, with an emphasis on reducing air, water, and land pollution. Other priorities include drainage, public lighting, solid waste, and community upgrading.

(vi) Reducing urban poverty through vocational training, support to small and medium sized enterprises (SMEs), and micro credit.

(vii) In urban development, avoid relocation of poor people to the extent possible, instead focus on on-site upgrading.

(viii) Strengthen rural-urban linkages.

Programs and Projects

(i) In HCMC, movement of the worst polluters out of the city, under the auspices of the HCMC Department of Science, Technology, and the Environment is underway.

(ii) Slum upgrading (EARIO is involved in four such projects, two in the large cities, and two in smaller cities.)

(iii) Water supply. (EARIO is in involved in four cities. A new project is underway that will support water supply projects in approximately 50 cities through a demand driven, on-lending program.)

(iv) Enhancing urban strategy formulation capacity, including in local economic development. (EARIO has been involved in Haiphong and HCMC and intends to broaden its involvement in this area through its Cities Development Strategies program.)

(v) Wastewater treatment / river clean up. (EARIO is significantly involved in HCMC through two projects.)


Key constraints affecting urbanization in Vietnam include:

(i) Lack of horizontal coordination among agencies.

(ii) High levels of centralization, and reliance on planning the settlement system by fiat (command and control), rather than a performance based approach that would focus urban initiatives and performance monitoring on emerging and fast-growing settlements.

(iii) High population densities in the largest cities (80,000 per square kilometer in core HCMC) in conjunction with large numbers of industrial firms (often high polluters) and inadequate environmental infrastructure.

(iv) Inconsistencies between national plans and local plans. For example, the HCMC urban plan is based on a population of seven million in 2020 (a level which may have already been reached) while the MOC urbanization forecasts would imply a population of 13-19 million by 2020.

(v) Lack of a clear national urbanization strategy / urban policy framework, exacerbated by uncoordinated divergent technical assistance on urbanization from the international community.

(vi) The continued presence of manufacturing firms (often heavy and/or polluting industries) in core urban areas. Related, this limits land available for higher value urban uses, SOEs frequently control large expanses of centrally located land.

Urbanization Dynamics and Policy Frameworks in Developing East Asia.
East Asia Infrastructure Department
The World Bank
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