70185 Vietnam: Formal and informal social assistance in metropolitan cities – A rapid assessment April 20111 Abstract The expanding coverage of social assistance in Vietnam raises a question of whether relevant arrangements at all levels are sufficiently robust to handle a larger program. This note explores institutional and delivery aspects of formal and informal social assistance in metropolitan cities. It is a result of a rapid assessment of governance and administration of social assistance in metropolitan cities, including interviews with related stakeholders in Ho Chi Minh City in July 2010 and in Hanoi in January 2011. Basically, the existing governance and administrative structures for delivery of Decrees 67/13 assistance in Hanoi and Ho Chi Minh City are characterized by a number of common issues elsewhere in the country, as described in previous studies.2 In addition, this note finds that while the cities may have resources to self-finance their assistance under Decrees 67/13 and provide significant informal assistance through various channels, their determination of exclusive poverty lines without sound scientific grounds may result in substantial inclusion and exclusion errors in locally funded schemes of aid. Furthermore, although the cities provided some forms of off-budget temporary assistance in response to the economic crisis in 2009, their targeting was based on the poor list and the ‘conventional’ administrative classification of residence status rather than consideration of actual needs as arisen from the crisis. These findings entail systematically strengthening the governance and administrative system of social assistance, given proven substantial increases in beneficiary coverage under Decree 13; improving methods of determining poverty lines; and developing measures to identify emerging needs from external catastrophic shocks and thus formulating an appropriate targeting mechanism in the metropolitan cities. Also, a mechanism is required to effectively harmonize formal and informal assistance in order to optimize resources and maximize the coverage of assistance to needy individuals and households 1 The note was prepared by Nguyen Tam Giang. 2 See World Bank (2011), ‘Vietnam: Governance and administration of social assistance – A rapid assessment and options for reform.’ 1 Social assistance in Vietnam 1. Social assistance is a small part of Vietnam’s overall social security and poverty reduction system. The social security and poverty reduction system in Vietnam is based broadly on three mechanisms: (i) social insurance, with policies to extend access to health and pension insurance for poor and near-poor individuals; (ii) geographically targeted development and anti-poverty programs as well as budget equalization mechanisms to channel resources to poor provinces and poor districts, and (iii) household-targeted anti-poverty and social assistance programs.3 2. Vietnam provides non-contributory social assistance cash transfers to different categories of the population. Social assistance cash transfers under “Decrees 67/13� (see Box 1) aims to tackle chronic poverty and vulnerability among people who are unable to provide for themselves through gainful employment. It is not designed to serve as a tool to cope with income shocks, as its eligibility criteria exclude households that fall into poverty who do not fit into any categories of Decrees 67/13. Box 1: Social assistance under Decree 67/13 In introducing Decree 67 in 2007 the Government decided to recast the basic targeted social assistance benefit program and to increase its importance within the overall social security system. Decree 67 consolidated several social assistance benefits under several separate decrees, widened eligibility criteria and raised benefit levels. According to Decree 67, the following groups are entitled to monthly social assistance benefits: • Children and young people: Eligible groups include orphans, abandoned children (and minors aged between 16 and 18 years who are in general education or vocational training) or, those who have nobody to rely on, and HIV/AIDS- infected children in poor households. It also includes families and individuals who adopt orphans or abandoned children. • The elderly: Eligible groups include lonely elderly people in poor households or elderly people in poor households who have no spouse or other relative to rely on. The same holds for people aged 85 or older without pension or social insurance income. • People with special needs or health challenges: This includes seriously disabled persons who are unable to work. It also includes people with a non-treatable mental disability. Also eligible are HIV/AIDS-infected persons in poor households who are unable to work and households with two or more seriously disabled persons. • Poor single parents or guardians: Single persons in poor households who are raising children under 16 years of age (or under 18 years if their children are in general education or vocational training) are eligible. The widening of eligibility criteria has led to a considerable increase in the number of beneficiaries from 416,000 in 2005 to about one million in 2008, accounting for around 1.2 percent of the population. According to the Bureau of Social Protection of the Ministry of Labor, War Invalids and Social Affairs (MOLISA), old people (aged 85 and above) without pension accounted for 43 per cent of Decree 67 social assistance beneficiaries, people with disabilities for 25 per cent, the lonely elderly for close to 10 per cent, people with mental disability for close to 9 percent, single parents raising children accounted for close to 8 percent, with around 5 per cent other beneficiaries (Draft Vietnam Social Security Strategy, April 2010). The adoption of Decree 67 in 2007 and an amendment through Decree 13 in early 2010 considerably raised benefit levels which now vary between VND 180,000 and 540,000 per month depending on eligibility criteria. It also introduced one- time emergency assistance in case of shocks such as death of family member, natural disasters or other impoverishing shocks. Some Decree 67 benefits are targeted to the poor based on the MOLISA poor list, while others are categorical. In fact, the amendments of early 2010 strengthened the categorical nature of the benefit by removing the requirements of being on the poor list for people unable to work. The widening of eligibility criteria and increase in benefit levels raised budget allocations for social assistance programs under Decree 67 to around 0.15 percent of GDP in 2008, up from 0.05 percent in 2007 and previous years. Decree 67 stipulates that the program is funded from local budgets, though the Government can release funds from the central budget in case of significant funding shortfalls. The draft Social Security Strategy 2011-2020 proposes to develop social assistance into a guaranteed minimum income program. 3 For more on Vietnam’s social security system see World Bank (2008) Vietnam Development Report: Social Protection and World Bank (2010) Vietnam: Strengthening the social safety net to address poverty and vulnerability, A Policy Note. 2 3. This note explores institutional and delivery aspects of formal and informal social assistance in metropolitan cities. It is a result of a rapid assessment of governance and administration of social assistance in metropolitan cities, including interviews with related stakeholders in Ho Chi Minh City in July 2010 and in Hanoi in January 2011. Throughout the note, formal social assistance chiefly refers to the governance and administration of the Decrees 67/13 scheme, while informal one stands for any social assistance provided outside municipal budgets (also known as ‘off-budget’ assistance). The next part of the note explores institutional and delivery aspects of formal social assistance in Hanoi and Ho Chi Minh City, including the structure and operations of the municipal boards for poverty reduction. The last part examines the governance and administration of two major sources of informal social assistance in the metropolitan cities, vis-à-vis the Fund for the Poor and the Humanitarian Fund. Formal social assistance in metropolitan cities Roles and responsibilities 4. Each city has issued its own instructions regarding the roles and responsibilities of stakeholders in delivery of Decrees 67/13. At the central level, Circular 09/2007-TT-BLDTBXH and Circular 04/2010-TT-BLDTBXH provide guidance on the implementation of Decree 67/2007-ND-CP and Decree 13/2010-ND-CP, respectively. To provide more specific guidance on the implementation of the foregoing legal documents in their areas, the Department of Labor, War Invalids and Social Affairs (DoLISA) in Hanoi and Ho Chi Minh City enacted Instruction 1548/LDTBXH-BTXH (September 17, 2010) and Instruction 9767/LDTBXH-XH (October 19, 2010), respectively. 5. Each of the municipalities has a poverty reduction steering board (a PR board for short) which acts as an umbrella institution for programmes and projects that provide aid in various forms to local vulnerable groups. The board manages a PR fund which comprises all financial resources from formal budgets for poverty reduction work. The board is chaired by a vice mayor with a deputy being a DoLISA leader. In addition, the board has a standing unit, which is based in and consists of some assistants from DolISA. While the steering unit is responsible for making policies and issuing important instructions, the standing unit is responsible for day-to-day work, monitoring and reporting. 6. The PR board’s membership comprises representatives from related departments and mass organizations, including Vietnam Fatherland Front (VFF).4 In Ho Chi Minh City, the PR Board has taken this advantage to mobilize off-budget resources from the Fund for the Poor under VFF5 whenever formal budgets cannot be mobilized effectively, for example, in repairing accommodation, particularly electricity and water supplies, for needy households. In some instances, the PR board may mobilize regular assistance from the Fund for the Poor (as is the case of assistance for those affected by the global financial crisis in 2009) and emergency relief from the Humanitarian Fund.6 Other major areas of assistance provided by the PR Board include preferential credit for business operations; assistance for children from poor households, including tuition fees and contributions to 4 In Hanoi, membership of the Municipal PR Board includes leaders from the Department of Finance (DoF), the Commission for Ethnic Minorities Affairs (CEMA), the Department of Planning and Investment (DPI), the Department of Agriculture and Rural Development (DARD), the Department of Health (DoH), the Department of Education and Training (DoET), the Statistical Department, the Department of Industry and Trade, the Social Policy Bank, the Women’s Union and the Farmers’ Association. See Appendix One, for the organization and operations of the Board for Reducing Poor Households and Increasing Better-off Households at different levels of administration in Ho Chi Minh City. 5 See more on the Fund for the Poor in ‘Informal social assistance in metropolitan cities’ below. 6 See more on the Humanitarian Fund in ‘Informal social assistance in metropolitan cities’ below. 3 school facilities, and health insurance; and legal aid.7 In Ho Chi Minh City, the PR Board has been re- named as the Board for Reducing Poor Households and Increasing Better-off Households since May 2010.8 7. Hanoi’s PR Board has included a representative from the newly-established CEMA since early 2009 when the city was merged with Ha Tay province and thus took on 3,068 poor ethnic minorities households comprising 12,078 people. Following its expansion, the city has seen its poverty rates soar up, with 90 percent coming from ethnic minorities, and has one commune and five villages under P135-II. However, the ethnic minorities in Hanoi experience no exclusionary status as in other mountainous provinces, since they have a relatively good command of Vietnamese and better access to modern life conditions. Many of them do not live in difficult geographical conditions, with some even residing near industrial parks. 8. At the sub-municipal levels, there is substantially overlapped membership between the Decrees 67/13 administrative system, the PR board, the Fund for the Poor, and the Humanitarian Fund. Therefore, strengthened capacity of any of these welfare institutions (in terms of human resources, service delivery and communication) may bring benefits to others related, if an effective coordinative mechanism is established and functions well. Regular turnover of social officers at the sub-municipal levels for various reasons, which may lead to inadequate knowledge and skills in service delivery, represents a challenge for the cities. Hanoi’s DoLISA runs annual training courses for sub-municipal staff to address this issue. Financial mechanism 9. Ten out of 29 districts in Hanoi and 20 out of 24 counterparts in Ho Chi Minh City had, by the end of 2010, been able to self-finance their social assistance under Decrees 67/13. The remainder request for subsidy from the Municipal People’s Committees (MPCs). DoLISA is responsible for selecting beneficiaries while DoF identifies financial resources to meet requests and then transfers funds to districts for delivery. In addition, all resources for informal social assistance in the metropolitan cities are mobilized locally. 10. Tet gifts provided in cash and in kind to households from the poor list and beneficiaries of Decrees 67/13 were jointly contributed by the municipal and lower levels of administration. It is more convenient to distribute Tet gifts on a household rather than an individual basis (as it was conducted nationwide in early 2009) as changes are more likely to happen to the individual status. In early 2010, in Hanoi, 27.9 billion VND (1.3 million VND) was spent on Tet gifts for poor households, beneficiaries of Decrees 67/13, senior citizens, and children with special needs. Each household from the existing poor list was entitled to 200,000 VND, with three quarters from the MPC and one from district budgets.9 Meanwhile, on the same occasion, in Ho Chi Minh City, nearly 25 billion VND was spent on Tet gifts, with 2.16 billion VND from the MPC’s budget, 11.5 billion VND from the Municipal Fund for the Poor, and the rest from other informal funds raised at the sub-municipal levels. 11. With financial independence, metropolitan DoLISAs and divisions of labor, invalids and social affairs (DivLISAs) may exercise some discretion in beneficiary coverage. Hanoi’s DoLISA may include certain categories of beneficiaries in addition to those specified in Decrees 67/13, if the department finds them appropriate and can identify sufficient financial resources. In Hanoi, children with serious disabilities are entitled to benefits, although they may not be eligible under Decree 13 which stipulates benefits only for people aged 15 or more with serious disabilities which make them 7 Administrative procedures are carried out in cooperation with the Department of Justice. 8 Under Decision 2016/QD-UBND, enacted on May 7, 2010. 9 The value of Tet gift was raised to 300,000 VND in early 2011, with 250,000 VND from the MPC and 50,000 VND from district budgets. 4 unable to work. Furthermore, Hanoi’s MPC provides regular cash assistance for senior citizens with sickness and people with terminal illness who are not able to work to escape poverty and not entitled to social insurance or any other regular cash transfers. The governance and administration of the scheme basically follows the existing system established for Decrees 67/13. In 2010, the city spent 27 billion VND on 11,250 beneficiaries under the scheme (200,000 VND per month per beneficiary). Some districts in Hanoi, for instance Long Bien, may top up benefits of this scheme or may develop other assistance programmes of its own. Beneficiary selection and targeting 12. Hanoi and Ho Chi Minh City have produced their own poverty lines in accordance with metropolitan living standards,10 although scientific rationales for determining the lines remain unclear. In Hanoi, the PR board has determined the poverty lines on a basis of Consumer Price Index (CPI) data, the MoLISA-set poverty lines, and community surveys, and then provided advice to the MPC for approval and enforcement. In fact, the lines have been a result of verbal discussions amongst stakeholders of the board, and actual methods have not been documented or published. Meanwhile, as is the case at the central level, metropolitan poverty lines are crucial as they may result in substantial inclusion and exclusion errors in locally funded schemes of social assistance whose beneficiaries are identified according to the poor list, whether these schemes are funded with budget or off-budget resources. For instance, in Ho Chi Minh City, the number of Decree 67 beneficiaries declined by more than a half, from 75,223 in 2008 to 34,893 in 2009 when a new poverty line took effects.11 Since 1995, Ho Chi Minh City had revised the food and non-food baskets for determining the poverty lines five times in response to actual situations. 13. Some cash assistance in response to the economic crisis in 2009 was targeted at ‘administratively’ local households from the poor list and/or beneficiaries of Decree 67. For various reasons, neither Hanoi nor Ho Chi Minh City provided any assistance to migrants from other areas although it was then obvious that migrants, especially those working for industrial factories, born the brunt. In Ho Chi Minh City, the Municipal Steering Board for Reducing Poor Households and Increasing Better-off Households has played an important role in coordinating available resources in response to unexpected needs. During the period, locally based enterprises, the main off-budget funders, also faced difficulties so could not contribute resources as usual. Meanwhile, as a representative from VFF is also included in its membership, the Board has been informed of and may mobilize its financial resources for assistance in case of shocks. Therefore, off-budget resources, accumulated from previous years of the Fund for the Poor, were mobilized to help people cope with shocks. The prime aims of the temporary aid were to prevent individuals and households from falling into hunger and to keep the local socio-economic situation stable. The aid was provided in two periods, with the first half of 2009 for an experiment. Beneficiaries were households from the poor list and/or beneficiaries of Decree 67 that have an annual per-capital income of less than six million VND, which is the lowest level in the city’s poverty scale.12 In districts that no longer have such low-income earners, the next income level of six to eight million VND applied. Each member of a beneficiary household was entitled to 50,000 VND per month. In 2009, as many as 5,352 households with 15,259 10 In Hanoi, for the 2011-15 period, the poverty lines are a monthly per-capita income of 750,000 VND for urban areas and 550,000 VND for rural areas. In addition, the near-poverty lines are a monthly per-capita income of one million VND for urban areas and 750,000 VND for rural areas. Meanwhile, in Ho Chi Minh City, the poverty threshold for the 2009-2015 period is a per-annum per-capita income of 12 million VND (two USD per capita per day), regardless of residence areas. Ho Chi Minh City also sets up a scale of poverty levels below that threshold as a basis for categorizing assistance and monitoring progress (or regression) of the poor. The scale is divided into four levels: households with an annual per-capita income between 10 million and 12 million VND; between eight million and 10 million VND; between six million and eight million VND; and below six million VND. 11 See Chart 3 at the end of this part. 12 See Footnote 9. 5 people benefitted from the scheme. A total of six billion VND (more than 300,000 USD) spent on the scheme came from the Fund for the Poor and the Social Charitable Fund. 14. In Hanoi, assistance in kind was provided to local poor households during the 2009 crisis for promoting agricultural production and non-agricultural employment. In particular, assistance included seeds, seedlings, and breeder animals for agricultural and forestry extension services, especially for communes with high poverty rates; increased preferential credit;13 and free vocational training. The PR Board provided advice to the MPC for a final decision regarding beneficiary eligibility and types of support. Benefit payment 15. The expansion of eligibility criteria under Decree 13 (as of January 1, 2010) and the enforcement of the Law on Senior Citizens (as January 1, 2011)14 have put additional pressure on the existing administrative structure and have budgetary implications. The charts at the end of this part show annual changes in beneficiary coverage and benefit expenditures under Decrees 67/13 between 2009 and 2011 for Hanoi, 15 and between 2008 and 2011 for Ho Chi Minh City. As graphically demonstrated, the numbers of beneficiaries in both cities almost doubled from 2010 to 2011 (Charts 1 and 3), which entailed considerable increases in the required municipal budget shares (Charts 2 and 4). As the number of beneficiaries is expected to hover around 1.7 million between 2011 and 2015,16 the figures are estimated at 151,140 in Hanoi and 86,913 in Ho Chi Minh City in 2011 (Charts 1 and 3), which account for 8.89 and 5.11 percent of the country’s beneficiary coverage, respectively. The higher rates of beneficiaries living in the cities are indicative of the relative importance of strengthening the administrative system there. 16. Although the Government is considering piloting electronic payment systems through alternative service providers,17 it is concerned that some measures may not work well in the city. In Hanoi, a considerable proportion of Decrees 67/13 beneficiaries are aged 80 or more, so may not be comfortable with ATM and other banking services. So are representatives for people with disabilities who usually come from poor households with limited education. Also, as the experience has shown, there is a high chance of domestic conflicts for various reasons, if any of the children of senior citizens aged 80 or more is authorized to access electronic services for cash. Verification and monitoring 17. The separate management of essential data on formal social assistance at both vertical and horizontal levels of administration makes it hard to monitor service status and make informed policies. In fact, there exists a lack of both awareness and practice of data sharing for a consolidated database amongst related stakeholders. At the horizontal level, DoLISA keeps data on beneficiaries and expenditures on social protection centres while DoF manages expenditures on household and individual benefits. In addition, the Department of Home Affairs (DoHA) controls information on incentives for personnel relating to social assistance at the sub-municipal level. At the vertical level, under the decentralization system, districts that can self-finance their social assistance do not find it obligatory to report their expenditures on Decrees 67/13 benefits to DoLISA. 13 Each soft loan ranged between 5 and 10 million VND, and a beneficiary household was required to pay only 0.33 to 0.4 percent of the loan value per month as an administration fee. 14 The Law has reduced the minimum age of senior citizens without pension or social insurance income who are thus entitled to monthly social assistance from 85 to 80. 15 The data for Hanoi are available only for the 2009-2011 period as the city was merged with Ha Tay province in early 2009. 16 Draft Social Security Strategy, October 2010. 17 See ‘Vietnam: Governance and administration of social assistance – a rapid assessment and options for reform’ (World Bank, 2011). 6 18. MoLISA has tried a version of beneficiary database software but the project did not seem successful. The reasons included an inadequate design which failed to work in different contexts; a lack of computers, especially at the commune level; and a considerable number of social officers at a senior age who are not good at IT skills. Therefore, in Hanoi, data on social assistance remain stored in hard copies at the sub-municipal levels and not shared electronically. Ho Chi Minh City’s PR Fund claims to possess a good database of poor people with a common set of software. 19. The poor list is updated regularly to minimize exclusion and inclusion errors in social assistance schemes. In Ho Chi Minh City, the database of the poor is updated electronically in a quarterly basis and incomes of beneficiary households are re-assessed on a yearly basis. In Hanoi, poverty certificates are not provided to households, as in other provinces, as the poor list is updated on a more regular basis (every six, nine and 12 months). Any assistance, including Tet gifts and access to preferential credit or a vocational training scheme, is provided on a basis of an updated poor list, as verified by ward/commune people’s committees (WPCs/CPCs), rather than presentation of a poverty certificate. However, assistance on a fixed-term basis, such as subsidized health insurance cards and education-related aid for poor children, may be valid until the end of the term despite a household exit from the poor list. After delivery, a team from DoLISA and DivLISA randomly checks results. Communication 20. DoLISAs in the metropolitan cities have better communication conditions than in other areas thanks to their available funds. Hanoi’s DoLISA may request for budget allocation from the MPC for its communication activities (for instance, printing leaflets and guidance documents). DoLISAs may also integrate information on aid schemes in NTP-PR communication activities to take advantage of resources from larger PR programmes. 21. In Ho Chi Minh City, self-managed poverty teams have been playing an important role in grassroots communication to enhance effectiveness of social assistance and prevent the notorious culture of dependence through a participatory approach. Poor households elect one representative to head the team. Other members include representatives from the women’s union, the farmers’ association and community pensioners. With their good knowledge of needs and aspirations of local poor households, these teams effectively act as a bridge between the poor themselves and ward cadres at the neighborhood level. They have been actively involved in formulating the local poor list, planning activities, setting priorities, and monitoring and evaluation. In a universal principle of assisting, not subsidizing, the poor, assistance packages are not left open-ended. 7 Beneficiaries of and expenditures on Decrees 67/13 benefits in Hanoi and Ho Chi Minh City Hanoi (2009-2011): Below are the estimates provided by the DoLISA in Hanoi. Chart 1: Beneficiaries by year Chart 2: Annual benefit expenditures 600 160,000 568.1 151,140 N o o f b e n ef ici arie s 120,000 Expenditures (in bil VND) 400 80,000 78,738 243 69,164 200 152.5 40,000 0 0 2009 2010 2011 2009 2010 2011 Year Year Ho Chi Minh City (2008-2011): Below are the estimates provided by the DoF in Ho Chi Minh. Chart 3: Beneficiaries by year Chart 4: Annual benefit expenditures 90,000 86,913 200 199.3 81,050 N o o f b en e fi c ia ri es 150 Expenditures (in bil VND) 60,000 44,245 38,838 100 82.23 66.17 71.36 30,000 50 0 0 2008 2009 2010 2011 2008 2009 2010 2011 Year Year 8 Informal social assistance in metropolitan cities Roles and responsibilities 22. The Fund for the Poor under VFF and the Humanitarian Fund under Vietnam Red Cross Society (VRC) operate systematically at four levels of administration nationwide. From the perspectives of both cadres and beneficiaries at the community level, particularly in Ho Chi Minh City, assistance from the Fund for the Poor and the Humanitarian Fund is usually considered more effective and responsive than formal aid from the state budget (chiefly under Decrees 67/13). Decisions on the former, regarding allocation of resources, targeting and benefit sizes, can be made by cadres who themselves mobilize resources locally and already have a good knowledge of beneficiary needs. Meanwhile, the public funds are usually limited and the use of it is subject to national legislation, which entails a rather long process of decision making and enforcement. Moreover, resources from the Fund for the Poor and the Humanitarian Fund are usually believed to be mobilized and used more effectively than off-budget aid from other organizations, such as the women’s union, the farmers’ association, the veterans’ association, the youth’s union, and the federation of labor. 23. The roles and responsibilities of institutions that provide off-budget sources are governed by a number of legal documents. The Fund for the Poor and the Humanitarian Fund are subject to Decree 148/2007/ND-CP regarding organization and operations of social and charitable funds, and Decree 64/2008/ND-CP and Circular 72/2008 regarding mobilization, reception, allocation, and use of voluntary contributions to supporting people in need to overcome hardships caused by natural calamities, fires, and other serious incidents, as well as patients with terminal illnesses. In particular, the Fund for the Poor, established by VFF in 2000 in a response to the UN-launched Fight against Hunger and Poverty, is subject to Regulation 167/2008/Ttg, issued with Decision 924/QD-MTTW, May 24, 2006, regarding its formulation, management, and use at different levels of administration. In addition to the Fund for the Poor, VFF runs the Fund for Emergency Relief, which is also subject to Decree 64/2008/ND-CP. Meanwhile, the Humanitarian Fund, established by VRC in 1992, is subject to the Law on Operations of VRC, which became effective on January 1, 2009, and the Statute of VRC, which took effects on January 14, 2008. However, there has been no guiding circular on the enforcement of the Law on Operations of VRC, which has resulted in a lack of specific instructions, inconsistent policies, overlapping work, and public unawareness of the law and operations of VRC as a whole. In order to strengthen the status, the role, and the state management of VRC and humanitarian activities, the Secretariat of the Communist Party of Vietnam (CPV) issued Directive 43-CT/TW on June 8, 2010 regarding the strengthening of the CPV’s leadership over VRC. Also, VRC is subject to Decree 45/2010/ND-CP that stipulates organization, operations, and management of associations and societies. 24. At each level of administration, the Fund for the Poor has a management unit (ban v n đ ng) that includes representatives from the finance and social sectors at its corresponding level. At each level, the Fund, headed by the VFF President of that level, is responsible for mobilizing resources on a voluntary basis from locally-based individuals and organizations. In addition, at each level, the Fund may have an assistant team that includes staff, who usually assume multiple functions, from VFF and the social, financial, and ethnic minorities affairs sectors of that corresponding level. The teams are based in the VFF office at the central, provincial and district levels and in the people’s committee’s (PC) office at the ward/commune level. 9 Table 1: Compositions of the Fund for the Poor at different levels of administration Central level18 Municipal level District level Ward/commune level MoLISA; DoLISA; DivLISA; Head of the CEMA; CEMA; Related PR Board; Ministry of Finance (MoF); DoF; divisions; Head of the Women’s Union; VFF member VFF member financial Farmers’ Association; organizations organizations section; Confederation of Labor; VFF member Youth’s Union; organizations. Veterans’ Association; Red Cross; Union of Friendship Organizations (VUFO); Union of Cooperatives; Chamber of Commerce and Industry (VCCI); Committee for Overseas Vietnamese. 25. VRC claims to have more professional members of staff and a better legislative system in delivering social assistance than other local welfare organizations thanks to considerable support from the International Red Cross and Red Crescent Society (IRC), as the former is governed by both VFF and IRC. For instance, the Fund for the Poor usually provides cash only for building houses for vulnerable people, while VRC requires that construction of subsidized houses follow certain regulations, for instance, regarding anti-storm specifications following IRC’s common standards. Also, VRC is more active in mobilizing support of the community and the local authorities to fulfill its goals. However, VRC face constraints that are oft-mentioned at state welfare institutions, such as limited human resources, poor incentives and regular turnover. Also, VRC’s staff lacks deep knowledge in some particular areas of assistance due to excessive coverage of support domains. Communication and awareness raising activities remain limited as a result of limited state budget allocation. 26. The Fund for the Poor self-finances its management and operations costs in service of poor individuals and households, which may result in disincentives for some local authorities. In particular, operations costs of the Fund come from a budget line for regular expenditures designated for local divisions related. At different levels of administration, the Fund’s management unit is responsible for synthesizing and reporting its estimated revenues and expenditures to a higher level of the Fund and a financial division at its corresponding level in order to ensure financial transparency. Aid resource mechanism 27. Resources of the Fund for the Poor and the Humanitarian Fund usually come from voluntary contributions in cash and in kind from individuals and organizations at home and abroad, including permanent corporate donations. The Fund for the Poor may receive other sources, including foreign aid; aid designated with specific purposes and recipients as authorized by donor individuals and organizations; interests from deposits; and other legal revenues (if any). Meanwhile, resources from 18 At the central level, under VFF’s coordination, MoLISA, CEMA and MoF share the responsibility for delivery aspects of the Fund. In particular, MoLISA is responsible for identifying beneficiary localities and households and determining levels of support based on the official poverty line, whilst CEMA is responsible for setting levels of support for poor individuals and households in especially difficult communes in remote and island areas. In addition, MoF is responsible for giving instructions, checking and inspecting revenues and expenditures of the Fund according to the laws and relevant regulations. 10 foreign individuals and organizations are often channeled to VRC through IRC. Some foreign organizations are concerned about politically sensitive issues, thus choosing to transfer their resources through IRC rather than other channels.19 Other resources include membership fees; support from the state budget for activities regarding aid relief and other state assignments; and other legal revenues. While the Fund for the Poor usually accepts contributions in cash, the Humanitarian Fund receives contributions both in cash and in kind. Many of the major benefactors of the central VRC are joint ventures from South Korea and Japan and local private businesses, some of which have recently entered medium-term contracts to donate certain percentages of their revenues annually, chiefly to improve connection with local authorities. 28. Financial resources mobilized at the municipal level are usually more significant than those at the central level. Over the last decade, Ho Chi Minh City’s Fund for the Poor at different levels of administration raised nearly 617 billion VND, out of which 250 billion VND had been spent on housing support and 126 billion VND on 310,000 scholarships.20 In 2010 alone, Ho Chi Minh City’s Fund for the Poor raised as much as 109.45 billion VND while its Hanoi counterpart mobilized 4.35 billion VND. Meanwhile, the central Fund had mobilized more than 300 billion VND (15 million USD) over the last decade.21 The financial resources of the central Fund usually come from giant state- owned enterprises in the industries of oil and gas (PetroVietnam), electricity (EVN group), telecommunication (VNPT group), and cement production, and also from contributions of one-day pay from staff of state-run agencies. 29. The management unit of the Fund for the Poor from an immediate higher level may reconcile cash flows from a better-resourced to a less-resourced division in order to be spent on stipulated categories of assistance. Methods of reconciliation are decided by the head of the Fund’s management unit at an immediate higher level with the agreement of better-resourced divisions. Allocation of the Fund for the Poor’s resources from the central to lower levels of administration depends on beneficiary households’ needs as identified by the community level. Some donors specify their own requirements for allocation of resources to the lower levels of administration, including specific cities and provinces and specific amounts of resources. 30. The Humanitarian Fund allocates its resources, in cash and in kind, to lower-level divisions through scoring and ranking exercises with a technical support from the Vietnam-based IRC branch. Main allocation criteria include actual needs in eligible areas of support as stipulated in the Law on Operations of VRC;22 availability of local counterpart funds; capacity of local cadres from both RC societies and the community as a whole; population sizes; and poverty rates. An immediate higher- level VRC may reconcile resources from better-resourced to less-resourced localities. There is usually overlapping and ineffective use of resources in emergency relief at both the community and household levels due to a lack of coordination and regulations on relief activities. Targeting and assistance arrangements 31. Assistance from the Fund for the Poor is provided chiefly in cash for construction of new houses and repair of existing houses.23 Eligibility criteria are based on those set in the Prime 19 For instance, in the Central Highlands, only VRC can work with ethnic minorities people who, in many cases, do not respond to the local authorities. 20 Especially, over the last decade, the Municipal Fund had spent 700 million VND on supporting poor workers, regardless of residential status, at industrial and export-processing zones in the city. The irregular assistance, both in cash and in kind, is provided through the management boards of the zones and the youth’s unions. Employees in the informal sector are excluded. These data come from annual reports of the Municipal Fund. 21 From the interview with the manager of the Central Fund. 22 See Articles 7-13 of the Law. 23 At the central level, housing support is focused on ethnic minorities households in difficult mountainous areas. 11 Minister’s Decision 167/2008/QD-TTg, issued on December 12, 2008 and later supplemented by Decree 67/2010/QD-TTg, regarding the housing support policy for poor households.24 The housing support from the Fund is in most cases partial and thus should be supplemented by other sources, usually mobilized from beneficiaries’ relatives and neighbors at the community level. In 2010, Ho Chi Minh City’s Fund for the Poor and its Hanoi counterpart spent 30 billion VND and 1.58 billion VND on housing support, out of their yearly expenditures of 85 billion VND and 5.5 billion VND, respectively.25 Other forms of the Fund’s assistance include cash transfers for purchase of agricultural inputs such as seedlings and breeding animals; support of children’s schooling; support for medical treatment; and support for overcoming hunger in case of necessity. 32. Specific levels of spending on the foregoing assistance are determined by the head of the Fund for the Poor’s management unit at each level of administration with a consensus from its membership and in accordance with the reality and available resources. For projects with a particular donor support, items and levels of spending depend on agreements between the Fund and donors. Beneficiary households are identified in a community-based manner, similarly to other aid schemes, such as the National Targeted Program-Poverty Reduction (NTP-PR) and Decrees 67/13. Some cities/provinces may develop their own eligibility criteria. 33. To some extent, VRC’s humanitarian aid may complement some categories of beneficiaries of the poor list and Decrees 67/13. The areas of support of VRC include, among others, humanitarian aid and emergency relief. Beneficiaries of humanitarian aid are people with disabilities, the elderly with no one to rely on, and others in especially difficult circumstances who are not entitled to regular assistance from the state budget. Furthermore, beneficiaries from the poor list are usually excluded from aid of VRC as they have been entitled to PR schemes. Meanwhile, emergency relief may be provided to victims of wars, natural calamities, epidemics, fires, traffic accidents and other accidents and calamities to overcome initial hardships. Aid may be in cash or in kind, or moral support. Moreover, the Humanitarian Fund provides other forms of regular assistance through various programmes and projects.26 The Fund is involved in all PR programmes but only through particular projects, with specific beneficiaries who are usually approved by donors, but some of whom may be recommended by VRC at different levels of administration. 34. The Humanitarian Fund may provide support to a wider range of beneficiaries, especially people who cannot receive aid from the state budget or any other sources, as compared with targeted mass organizations, such as the women’s union or the youth’s union. At different levels of administration, the Humanitarian Fund provides vocational re-training, additional support in subsidized health insurance, and Tet gifts in cash and in kind for the near-poor and people in economic difficulties regardless of occupational and residential status, thus including workers from both formal and informal sectors and migrants to urban areas, who are not eligible for aid from formal or other non-formal schemes. VRC’s current annual theme of operations, effective from May 8, 2010 to May 8, 2011, focuses on supporting poor people affected by urbanization. Under the theme, some prominent events and schemes include fund-raising walking events and vocational training and job search assistance. However, the use of resources is very much driven by donor objectives and conditionality. 35. In case of humanitarian aid, beneficiaries are identified in a community-based manner and later verified by WPCs/CPCs or social protection centres. Meanwhile, in case of emergency, 24 Under the decision, eligible households must be in the poor list; have no or dilapidated accommodation but cannot afford improvements; and not be entitled to any other housing support. 25 From annual reports of the Municipal Funds for the Poor. 26 The Humanitarian Fund identifies beneficiaries and delivers assistance through its network while the Financial Division of VRC allocates funds accordingly. 12 assistance is delivered immediately and directly to beneficiaries who are identified at the community level. At the central level, VRC has an independent team to assess local needs in cases of both humanitarian aid and emergency relief. Every year, the central VRC also synthesize needs from local levels for planning and budgeting annual events and activities, such as fund-raising for the poor, blood donations, and the Month for Orange Agent Victims. Moreover, VRC plays an effective role in referring eligible beneficiaries to relevant programmes/ projects/donors thanks to a longer-term established network with good knowledge of communities and a better database as compared with other mass organizations. 36. The Humanitarian Fund’s targeting of operations and beneficiaries, to a large extent, depend on donors who specify their own objectives and activities, or are driven by domestic political motivations. Consequently, VRC’s members of staff sometime face difficulties in negotiating the use of aid as donors may have different strategies. Current support activities remain predominantly geared towards natural disasters rather than economic shocks, for instance, as a result of global integration or incidental health expenses. Verification and monitoring 37. The management unit of an immediate higher-level Fund for the Poor is responsible for checking revenues, expenditures, and operations of lower-level funds. At different levels of administration, the Fund is supposed to produce and submit quarterly and yearly financial reports, including final accounting of revenues and expenditures to the standing board of VFF at the same level and the management unit of a higher-level fund. Furthermore, VFF and the financial division at the same level of the Fund are responsible for regular and irregular inspection of management and use of financial resources. However, management of the Fund’s resources at the ward/commune level remains challenging. In some cases, cash handouts may be misused by beneficiary households for purposes other than specified by the Fund. 38. Municipal Humanitarian Funds produce and update their database of existing and potential beneficiaries. However, updating is usually slow at the sub-municipal levels as a result of limited human resources. A municipal VRC has 15-16 members of staff while a district VRC employs two or three, and the ward/commune level only one. At the central, VRC has a trustee board which comprises major benefactor representatives and plays an advisory role in making aid-related decisions. 39. The Humanitarian Fund follows an international accounting system and is subject to international auditing with technical and financial support from IRC.27 In addition, the central VRC reports to MoF the status of mobilization and use of resources in cash and in kind. Similarly, at the provincial and district levels, local VRCs submit financial reports to the financial division at the same level. There exist inspection boards at different levels of administration. But there is no mechanism for coordination and monitoring of enforcement of legal documents. Areas for future work 40. The foregoing findings have identified major issues for improving social assistance schemes in Vietnamese metropolitan cities. It highlights a number of administrative and technical topics for further research and consideration. In particular, the note calls for: • systematically strengthening and professionalizing the governance and administrative system in the metropolitan cities to ensure effective implementation of social assistance, formal or 27 For instance, IRC assists VRC in building capacity in accounting practices and hires international auditors for projects funded through IRC. 13 informal alike, given proven substantial increases in beneficiary coverage under Decree 13 and shared resources amongst certain administrators;28 • developing measures to identify emerging needs from external catastrophic shocks and thus formulating an appropriate targeting mechanism. It is necessary to obtain further knowledge of the welfare system in cities other than Hanoi and Ho Chi Minh, which are also highly vulnerable to external shocks. This is particularly important as a desk review of field studies during the global economic crisis in 2009 has indicated a variety of vulnerabilities which were faced by locals and migrants, working in both formal and informal sectors, but unaddressed; • improving methods of determining poverty lines in metropolitan cities. This requires a better understanding of methods to measure poverty lines in other centrally administered cities and provinces.29 This issue is closely related to social assistance targeting but is not well documented; • formulating a mechanism to effectively harmonize formal and informal assistance in order to optimize resources and maximize the coverage of assistance to needy individuals and households. It is essential to learn from better-resourced cities that are believed to have good experience in assisting vulnerable groups.30 Moreover, it is necessary to examine the interactive and complementary mechanism in fund raising and service delivery amongst related assistance schemes at the grassroots level, given growing competition for a limited number of donors; 28 This need has been flagged up for the whole governance and administrative system of social assistance across Vietnam (World Bank, 2011). 29 Other localities that apply their own poverty lines are Da Nang, Khanh Hoa, Binh Duong, Binh Phuoc, Dong Nai, Long An, and Vung Tau. 30 Ho Chi Minh City and Da Nang, which have been well-known for a number of initiatives, can be useful case studies. 14 Appendix One: Table 2: The organization and operations of the board for reducing poor households and increasing better-off households31 at different levels of administration in Ho Chi Minh City Level Organizational structure Mandates Specific tasks Connection Chair: Vice Mayor; Deputies: Assisting MCCPV and MPC in developing, instructing and The Office of the Steering DoLISA Vice Director and implementing programmes to reduce poverty and increase Board belongs to DoLISA. Municipal Director and one full-time better-off households; level deputy; 14 members and Supervising relevant Depts and PCs at various levels; reps from mass organizations Checking coordinative mechanisms and managing use of preferential credit and charitable sources; Directly managing PR funds and the Employment Fund for people affected by land acquisition. Chair: DPC Chair or Vice Advisory role Providing advice to DCPV and DPC in formulating and approving Subject to direct chair; 2 deputies: DivLISA to DPC in annual PR targets and plans; instruction from district head, and one full-time implementing Coordinating PR programs with other local socio-economic DCCPV and DPC; deputy (possibly DivLISA local PR programs; mobilizing community resources in implementing Subject to instruction and Urban/ rural deputy head) and 10-12 programmes. local PR programs; inspection from municipal district members with double Coordinating with relevant divisions and mass organizations in steering board for PR and level functions instructing and checking CPC and ward/commune PR board in employment; A permanent unit and an fulfilling annual PR targets and plans developed by the district Actively integrating PR assistant unit (3 officers) and ward/commune level; programs into other local Managing the poor list, the use of the PR fund and NTP- socio-economic programs Employment, Fund 156 on welfare for poor individuals and and effectively households; coordinating with VFF and Emulation work, training for PR staff at the district and other mass organizations; ward/commune levels; regular reporting and replicating successful models. 31 It is formerly known as the Municipal Steering Board for Poverty Reduction and Employment. 15 Level Organizational structure Mandates Specific tasks Connection Chair: CPC Chair or Vice Advisory role Formulating PR targets and plans and measures to implement Subject to direct Chair; 1 deputy and 6-8 to CPC in annual ward/ commune PR schemes; instruction from DCCPV members with double implementing Surveying, checking, producing and updating the poor list; and DPC; functions from mass local PR Raising funds and assisting poor individuals and households; Subject to instruction and organizations programmes. Facilitating poor households’ access to credit from the PR Fund inspection from district Ward/ A permanent unit and a full- in coordination with other funds; board for PR and commune time assistant Developing self-managed poverty teams; employment; level Raising awareness to tackle the culture of dependence; Contact point for local PR Replicating successful models, regular reporting. activities; closely coordinating with VFF, mass organizations and ward/commune sections; Checking activities of self- managed poverty teams and PR efforts of poor households. 16 Appendix Two: Abbreviations CEMA Committee for Ethnic Minorities’ Affairs CPC Commune People’s Committee CPI Consumer Price Index CPV Communist Party of Vietnam DCCPV District Committee of the Communist Party of Vietnam DivLISA District’s Division of Labor, War Invalids and Social Affairs DoF Department of Finance DoLISA Department of Labor, War Invalids and Social Affairs DPC District People’s Committee EVN Vietnam Electricity Group IRC International Red Cross IT Information Technology MCCP Municipal Committee of the Communist Party MoF Ministry of Finance MoLISA Ministry of Labor, War Invalids and Social Affairs MPC Municipal People’s Committee NTP-PR National Targeted Program-Poverty Reduction PC People’s Committee PR Poverty Reduction RC Red Cross (Society) USD American dollar (currency) VCCI Vietnam Chamber of Commerce and Industry VFF Vietnam Fatherland Front VND Vietnamese dong (currency) VNPT Vietnam Post and Telecommunications Group VRC Vietnam Red Cross VUFO Vietnam Union of Friendship Organizations WPC Ward People’s Committee 17 References: Hanoi’s Department for Labor, War Invalids and Social Affairs (2010), An annual collection of documents on programs for poverty reduction and social assistance. Ho Chi Minh City’s Steering Board for Poverty Reduction and Employment (2007), Training materials for management and use of the Fund for Poverty Reduction and the National Fund for Employment. Ho Chi Minh City’s Steering Board for Poverty Reduction and Employment (2007), Training materials for activities under the Poverty Reduction Program in Ho Chi Minh City, second step, second phase (2006-2010). MoLISA (2010), Draft Social Security Strategy 2011-2015. Nguyen Tam Giang (2010), Vietnam: Social Safety Net Governance at the Local Level, The Case of Ha Giang Province and Ho Chi Minh City, processed. World Bank (2008), Vietnam Development Report: Social Protection. World Bank (2010), Vietnam: Strengthening the social safety net to address poverty and vulnerability, A Policy Note. World Bank (2011), Vietnam: Governance and administration of social assistance – A rapid assessment and options for reform. 18