Bernardo M. Villegas
Recent Articles
Need to Broaden VAT Base
published: May 30, 2017

Emerging Markets Leading World Growth
published: May 22, 2017

Articles  >> more topics
Vietnam Model

           There are two priority areas in economic development for the next President:  infrastructures and agricultural productivity.  To learn some lessons from an emerging market in the ASEAN, the next President should make a state visit to Vietnam as early as possible in his term.  We can learn some valuable lessons from what can now be considered our non-identical twin (as Thailand was in the 1980s but which country left us far behind by the end of the last century).  The populations and resource endowments of Vietnam and the Philippines are quite similar.  Unfortunately for the Philippines, Vietnam has been much more successful in reducing poverty than we.  Its poverty incidence is only 17% compared to our 25%. How did this happen?

          The main answer can be found in Vietnam’s focus on agricultural productivity.  The story is well told by the leading agribusiness economist of the Philippines, Dr. Rolando Dy who is Executive Director of the Center for Food and Agribusiness of the University of Asia and the Pacific and a very active member of the Agribusiness Committee of the Management Association of the Philippines.  In an article written for the Food and Agribusiness Monitor, he described in detail the success story of Vietnam in poverty reduction through agricultural development.               

          Dr. Dy starts by enumerating the five “stars” of Vietnam agriculture.  These are the products that earn over US$1 billion annually in exports:  rice, natural rubber, cashews, shrimps and catfish.  In contrast, the Philippines has only one:  coconut.   The success story of Vietnam is illustrated in the life of a farmer in the province of Tra Vinh, one of those redeemed from absolute poverty in less than two decades.  That farmer told an interviewer that her family used to harvest only one crop a year.  Thanks to the appropriate state intervention, her family now grows more crops with the availability of more varieties and canals for irrigation.

      The greatest success over the last ten years was in coffee.  In less than a decade, Vietnam has become the largest coffee exporter in the world, surpassing Brazil. In a recent visit to the countryside in Vietnam, Dr. Dy learned that the average coffee yield in a village called Daklak was two kilograms per tree per year versus 1.6 kg. per tree for the whole of Vietnam.  To our shame, the average yield of coffee farms in the Philippines is a measly 0.4 kg per tree.   One of the major reasons for Vietnam’s high productivity is the support given by the Government to research and development.  In Daklak, there is the Western Highlands Research Center for Agriculture and Forestry.  The Center has 50 researchers on coffee alone. Its new coffee clones will yield 3 to 5 kg per tree in farmers’ fields.  Not content with its already outstanding accomplishment, Vietnam has released a strategic plan for coffee production up to the year 2020 and a vision to 2030, under which total area for coffee growing will be maintained at 500,000 hectares by 2020 with an output of 2,400 kg per hectare, and 479,000 hectares with an output of 2,500 kg per hectare by 2030.

          As regards rice (which we regularly import from Vietnam), Vietnam ranks second in world export in 2012 after India.  Thanks to the abundant supply of water from the Mekong River and good research and extension services, Vietnam is able to achieve an average of 5.5 tons per hectares.  As Dr. Dy and other agricultural experts in the Philippine have pointed out, Vietnam will always have a competitive advantage of growing rice over the Philippines because of almost unlimited supply of water from their ocean-like rivers. We have to identify other high-value crops in which abundant water is not a major factor for high productivity.  These can be found in the other “stars” in Vietnamese agribusiness:  natural rubber, cashews, shrimps and catfish. 

          In 2012, Vietnam became the third largest exporter of natural rubber after Thailand and Indonesia, earning US$2.8 billion.  The small rubber farmers’ yield is 50 percent more than their Filipino counterparts.  In the same year, Vietnam harvested nearly 290,000 tons of cashew nuts from over 330,000 hectares.  Of the total figure, some 223,000 tons worth about US$1,500 million were exported.  Fruit and vegetable exports were projected to reach US$1,000 million in 2013.  In fish farming, Vietnam excels in pangasius catfish (dory fish in our supermarkets).  The processing of this fish involves 150,000 rural workers in the Mekong Delta.  Exports of this very popular fish hit over 600,000 tons valued at $1,800 million in 2011.   Meanwhile, shrimp exports reached US$2,400 million in 2011.  Despite the outbreak of certain diseases, exports of black tiger shrimps were maintained through expert management of the fish farms. 

            Vietnam is a model for increasing agricultural productivity despite continuing corruption and a great amount of red tape and bureaucracy.  Dr. Eliseo Ponce, a noted Filipino research and extension consultant for many years in the Mekong region that includes Vietnam, aptly summarized the situation: “The agricultural bureaucracy is not perfect like any other human institution.  I heard some people talk about corruption at the very high level and inefficiency in interfaces among government agencies.  But the bureaucracy works.”  He then gives some insights that will be very useful to the next Secretary of Agriculture.  Even if is impossible to root out corruption and bureaucratic red tape completely in the next six years, what is important  is policy consistency at  all levels.  In Vietnam, agricultural extension is very much decentralized under the provincial government.  The national government provides policy directions; the local government implements.    The agriculture research system under the Ministry of Agriculture and Rural Development is well-organized with highly trained staff and modern laboratories.  The regulatory system of the country is well structured; it consists of a group of agencies under the Ministry, avoiding conflict of interest. I hope that it is not too much to ask that the next President of the Philippines should appoint a Secretary of Agriculture who not only has had a long exposure to agricultural practice but also is an excellent manager of people and resources. We should avoid appointing politicians like the plague.   Integrity—while a necessary condition for leading an organization—is not sufficient for getting things done.    Professional and managerial competence is a must. Come to think of it, Dr. Rolando Dy would make a very good Secretary of Agriculture.  If he or his wife strongly objects, then we will ask him to name three or four other colleagues of his in agribusiness who can help the next President address one of the two most important challenges in the next six years.   For comments, my email address is