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Land Use Policy 54 (2016) 583–592

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Socio-economic effects of agricultural land conversion for urban development: Case study of Hanoi, Vietnam Thi Ha Thanh Nguyen a,∗,1 , Van Tuan Tran a,1 , Quang Thanh Bui a , Quang Huy Man a , Timo de Vries Walter b a b

VNU University of Science, Vietnam Geo and Environmental Engineering, Technical University of Munich, Germany

a r t i c l e

i n f o

Article history: Received 1 August 2015 Received in revised form 1 February 2016 Accepted 29 February 2016 Available online 31 March 2016 Keywords: Agricultural land conversion Economic benefit sharing Livelihood changes Hanoi

a b s t r a c t Agricultural land conversion for urban development is a major process in the vicinity of many cities in Vietnam. This causes problems for the fabric of local society. In this paper, we evaluate four agricultural land’s acquisition projects in two areas (Hoai Duc district and Thanh Oai district) in Hanoi, Vietnam to examine two primary questions: (1) how do farmers obtain any economic benefit from urban development projects? And, (2) how are socio-economic livelihoods of the farmers effected by land conversion? The investigation relied on a market land price’s survey using a structured-interview method, in which 395 land-acquired households were randomly selected. The responses indicate that there are unequal benefits among the various stakeholders. On average farmers tend to benefit the least. Although the farmers have the possibility to transform their agricultural livelihood into a non-agricultural one with probably a higher income, they are actually faced with many difficulties in maintaining non-agricultural activities, in finding stable alternative livelihood activities, and in using the compensation for investments. © 2016 Elsevier Ltd. All rights reserved.

1. Introduction The process of urbanization that is associated with the conversion of large areas of agricultural land into urban development, has been a common trend in many developing countries, including Vietnam (Kelly, 1998; Zana Naab et al., 2013; Kontgis et al., 2014; McGee, 2009; Ngo, 2012; Nguyen, 2009; Schneider, 2012). This trend causes increasing conflicts between maintaining agricultural land to ensure the food security and urbanization (FAO, 2011) as well as job development (Zana Naab et al., 2013; JeanPierre et al., 2010). The demand for conversion of agricultural land to industrial/residential uses occurs mainly in developing countries (FAO, 2011; Azadi et al., 2010) as its governments have recognized that urban development on agricultural land is much cheaper than on old urban residential land (Azadi et al., 2010). This process itself has raised many concerns in terms of food security, declining agricultural productivity and agricultural labors, downgrading irrigation system, increasing fallow agricultural land

∗ Corresponding author at: VNU-University of Science, No. 334, Nguyen Trai Road, Thanh Xuan District, Hanoi, Vietnam E-mail addresses: [email protected], [email protected] (T.H.T. Nguyen). 1 These authors are equally contributed to this work. 0264-8377/© 2016 Elsevier Ltd. All rights reserved.

as well as major changes in culture, environment and life of local people (ADB, 2007; Kelly, 1998; Zana Naab et al., 2013; Thuo, 2013). Consequently, urbanization is considered as a threat to agricultural land in developing countries (Azadi et al., 2010). Besides that, it is important to recognize that legal factors, national land policies and local communities exercise influence on how land is used. This occurs both in countries that recognize the right of ownership of private land (Kelly, 1999; Thuo, 2013), or countries that recognize state ownership of land such as China and Vietnam (Guo and Jonathan Lindsay, 2008; WB, 2012) The urbanization rate of Hanoi Capital is quite high: 3.35% in the period 2000–2010. There have been several studies on the impact of the conversion of agricultural land and land acquisition policy in the city during this transition period. Tran (2013) uses econometric methods to divide household behavior into three categories according to their different livelihood activities after land acquisition: (1) The first group is likely to concentrate on informal paid jobs, (2) the second focuses on doing business, (3) and the third are more likely to diversify their livelihood. Nguyen (2009) focuses on the input and output of financial capital, the conversion of livelihood and social problems that arose in a suburban village. On the other hand, Vu (2006) discusses many aspects of urbanization which affected land losers in a precinct, such as the transformation of farming, job change, environmental change and the lack of accountability


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responsibility of the investor. In another study in a suburban village of Hanoi, Nguyen (2011) also analyzes the problem of job change, the ability to preserve traditional craftsmanship and the risks due to income instability and the use of financial resources. This paper presents an in-depth analysis on the impact of both conversions of agricultural land policy and of land acquisition. Although we zoom in to conversion processes in Vietnam, the findings of this study is significant for other countries where rapid urbanization and land conversion takes place. In this study, we evaluate four agricultural land acquisition projects in two areas with different urbanization rate (Hoai Duc district, at high urbanization rate, and Thanh Oai district, at low urbanization rate) of Hanoi to examine two primary questions: (1) how do farmers whose land were acquired obtain economic benefits from urban development? This question has not been emphasized in previous comparable studies on land use conversion; and (2) how does land conversion affect socio-economic livelihoods of the farmers (income, employment.,)? Specifically, the study aims at comparing situations in livelihood and employment changes of people whose land were acquired for urban construction projects with those whose land were acquired for industrial construction projects. The study focused on famers whose agricultural land was acquired. They were the most affected ones when the agricultural land transition occurred, because of their dependence on agricultural land and because of the change in their village life style which they had been accustomed to through generations (Ngo, 2012). In order to address these two questions, a bottom-up approach was employed. This involves local people’s participation in the research, collecting views and opinions of communities, and holding household interviews. This mixed method was considered most effective for this purpose.

2. Background and context 2.1. Agricultural land conversion in Vietnam and Hanoi To meet the goals of industrialization and urban development in the period 2000–2010, 636,000 ha of agricultural land were converted to non-agricultural uses in Vietnam (GDLA, 2010b). In Hanoi, the conversion of agricultural land to urban land took place at a rapid pace. Urban area increased by 4 times from 1995 to 2003, from 47.22 km2 in 1995 to 185.72 km2 in 2003 (Duong et al., 2014). The conversion process occurred mainly in the suburban districts, such as Tu Liem, Thanh Tri and Gia Lam (Tran et al., 2005). This despite the fact that these regions had highly suitable soils for agriculture (Thapa and Murayama, 2007) and were considered as “important provider of cereal production (meat, vegetables and flowers) for the inner city.” (Pham et al., 2014). Since 2008, after the expansion of the Hanoi administrative boundaries, the process rapidly continued, spreading to surrounding rural districts, particularly in Hoai Duc district (Tran, 2013). A series of new urban centers, parks and industrial zones and infrastructure appeared, replacing the rice fields and rural villages.

2.2. Farmers’ livelihoods in agricultural land conversion Livelihood is understood as “capabilities, assets (including both material and social resources) and activities required for a means of living” (Chambers and Conway, 1992). The funds that ensure livelihood activities in a fairly traditional way are divided into five categories: natural capital (land, water,. . .), human capital (knowledge, health), physical capital (assets and means of production), financial capital (income, loans, . . .) and social capital (social relations, relatives, neighbors,. . .) (DFID, 2000). When circumstances

change, it leads to new opportunities and challenges for the livelihood of people (IRP, 2010). The acquisition of farmer’s agricultural land is regarded as a considerable livelihood change (or maybe it is a “shock” for their livelihood), because they are forced to change their primary livelihood activities (by crop intensification or conversion to more valuable, more suitable crops in remaining agricultural land) or to new livelihood activities (Duong et al., 2013; Dung, 2010; Van den Berg et al., 2003; Tran and Steven Lim, 2013). At this time, the livelihood strategies of the people, i.e. the way they access and use of the funds in the context of economic, social, political and environmental conditions (IRP, 2010) play a decisive role for stabilizing their lives, also because there is generally inefficient support from the State or the investors in many places (Nguyen, 2009).

3. Policy for land conversion In countries with private land ownership regimes the conversion of land is voluntary, i.e. in line with any owner’s own wishes, or based on agreements between local governments or investors (GDLA, 2010b). In contrast, in Vietnam and China amongst others, land governance is based on the principle that land is owned collectively and the State has the prime authority to manage land. So, the conversion of land for the process of industrialization and urban development is compulsory once decided by the State (Chan, 2003; Parliment of Vietnam, 2013). Industrialization is considered as a major factor that has driven the decline of agricultural land, and the process is sometimes promoted by the governments’ policy (Azadi et al., 2010). It is also one of the reasons why the restructuring of labor in Southeast Asia goes after the shifting of agricultural land (Hans-Dieter and Korff, 2003). In Vietnam, there were two types of regulations which enabled the conversion of land based on the Land Law 2003: compulsory and voluntary conversion. The updated Land Law, endorsed in 2013, states that compulsory land conversion is conducted only for the purposes of national defense or security, national or public benefit. Land acquisitions must be done in a manner which ensures transparency and accountability, and which ensures that compensation is paid in accordance to the law. The State also proactively acquires land under approved land use planning laws at district level in order to create a “clean land fund”. After that, the State takes land from this fund to allocate it for other uses. The compulsory conversion mechanism for socio-economic development use (as stated in Land Law 2003) is prohibited because of its inadequacies. Along with the change of land conversion mechanism, Vietnam land legislation regulates a specified condition for compensation, support and resettlement for those whose land is acquired, including regulations on agricultural land conversion. The 2013 Land Law stipulates the principle of valuation of land, including agricultural land valuation for compensation (specific price) that must be consistent with the market price. The 2003 Land Law and its implementation guides regulate livelihood and employment stability, in which career rearrangement is one of the most important components of the land compensation policy. This policy has however dramatically changed over time (Table 1). In general, policies for compensation and support in agricultural land conversion in Vietnam have gradually become more beneficial for users whose lands are acquired. Target groups are expanded from members at working age to all members of household and the supports are more reality-needs oriented. However, miss-handling of regulation still exists due to gaps in the implementation of policies (Nguyen, 2009; Vu, 2006). On the other hand, in the current Land Law, while more concerns are laid on securing the land compensation rates, price support and life rearrangement, the issue of “shared interests” between the ben-

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Table 1 Livelihood and employment stability, job arrangement policies since 2004. Degree/Year

Condition to receive support

Target group

Mean of support

Degree 197/2004/NЖCP

Households and individuals directly involve in agricultural production and whose acquired land area exceed 30% of their total agricultural land Households and individuals directly involve in agricultural production and whose acquired land area exceeds 30% of their total agricultural land but not receiving agricultural land in other places as compensation by the state Households and individuals who: + are directly involved in agricultural production + whose acquired land area exceeded 30% of their total agriculture + are not compensated by agricultural land in other places + do not need to receive service land parcel instead Households, individuals who: + are directly involved in agricultural production + are not compensated by agricultural land in other places

Members of household at working age Members of household

Training for new careers in local training centers

Degree 17/2006/NЖCP

Degree 84/2007/NЖCP

Degree 69/2009/NЖCP

eficiary and the users of acquired land has not been mentioned yet (WB, 2012).

4. Study areas and methods 4.1. Study areas Two suburban districts with different urbanization rates were ´ (at rapid rate) and Thanh selected for this study, namely Hoài Ðuc Oai (at low rate). Fig. 1 shows the study area. In each district, we selected two types of projects: urban development projects and industrial development projects. Hoai Duc’s suburban district is an important gateway to the west of Hanoi with many arterial roads passing through, especially Thang Long Highway, Highway 32. Hoai Duc district is characterized by a rapid decline of agricultural land area, especially after the expansion of Hanoi administrative boundary in 2008 (the average decline rate of agricultural land

State allocates land to farmers, where they can do non-agricultural services, but they have to pay land use fee

Members of household

State allocates land to farmers in planned resettlement areas

Members of household

+ Compensation in cash that is equivalent to 1,5 – 5 times the price of acquired agricultural land (but the compensation does not exceed maximum limit) + or farmers receive a land parcel in residential area, or 01 apartment or a non-agricultural land parcel

in the period 2005–2008 was 102.4 ha/year, that was equivalent to 2.4%/year and the rate was 143.3 ha/year during 2008–2014, that was equivalent to 3.5%/year). During 2004–2011, 90 construction projects have been activated, with a total acquired area was 29,617,648.9 m2 (People Committee of Hoai Duc district, 2012). In particular, Kim Chung-Di Trach New Urban Zone project is one of the third largest urban construction projects in the district, with a total acquired area of 138.2 ha. Lai Xa Industrial Zone deployed in Kim Chung commune, with total area of 37 ha, was one of two largest industrial construction projects in Hoai Duc at that time. ´ Thanh Oai is a rural district of Hanoi, In contrast to Hoài Ðuc, where the urbanization rate is slow. On average, the conversion rate of agricultural land has been 46.1 ha/year, equivalent to 0.56%/year in the period 2005–2008 and the conversion rate was 58.2 ha/year, corresponding to 0.72%/year in the next period, 2008–2013. So far, only four new land conversion projects have been implemented in the district, with the total area was 436.2 ha. Thanh Ha-Cienco

Fig. 1. Study area.


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5 New Urban Zone is the largest project, implemented in Cu Khe commune, with a total construction area of 278.9 ha (accounting for 63.9% of total construction area of the district). Thanh Oai Industrial Zone was deployed in Bich Hoa Commune, with total area of 60 ha. According to the master-plan of Hanoi with vision to 2030 and 2050, Hoai Duc will be chosen to be one of satellite cities in Hanoi (located along Road 4), and Thanh Oai will be within green park ring that surrounds this municipality. 5. Methodologies To answer the research questions raised previously, we applied two processes with different methodologies (see Fig. 2). Firstly, in order to estimate the degree of variability in economic benefits among the key stakeholder in the conversion process (being the State, the investors and farmers; the latter being the one who lost their land in the conversion process), we collected information and data from several sources: feasibility reports of urban development projects (which provide real compensation and support price for acquired land), agricultural land’s price list of Hanoi People Committee in 2010 (to understand land lease price, compensation and support price for agricultural land in different quarters that were promulgated by the local authority), and a survey for market price of land (which reveal price of land in the market). Secondly, in order to analyze the changes occurring in livelihood as a result of the conversion a bottom-up approach was applied, based on structured interviews combined with structured ques-

tionnaires. Based on the lists of farmers in the study areas provided by the committees of Land Clearance and Compensation of Thanh Oai district and Hoai Duc district, 410 households were randomly selected for interviews. The first interviews were carried out in May 2014, in Kim Chung commune, Hoai Duc district. The second round of interviews were carried out in June, 2014 in Cu Khe, Bich Hoa communes, Thanh Oai district. After checking the collected data, 15 response sets did not prove reliable and were eliminated. So, finally 395 response sets could be used as a basis for further data processing and analysis. Table 2 describes these results. The structured interviews focused on basic information of household members, the respective land areas, the type of livelihood conversion, the amount of compensation and support money, the coping and re-investment strategies after having received the compensation, and personal views and opinions about their new living and production environments.

6. Results 6.1. Responsibilities and relationships between stakeholders in agricultural land conversion In all of the four selected projects, the primary stakeholders during the conversion process are the State, project investors and farmers (land losers). The responsibilities of the three parties are shown in Figs. 3 and 4.

Fig. 2. Methodology processes.

Fig. 3. Responsibilities of stakeholders in agricultural land acquisition for new residential construction project (for economic development).

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Table 2 List of interviewed households. Land acquisition projects

Total number of households whose lands are acquired

Total number of interviewed households

Percentage of interviewed households per total (%)

Kim Chung-Di Trach project in Kim Chung commune Lai Xa industrial zone in Kim Chung commune Thanh Ha-Cienco new residential area in Cu Khe commune Thanh Oai Industrial zone in Bich Hoa commune

925 383 1564 1208

91 36 138 130

9.8 9.4 8.8 10.8

Fig. 4. Responsibilities of stakeholders in agricultural land acquisition for new industrial development project (for public benefit).

In residential construction projects, the State acts as an intermediary to reclaim land use rights from farmers and to prepare “clean land” for investors. Investors pay a land use fee to the State which covers the compensation for land acquisition. The State then pays the compensation and provides support to farmers for giving back land use right. The State pays compensation and provides support for farmers in industrial construction projects. Acquired land is converted to industrial land and new land users (investors) have to pay land use fee (annually or for entire leased period) for the State, in order for the State to rearrange jobs for land losers. In both the cases of Kim Chung-Di Trach urban zone project and Lai Xa, Thanh Oai industrial zone projects, the State allocated a parcel of service land that was 10% of total acquired agricultural land at preferential rates for households whose land was acquired. In contrast, in the Thanh Ha-Cienco 5 project, investors preferred offering a budget of 5 times of the price of land compensation for employment and livelihood stability (through the State, and pay for the people in cash). The responsibilities of the parties involved were quite clear and consistent. However, specific results below shows the actual implementation responsibilities of each party are not as expected. This is key element of our finding that there are big gap between formal rules and actual process of land acquisition. 6.2. Economic benefits from agricultural land conversion 6.2.1. Economic benefits The economic benefits that the State, investors and farmers receive from agricultural land conversion for urban development projects differentiates from land conversion for industrial projects. Table 3 provides the details of the economic money flows. When comparing the economic benefits of the three parties it can be seen that the investors of these projects receive the highest benefit from the conversion of agricultural land. In Kim ChungDi Trach and Thanh Ha-Cienco 5 New Urban Zone projects, the investors could enjoy the profits of 9.3 million VND/m2 and 6.7 million VND/m2 in respectively, much higher as compared to the profit

of the State (2.52 million/m2 and 0.25 million/m2 ) and farmers (0.13 million/m2 and 0.16 million/m2 ). In the Lai Xa industrial project in Thanh Oai district, a similar situation occurred. The amount of compensation which the farmers received (0.13 million VND/m2 and 0.05 million VND/m2 ) from the State was far lower than the overall benefit. The State can directly get benefit from entrepreneurs by leasing office buildings or land (annual or long-term). With low rent fee (as compared to the actual market price) that they have to pay to the State, the entrepreneurs were highly benefiting from the projects. Besides, according to the support policy of three construction projects, Kim Chung-Di Trach, Lai Xa and Thanh Oai, each household only had to pay an amount of money (at quite low price) to receive a service land parcel, by 10% area of their total acquired agricultural land. This policy aims to not only support the farmers in job rearrangement but also to involve them as a beneficiary of the projects. However, after years of land acquisition, service land for people has not been allocated yet due to actual policy implementation. This situation exacerbated the conflict between the real interests of the local farmers and the responsibility of investors. From this case, we found that, the farmers were the most disadvantaged ones while investors got the highest benefit.

6.2.2. Value of other benefits (non-physical) Besides the payment of compensation and support in cash, the other supports for farmers included vocational training, job rearrangement in urban area or new industrial zone. However, the responses analysis showed that only few people (2.1% of land losers) were able to join the local vocational training (such as clothes manufacturing,. . .). Moreover, the content of the training was not perceived as suitable for the demands of the local people. The proportion of households whose members have been employed as workers, factory guards and cleaners in industrial zone was only 6.3% of interviewed households in Thanh Oai Industrial Zone and 5.6% households in Lai Xa Industrial Zone.

6.3. Livelihood changes of farming households 6.3.1. Land losers in the context of living changes In two development projects in Kim Chung-Di Trach and in Lai Xa, the State had reclaimed considerable large agricultural area in Hoai Duc district. On average, at the time of the survey (May 2014), the project Kim Chung-Di Trach New Urban Zone had acquired 512 m2 of agricultural land area per each household (accounting for 64.4% average land of each household). While the project Lai Xa Industrial Zone had acquired 1,071 m2 of agricultural land area per each household (96% average land area of each household). Therefore, with small remaining land area, few households in Kim Chung were able to keep their agricultural activities. In the Thanh Oai district, the Industrial Zone had acquired only 384 m2 of land per household (accounting for 20.2% of total arable land of each household), almost all of households were still possible to conduct agricultural activities on their remaining lands. Whereas, as Thanh Ha-Cienco 5 New Urban Zone project had acquired 97% of the total land area of each house-


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Table 3 Economic benefits of all parties in land conversion projects.

Source: (Cienco, 2008; GDLA, 2010a; HNPC, 2010).

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Table 4 Acquired land area and the remaining of interviewed households. Project

Average acquired land/household (m2 /household)

Average remaining land area/household (m2 /household)

Number of households keep arable land (household)

Current uses of remaining land

Kim Chung-Di Trach New Urban Zone Lai Xa Industrial Zone Thanh Ha-Cienco New Urban Zone Thanh Oai Industrial Zone




1072 1983

267 268

5 24




26 households still cultivate on remaining lands; 34 have abandoned their lands 5 households have abandoned their lands 5 households still cultivate on remaining lands, 19 have abandoned their lands 128 households still cultivate on remaining lands

hold (1983 m2 /household), most of households left their remaining lands unused. Table 4 provides an overview. Another problem which emerged under the influence of the construction works was that the agricultural production of people in Thanh Oai Industrial Zone was no longer the same as before. 74.8% of interviewed households complained that irrigation canals had been damaged, 62.2% stated that pollution lead to the increase on plants and human diseases. In the other projects, farming households have also found the same difficulties in cultivation.

6.3.2. Strategies in transforming livelihoods One of significant consequences of agricultural land conversion in this research is the livelihood changes from agricultural activities to non-agricultural activities. It was only an exception in Thanh Oai Industrial Zone, where farming households were still able to maintain their agricultural works on remaining lands (cultivation and livestock and poultry). Whereas, in most cases, land losers had to convert their livelihoods due to the big loss of agricultural land area. In these cases, farming labors have mainly engaged in trade, services and informal-paid works (Table 5). Although facing the same socio-economic shock (from being expelled from their agricultural land), the farmers have got different opportunities in livelihood conversion due to their dissimilarities on ages and financial capitals. It was obvious that those with a higher education level, at young age or obtaining good financial capital, could find official jobs (like being white collars (civil servants, teachers, state company’s staffs,. . .), blue collars (workers) or owning their own small business, services,. . .). Middle-aged workers, from 35–50 years old have found it hard to get such these jobs. The majority of them has chosen to engage in private-owned trade and services. A number of laborers of over 50 years old, who could convert their livelihood, accounts for only 13%. Among them, 60% can only change their agricultural activities into informally paid jobs. Moreover, in spite of still keeping agricultural land, many labors whose land is acquired for the Thanh Oai Industrial Zone still intend to change into non-agricultural activities to get higher income and reduce risks from agricultural land decrease in the urban development process (see Table 6).

Besides those can adapt to new circumstances, some labors cannot find a suitable livelihood after the land acquisition, especially those in Thanh Ha-Cienco 5 project (see Table 7). Meanwhile, the situation of land losers in Thanh Ha-Cienco project was completely different when many more of them could not find new jobs. They were mainly from 35–60 years old, and at low level of education (primary and secondary education level) (see Tables 7 and 8). Most of them counted on interest rates of bank savings deposits for livings (from their own money or from the compensation money for the acquired land). In some cases, young people, or those graduated from vocational schools, colleges or even university were still unemployed as they had not been able to find suitable jobs yet. However, in this research, we did not consider the last situation as a serious problem driven from only agricultural land acquisition, but as a general problem in other areas in Vietnam and the beyond. 6.3.3. Strategies in using financial resources to convert livelihoods As discussed above, households could receive compensation for the acquired agricultural land, depending on the land area and time of project implementation. Every household had its own strategies in using the compensation, but commonly, not many of them have used it for production or business investment (construction of hostels or rooms for rent, opening grocery, provision of motorcycle-repaired services) (see Table 9). It was noted that land losers in Thanh Ha-Cienco 5 got higher compensation than the others for two reasons: firstly, the compensation was in cash; secondly, this project reclaimed highest land area per each household (see Table 4). In the Thanh Ha-Cienco 5 project, although the percentage of households using compensation for production or business investment was not high (9.4%), but the how much that they had spent was much higher (average of 1.2 billion/household) than that of households in the other projects. Due to the high amount of bank savings (750,000,000VND/household), some unemployed people who had no dependent persons in the Thanh Ha-Cienco 5 project could still live well by mainly relying on the bank interest rates. Many laborers whose land is acquired for this project are now unemployed due to age or education levels, thereby significantly decreasing their enthusiasm to work at all (they become “pas-

Table 5 Changes in the structure of livelihoods (unit: %). Lai Xa project

Kim Chung-Di Trach project

Farmers Manual labors (blue collars) Office labors (white collars), or grey collars Small business owners, service providers Daily-hired labors Others

Thanh Ha-Cienco 5 project

Thanh Oai project









60.1 5.6 11.2 6.4 15.9 0.9

8.3 8.8 20.2 22.8 36.3 3.6

49.3 1.5 13.4 14.9 20.9 0.0

1.5 1.5 16.2 39.7 38.2 2.9

70.5 1.0 2.0 11.0 12.0 3.5

12.6 2.2 11.2 27.8 41.7 4.5

69.3 1.1 3.4 12.7 13.0 0.5

59.0 5.3 6.2 13.0 15.1 1.4

Note: 1*: before land acquisition; 2*: after land acquisition.


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Table 6 Number of labors able to convert livelihoods by age structure (unit: persons). Lai Xa project

Kim Chung-Di Trach project

Under 25 years old 25–35 years old 35–50 years old 50–60 years old Over 60 years old

Thanh Oai project

Thanh Ha-Cienco 5 project









9 15 19 2 0

8 6 9 8 1

3 5 5 2 0

1 2 6 3 1

15 20 19 9 0

8 31 9 4 1

18 11 6 3 0

7 16 4 4 2

Note: 1*: number of labors transited to white collar, blue collar, and trader or service providers; 2*: number of labors transited to part time or daily hired-labor (informal paid works).

Table 7 Number of labors has not yet found suitable jobs by age structure (unit: people).

Under 25 years old 25–35 years old 35–50 years old 50–55 years old (for women), 50–60 years old (for men)

Kim Chung-Di Trach project

Lai Xa project

Thanh Ha-Cienco 5 project

Thanh Oai project

0 0 0 2

0 0 0 1

4 4 29 33

1 2 0 2

Table 8 Number of labors has not yet found suitable jobs divided by education level (unit: people).

Elementary Secondary High school Vocational School College, university

Kim Chung-Di Trach project

Lai Xa project

Thanh Ha-Cienco 5 project

Thanh Oai project

1 2 0 0 0

0 1 1 0 1

7 51 9 1 0

2 3 2 0 0

Table 9 Expenses of farmers from compensation for reclaimed land (unit: 1000VND). Kind of expenses

Investment on trade, services Investment on education Bank savings Purchase of new land House construction House reparation Purchase of motorbikes Purchase of house furnitures Payment for service land Inheritance

Lai Xa project

Kim Chung-Di Trach project

Thanh Ha-Cienco 5 project

Thanh Oai project









6.6 17.6 23.1 0.0 14.3 18.7 5.5 7.7 6.6 6.6

33,000 46,200 54,700 0 87,200 53,700 20,600 11,100 45,200 74,900

13.9 5.6 11.1 0.0 13.9 50.0 8.3 8.3 8.3 0.0

95,260 49,000 86,000 0 171,000 81,000 33,000 5,800 89,000

9.4 7.2 32.6 18.8 71.0 8.7 5.8 10.1 0.0 11.6

1,169,100 557,400 749,000 1,231,000 1,211,337 302,727 207,000 46,500 0 1,139,000

10.8 14.6 5.4 0.0 9.2 20.0 2.3 3.1 2.3 0.0

25,500 25,600 27,000 0 65,200 24,420 17,800 14,500 89,000

Note: 1*: percentage of total interviewed households (unit: %); 2*: average expense money/household (1000VND).

sive” laborers, who do not want to overcome current difficulties in searching new jobs after losing agricultural land). Land losers in Kim Chung-Di Trach and Thanh Oai projects have used only 33 million VND and 25 million VND/household in respectively for this type of expenses. Besides, many land losers in Kim Chung-Di Trach (23.1%) and Thanh Ha-Cienco 5 projects (32.6%) had decided to keep their compensation money in bank savings in comparison with those in the other projects, at 23.1% and 32.6% respectively. Some households have spent the money to invest in education (investment for the future livelihood), with a high proportion of households in Kim Chung-Di Trach (17.6%) and Thanh Oai Industrial Zone projects (14.6%), however, the amount of money spent was quite low as compared to other types of expenses. Clearly, the majority of people had spent the compensation money on house construction and reparation. The percentages of households, as well as the amount of money spent for this type of expenses were at the highest in all four projects. Moreover, it seems that the land losers in Thanh Ha-Cienco 5 New Urban Zone

were the ones who got the most benefits from the urban development project as they received high compensation. It was a reason to explain that why the average money they spent for many types of expenses were dozen times more than that of households in the other projects.

6.3.4. Local people anxiety and satisfaction after land acquisition When the agricultural land conversion occurs, local people suffer considerable changes in livelihoods. Depending on the context of each region, each project, and compensation, they had given different opinions and comments on their new lives. For households in Thanh Oai Industrial Zone, because their remaining agricultural lands were large enough to keep agricultural production, they were not forced to change their livelihoods. At least, they did not complain much about the livelihood conversion. 20.5% found that they had more opportunities for finding jobs in new context. 33.9% said that their income had been improved in recent years due to the increase of livelihood opportunities;

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while 26.8% inversely expressed that their income was reduced because of the difficulties in occupational conversion and agricultural production maintenance. However, the main source of anxiety for many of them (41.7% of all households) was that land and water for cultivation were becoming increasingly polluted, which could lead to higher rates of pests and diseases. For land losers in Thanh Ha-Cienco 5, the situation was completely different, as almost the entire area of arable lands had been reclaimed; they were pushed to convert their livelihoods. 55.5% of households negatively felt that their income had been reduced due to land acquisition, and only 13.3% gave opposite opinions. Similarly, 56.3% of total interviewed households complained that they could not access opportunities to convert their careers. The situation was worsening that many labors in this project were currently unemployed and were not able to find jobs. However, many people gave positive opinions for the improved landscape, environment, accessibility to health services and education,. . . 48.3% interviewed households in Kim Chung-Di Trach also criticized the consequence of aftermath land conversion that local environmental quality decreased as growth of rats, bugs, and floods. In references to the income, positive responses accounted for 38.5%, while negative responses covered 30.8%. Regarding to the livelihood conversion, 30.8% of the total households said that they had better chance to change their careers, and only 16.9% gave the opposite opinions. And again, most of people agreed that the landscape, the environment, accessibility to health services, education and security were significantly improved. For households in Lai Xa Industrial Zone, their biggest problems after land conversion were increasing environmental pollution (55.6%) and the decreasing security (72.2%) (Increasing social problems, such as: theft, addictions, gamble. . .). The percentage of households seeing better chances in livelihood conversion was almost equal to the percentage of households feeling worse future. There was one other thing in common among households in Kim Chung-Di Trach project, Lai Xa and Thanh Oai industrial zones, that most of them was expecting to receive service lands in the urban development projects as the state had promised to allocate for them. The implementation of land allocation had not been done even though the projects had started 10 years ago.

7. Discussions 7.1. Need to adjust the balance of economic benefit share between the State, investors and farmers in agricultural land conversion projects This study reveals that in fact, project investors are the one obtaining highest benefit from the agricultural land conversion. Meanwhile, the farming households should suffer several vulnerabilities from losing agricultural land, jobs and ability of keeping agricultural production, in spite of getting more opportunities in increasing financial capital and evolving in non-agricultural activities. It is indicated that investors are enjoying great profits, but takes less responsibility for local livelihoods. In several projects, land had been acquired, but local people have not offered new careers and support for stabilizing their livelihood. In two cases of Lai Xa and Thanh Oai industrial zones, only 5–6% of total farmers were employed in these zones. It is an evidence to explain for the recommendation of World Bank on land policy that “the Land Acquisition and allocation methods for economic purposes often cause inequity in sharing interests between land users, investors and State. Inefficient land use, corruption and lasting land-related appeal are main issues. This implementation does not guarantee the right of the people, and it is contrary to the Constitution of 1992” (WB, 2012).


The updated 2013 Land Law therefore brings hope for giving more fair benefits for acquired-land people when it stipulates that self-negotiation mechanism between farmers and investor is applied in conventional socio-economic development projects, while compulsory land conversion mechanisms are required only for projects that benefit nation and society (SRV Congress, 2013: 32–33). 7.2. More concerns on livelihood stability and living environment after land acquisition project should be focused While the process of industrialization itself has not occurred, the rapid development of industrial zones and urbanization causes a “crisis” for farmers in livelihood issues (Dao, 2012). Several previous studies have shown that when agricultural land is revoked, the majority of the labor has changed to business activities: services and informal paid works (Dung, 2010; Nguyen, 2009; Tran and Steven Lim, 2013). This study also shows similar results. However, it indicates more clearly that the higher the age of labors, the less their ability to switch to other livelihood. On the other hand, some previous studies have warned that the more agricultural land conversion occurred, the stronger the livelihood transformation occurred (Tran and Steven Lim, 2013). This research revealed other facts: a rapid acquisition of agricultural land with high price of land compensation is leading to high rate of unemployment and people who lives count on bank saving interests. 26.9% of farmers (under 60 years) of the surveyed households are unemployed. Many households live in big houses, but their members do not have careers or have to do informal-paid work for a living. This is the typical result of the agricultural land acquisition at high price of compensation, but support forms on vocational training and live stabilization are not well concerned. Moreover, it is also the fact that in many industrial construction projects, the investors have not provided enough jobs for local farmers whose lands are acquired. The study shows that investors in Lai Xa and Thanh Oai Industrial Zone only employed 10 people in 10 households out of 163 households whose land are acquired. This is also the practical situation in many industrial parks across Vietnam (ADB, 2007; Nguyen, 2005). Currently, in several developing countries such as Vietnam, modern industry with high-tech systems and less negative impacts on the environment has not really developed, so that the environmental issues are raising as main problems in all industrial zones (Hoang, 2012). Therefore, the transition from fresh agricultural environment to contaminated environment in industrial zone has a direct impact on health, as well as the cultivation of farmers in many areas (Duong et al., 2013; Leaf, 2002). In Lai Xa and Thanh Oai industrial parks, environment is contaminated by dust and water from industrial discharge that result in low-productivity crop yields. 8. Conclusion This paper analyses two issues emerging during the conversion process of agricultural land to urban and industrial land: shared interests between the parties (including the State, investors and farmers whose land are acquired), and the strategic transformation of the livelihood of people whose agricultural land are acquired in the suburbs of Hanoi. This findings of study in Hanoi show that new urban development has resulted in unfair benefit-sharing, whereby farmers tend to receive a disproportionate share (i.e. the least) benefit, regardless of the rate of urbanization. A number of policies to support local inhabitants in the transition phase were indeed defined, but so far these have not been implemented properly. This fact has delayed any start-up of support activities for local


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people, causing them to prolong their insecure situation. At the same time, where the change of livelihood was actively supported during the conversion of agricultural land use from agriculture to diverse non-agricultural occupations, the income of households has increased. However, there are still difficulties in maintaining farming on the remaining agricultural land, in finding stable livelihood activities, and in using compensation for investment. In some projects where entire agricultural land is acquired such as Thanh Ha-Cienco 5 project, policy manner should be taken into consideration, when entire land is claimed in exchange for large amount of compensation. The findings of this study are not only insightful for Hanoi in particular or Vietnam at large, but also for other countries where significant and rapid conversion of land takes place, and where similar contrasting forces of stakeholders are present. It is crucial in such cases that not only compensation policies are fairly and effectively implemented, but it is perhaps even more crucial that effective and appropriate support strategies for local farmers whose livelihood is significantly changed in the conversion process are constructed. Without such support strategies the potential for further conflicts may increase, leading to a decrease in sustenance of the conversion process. Moreover, the degree to which benefits are shared may need to be carefully looked into. The main victims of the land conversion, in most cases the local subsistence farmers, tend to receive much lower benefits than the main winners from the conversion process, the investors. If these are not carefully looked into, it may lead to possible resistance and stress in society, and moreover, lead to considerable economic inequality. Acknowledgement This research is funded by Vietnam National University, Hanoi (VNU) under a project number QG.TÐ.13.08. References ADB, 2007. Making Markets Work Better for the Poor Markets and Development Bulletin. Hanoi. Azadi, H., Hol, P., Hasfiati, L., 2010. Agricultural Land Conversion Drivers: a Comparison between Less Developed, Developing and Developed Countries. John Wiley & Sons Ltd. Chambers, R, Conway, G., 1992. Sustainable rural livelihoods: Practical concepts for the 21st century IDS Discussion Pape. Brighton. Chan, N., 2003. Land acquisition compensation in China—problems and answers. Int. Real Estate Rev., 136–152. Cienco, 2008. Preliminary report on Thanh Ha A,B—Cienco 5 residential project (in Vietnamese). Duong, D.D., Le, T.N., Nguyen Thi, D., 2013. Difficulties in transition among lilivehoods under agricultural land conversion for industrialization: perspective of human development. Mediterr. J. Soc. Sci. 4 (10), 259–267. Dao, T.T., 2012. Urbanization and Periurbanization in Hanoi. Ho Chi Minh City General Publishing House, Ho Chi Minh City. DFID, 2000. Sustainable Livelihoods Guidance Sheet. Duong, N., Miguel, Castrence, T.M., Jefferson, Fox, James, Spencer, Qi, Chen, 2014. Built-Up Area Change Analysis in Hanoi Using Support Vector Machine Classification of Landsat Multi-Temporal Image Stacks, Environment, Population and Health Series, East-West Center Working Papers, vol. 1. People Committee of Hoai Duc district, 2012. Land clearance in Hoai duc district during 2004–2011: practical experiences. Dung, N.M., 2010. Farmers’ Coping Strategies for Sustainable Livelihood under the Impacts of Industrializaion Projects in Rural Area (a Case Study of Van Duong Commune in Red River Delta of Vietnam) EADN working paper, vol. 47, p. 43.

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