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Habitat International 65 (2017) 49e58

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Habitat International

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Effects of urban expansion on suburban farmers’ livelihood inVietnam: A comparative analysis of Ho Chi Minh City and Hanoi

Minh Hoang Vu PhD. Candidate *,Hiroyuki Kawashima (Prof./Dr.), Associate Professor (International EnvironmentalEconomics)Laboratory of International Environmental Economics, Department of Global Agricultural Sciences, Graduate School of Agricultural and Life Sciences, TheUniversity of Tokyo, Bunkyo-ku, Yayoi 1-1-1, Tokyo 113-8657, Japan

a r t i c l e i n f o

Article history:Received 30 November 2016Received in revised form21 March 2017Accepted 4 May 2017Available online 16 May 2017

1. Introduction

Suburbanization is the process of decentralization whereby ur-ban dwellers no longer only prefer to settle in the urban centre butalso to its surrounding suburban districts. With the stable and highgrowth of population in Vietnam's two largest cities, urban area hasbeen constantly expanding with more rural districts being incor-porated and reclassified into urban zone. As the suburb districts inHo Chi Minh City and Hanoi were largely rural prior to the ‘urban’reclassification, effort on land acquisition and conversion to non-farm use is therefore believed to have been most aggressive inthese areas. It should be noted that the suburban areas in ourstudies cover the most recently formed ‘urban’ districts in the citybased on its official establishment, rather than the ‘rural’ areas (orso-called periurban), which were referred inter-changeably innumerous studies on urban expansion and development in Viet-nam. Given the relative proximity of the suburban households toboth the city centre as well as the surrounding rural hinterland,their livelihood choices and transition outcomes are foremostcomplex and interesting. The research is carried out from a neutralstandpoint, assuming that these land-lost suburban agriculturalhouseholds can either (1) benefit from these land acquisition as

* Corresponding author.E-mail addresses: mhoangvu90@gmail.com (M.H. Vu), akawashi@mail.ecc.u-

tokyo.ac.jp (H. Kawashima).

http://dx.doi.org/10.1016/j.habitatint.2017.05.0010197-3975/© 2017 Published by Elsevier Ltd.

they can receive a compensation from their farm land, are no longertied down to farmwork, and can enter higher paid non-farm job; or(2) experience difficulties as they fail to adapt to the urban lifestyle,facing challenges in employment and income in the long run(Kawashima & Vu, 2015).

After the acquisition of farmland, agricultural households oftenhave to give up farming partly or entirely depending on howmuchland they have left. It was estimated that a loss of 1 ha farmlandcorresponds to an average job loss of 13 people in the case ofVietnam, and of 20 in the case of Hanoi (Nghi, 2009) Previous re-searches in Ho Chi Minh City's urban development covered a widerange of topics, from land price differential between governmentland price framework and market land sale price by developers(Thu& Perera, 2011; Nguyen, 2012) to trends of development in thesuburban districts and issues associated with city planning (Du,2012; Vo, 2012). Vo (2006) examined the aspect of livelihood ofaffected agricultural households after land acquisition. The studyfound, on one hand, a growing number of young people leavingfarm employment to find work in the non-farm sectors, notably inthe nearby industries and commercial services. On the other hand,those who stay in farming, with a reduced amount of land, hadswitched their agricultural types to more suitable, less landdependent, urban agricultural practice. Another study from a gov-ernment research project by the Ho Chi Minh City Institute forDevelopment Studies (HIDS) gave further implications to thetransition difficulties of households where only a minority ofhouseholds have experienced an increase in income after landacquisition (Phap Luat TPHCM, 2015).

In Hanoi, researches on the socio-economic impacts after landacquisition in Hanoi were covered by Tran and Lim (2011), forinstance, where they found that farmers after land acquisition aremore likely to enter informal and low skill work. While aged pop-ulation were more likely to open their own shops from home,younger members tend to migrate closer to urban area looking forwork. Tran (2014) further conducted research based on the samesurvey sample to find no implication of relation between farmlandendowment and households' income group, but rather it is

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whether households participated in non-farm jobs that matter.Other studies also confirmed the growth of population engaging inthe informal sector, such as unlicensed shop, or street vendors(Nguyen, 2011; Nguyen et al., 2016). The negative impacts ofcompensation were also assessed as it generates incentives forhouseholds to spend and even went into debt, mostly to upgradehouseholds’ living standard and housing condition (Nguyen, 2011).Case studies of land acquisitions in the periurban Hanoi also foundsimilar problems of integration and sustainability for land-losthouseholds, as well as issues resulting in segregation and corrup-tion within the community fuelled by the large disparities ofbenefit between land owners (Labb�e, 2015; Labb�e & Boudreau,2015). Han and Vu (2008), based also on case studies of new ur-ban development projects, saw problems in the implementation ofthe promised compensation and assistance packages. Demonstra-tions and riots occurred as a result from their frustration by the lowcompensation and delayed payment by developers and govern-ment agencies.

In this paper, our objectives are three-fold. Firstly, we explorethe urban and subsequent suburban development in Ho Chi MinhCity and Hanoi. In the second part, a comprehensive comparativeanalysis, based on surveys in both cities, is presented. The surveyfocused on suburban farm households who have lost their land dueto land acquisition and their livelihood afterward. Lastly, a numberof factors, including education, land endowment and agriculturaldependency and are analysed as to their possible effects uponhouseholds’ transitional outcome.

2. Vietnam's urbanization and suburbanization in retrospect- the “tales of two cities”

Since 2009, both Hanoi and Ho Chi Minh City have become‘Special’ class city according to the Vietnam's urban classificationsystem (World Bank, 2011). Currently the two cities are officiallyhome to over 15 million people, accounting for 16.75% of totalVietnam's population, up from its 15.9% share in 2009. With therapid development in the new and still partly rural suburban dis-tricts, strong and stable trend of population growth is expected tocontinue in both cities (Fig. 1).

2.1. Ho Chi Minh City

Ho Chi Minh City today is a populous urban area with high ur-banization rate. As with many large metropolises, its traditionalurban centre had become too congested. Since the early 1990s,population density in several traditional central districts had sur-passed 50,000 people per square kilometre (Kawashima & Vu,2015). Population decentralization thus occurred as a result. Pre-vious attempt to understand this pattern claimed that such out-wardmovement had occurred as early as 1989 (Luong, 2009), whilestudy on intra-movement of population in Ho Chi Minh City sawsuch trend taken place since the mid-1990s (Gubry, Castiglioni,Cusset, Thieng, & Huong, 2010). The pattern of urbanization in HoChi Minh City could also be divided into phases of (I) concentrationin the ‘core urban centre’ districts until mid-1990s, (II) dispersion tothe new central districts until mid-2000s, and (III) decentralizationto the suburban districts from then on (Kawashima & Vu, 2015).

The trend of urbanization, modernization, and the shift awayfrom the rural society is evident in Ho Chi Minh City. From 2000 to2013, more than 1000ha of agricultural land were convertedannually for non-agricultural use (Kawashima & Vu, 2015). Usingsatellite data on urban land use change, Kontgis et al. (2014) foundthat built-up areas in Ho Chi Minh City had increased by 4.8 timesfrom 1990 to 2012, with one third of such development occurred inurban area, presumably the suburban districts. Impacts on

agricultural households were visible, with the number of house-holds participating in farming in the suburban districts reducedover 6 times between 1997 and 2011, from 19,184 to 3082 house-holds respectively (Hoang, 2011).

2.2. Hanoi

Despite being the capital of Vietnam, Hanoi's urbanization ismuch lower than Ho Chi Minh City. Before the land expansion in2008, the city's urbanization rate was only 65%. Today, with theincorporation of the neighbouring provinces' rural areas and itsresidents, Hanoi's population has reached 7.5 million. Its urbani-zation rate nonetheless was lowered to only 49.1%. Populationsettlement to the suburban districts in Hanoi has not been asremarkable as in Ho Chi Minh City due to the capital being ayounger city, in terms of development and urbanization.

From the mid-1990s to mid-2000s, urban land in Hanoiquadrupled from 47.22 km2 in 1995 to 185.72 km2 in 2003 (Nguyenet al., 2016). Another study by Pham, Pham, Tong, Nguyen, andPham (2015), observing data from Landsat, concluded of agricul-tural land loss due to conversion in Hanoi at an annual rate of 1.4%from 1993 to 2000, and 3.0% from 2000 to 2007. Nonetheless, since2010, the rate of conversion somehow has stagnated. The total sizeof land converted from agriculture to non-agriculture in Hanoiremained relatively small from beginning of 2010 to early 2014,amounting to only 1212ha across the four years period (MONRE,2010; 2014). The reason could be related to the frozen real estatemarket in Vietnam during this time (Thanh Nien News, 2014). Onething should be noted however is that this data is not reflected ofthe amount of land acquisitioned from farmers. To convert land tonon-farm use, acquisitioned land has to be converted throughpaying a land conversion tax, corresponding to the difference ofnon-farm and farm land price at the location, based on governmentframework. From our field research in Hanoi, the amount of landacquisitioned has been striking. For instance, in Ha Dong districtabout 162 ha of farm land was acquisitioned from 2010 to 2015; inTu Liem, prior to its reclassification and division to two urbandistricts, about 564 ha of farm land belonging to 13,209 agriculturalhouseholds had been acquisitioned from 2010 to 2013. Landacquisition could be even more extensive in rural districts whereagricultural land is still abundant (Nguyen et al., 2016; Tran & Lim,2011).

2.3. Remark

Despite both cities belonging to the ‘special’ class urban cate-gory according to the Vietnamese government, it is clear that HoChiMinh City is more urbanized and developed. Here, developmentin the surrounding suburban districts has taken place since themid-2000which resulted in a gradual but visible shift of populationto these new urban areas. On the other hand, Hanoi is still relativelyrural with a large portion of population still reside in the rural areasand participate in farming. Trend of urbanization therefore wasrecorded in the capital city, but population accumulation to itssuburban areas is still relatively low. Along with stable economicgrowth, it is expected that more land acquisition and conversionwill be needed in Hanoi to meet the ever-increasing need ofurbanization.

3. Research design

3.1. Location

The survey areas cover the suburban districts of Hanoi and HoChi Minh City (Fig. 2). These districts represent the most recently

Fig. 1. Map of Vietnam and location of Hanoi and Ho Chi Minh City.Source: Vietnam's Map (asisaqualityfocus.com); HSO, 2016; HCMCSO, 2016.

Fig. 2. Map of urban districts in Ho Chi Minh City and Hanoi.

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formed ‘urban’ districts in the cities, having experienced large scaleland acquisition and conversion, and high population growth rate.Our location choice is different from what have been selected inprevious studies, which were mainly in rural districts. In the case ofHo Chi Minh City, for instance, Vo (2006) chose rural district BinhChanh as the research area. Similarly in Hanoi, Tran and Lim (2011)conducted survey in Hoai Duc rural district; Nguyen et al. (2016)selected rural Hoai Duc and Thanh Oai; Nguyen (2011) focused onTu Liem district in 2006 and 2007, which was then also rural. Case

studies on land conflicts due to land acquisition in Hanoi coveredboth rural and urban districts (Han & Vu, 2008; Labb�e, 2015; Labb�e& Boudreau, 2015).

The reasons for our choice of ‘suburban’ rather than ‘rural’ dis-tricts are simple. First of all, it is without doubt that status is animportant thing in Vietnam. By not being classified as an “urban”district, population movement to these areas is limited. Landacquisition and conversion in these areas would mostly come un-der schemes for factory construction, large scale residential

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projects, or infrastructure development. Secondly, althoughdevelopment in surrounding rural areas has been high, it is not asdynamic as in the suburban districts. In most cases, large amount offarm land still existing in the rural areas while households are notclosely connected to the urban lifestyle of Hanoi and Ho Chi MinhCity's centre. It is therefore believed that their changes and needsfor adaptation is relatively lower and less complex compared toagricultural households from within the suburban districts.

3.2. Methodology

In order to gather overall information on the livelihood transi-tion of agricultural households after land acquisition, a survey hasbeen established comprised of 30 questions at households' leveland 13 questions for households' members. Information collectedfrom the survey include data on: land size and amount of landacquisitioned, land compensation cost, income and employmentprior to and after land acquisition, challenges during transition,spending of compensation and current income sources, as well ashouseholds’ assessment on certain living aspects and their level ofsatisfaction compared to before.

The target for survey is the suburban agricultural householdswho have experienced their latest land acquisition from 2010 to2015. Our study originally planned to have an equal amount ofsurvey in all the suburban districts, however this has been provenunsuccessful. The first limitation is the lack of support from localgovernment as well as the scarce and patchy amount of data onland acquisition and on affected households. The second problemwas that many households have moved to new location after landacquisition, which could be in different district or even province.The snowballing samplingmethod was therefore used to access thetarget household group to overcome such challenges (Biernacki &Waldorf, 1981). The initial step of identifying households fittingto the survey was sourced from the limited list of compensatedhouseholds provided by the government from 2010 to 2015. Fromthen on, the survey expanded based on referral by either surveyedhouseholds or other non-participating local individuals.

For Ho Chi Minh City, 200 households survey was conductedbetween March and May 2015, of which 120 households belongedto district 9 before land acquisition. This is due to district 9 beingthe pioneer district of our research where we spent much of thetime gathering data, carry out preliminary field survey, and gettingin contact with local government. Two other districts, District 2 andBinh Tan were selected in addition for survey with 40 householdsper district. The remaining suburban districts of District 2, 7, 12, andThu Duc were not included in the study.

Survey in Hanoi, based on lessons and challenges of surveyconduct in Ho Chi Minh City, has been done in a more orderlymanner whereby necessary steps had been taken place prior to thefield study. For instance, an official letter of authorisation for studyfrom the Hanoi's government was acquired to encourage localgovernment to provide information on land acquisition. Four out offive suburban districts have been cooperative and provided infor-mation in a timely manner. District Hoang Mai was late in theprovision of data thus were eliminated from the study. With thesample size set at roughly 300 households, a target of 110 surveyshave been carried out in each district of Ha Dong, Long Bien, NorthTu Liem, and South Tu Liem. This means 110 households is themaximum number for survey per district, while the actual numberdepends on how easy or difficult it is to actually locate householdsand carry out survey. The field study lasted 3 months from Juneuntil middle of August 2016. The survey distribution is: South TuLiem (78 households), North Tu Liem (92), Long Bien (49), and HaDong (106).

4. Comparative results in Hanoi and Ho Chi Minh City

4.1. Land size, land acquisition, and compensation

The authors use land size distribution as the base line toexamine the difference aspects of livelihood between Ho Chi Minhand Hanoi suburban farmers. Clear differences have been recog-nised between Ho Chi Minh City and Hanoi based on the survey.Land size per households, for instance, was about 2.5 times larger inHo Chi Minh City. Whereas land distribution in Hanoi clusteredwithin the range from 500 to 2000 m2, agricultural households inHo Chi Minh City either owned large piece of land, over 6000m2, oronly owned relatively small land plot and have shifted their mainincome source to the non-farm sector (Fig. 3).

Average per square meter compensation, as well, was threetimes lower in Hanoi (340,000VND) as compared to Ho Chi MinhCity (1.1 million VND) (Fig. 4). Compensation per square meter hasthe tendency to decrease as the land size increases in Ho Chi MinhCity. This trend could be explained and attributed to the fact thathouseholds with larger land plot often reside closer to the ruralperiphery, where land price is lower. They have lesser interactionwith the urban non-farm economy, thus encouraging households’members to continue working in the agricultural sector. In Hanoi,compensation per square meter, however, did not fluctuate asstrongly across the land size distribution range (Fig. 5).

In Vietnam, compensation price is estimated based on thegovernment set price and multiplied by a K coefficient to narrowthe gap between set price and market price; K depends on thelocation and type of land use after conversion. Based on the gov-ernment pricing framework, before adjusting for K coefficient,compensation in Hanoi reflects relatively close to the set price. Incontrast, despite the lower set price in Ho Chi Minh City, actualcompensation paid was significantly higher (Table 1).

4.2. Households' livelihood before and after land acquisition

Despite the similar average households' size, Ho Chi Minh City(4.7 members) and Hanoi (4.9), the mean households’ income inthe former was six times larger before, and three times larger afterland acquisition (Table 2). The difference in income, aside from theobvious economic development gap between the two cities, is dueto the fact that suburban agricultural households in the Southerncity had already shifted and attempted to integrate in the urbaneconomy. It was pointed out through the survey that households inHanoi depended largely on agriculture prior to land acquisition,and still today about 60% of them still would rather continue towork in agriculture. The trend is opposite in the case of Ho Chi MinhCity with lower agriculture share of income prior and lesser per-centage of households still want to work in agriculture (Table 2).

Both cities were involved majorly in rice farming prior to landacquisition, though much more so in Hanoi. Whereas Ho Chi Minhhouseholds were more diversified and have started diverting tomore suitable types of urban agricultures such as vegetable andflower cultivation, Hanoi's farming practice wasmoremonoculture,focusing primarily on rice production.

The high dependency on agriculture prior to land acquisitionfundamentally restricted the possibility of higher income earningfor Hanoi's suburban farmers. Land acquisition, by pushing farmersout of agricultural practice, allowed households to perceive visibleincreased earning. Consequently, the present level of income in thecapital, despite still much lower than in Ho Chi Minh City, hasdoubled compared to before (Fig. 6). In the case of Ho Chi Minh City,although the average income generally increasedwithin the cohort,the gains were not so obvious with many households also experi-enced decrease in income.

0

20

40

60

80

100

Ho Chi Minh City

Hanoi

Num

ber o

f Hou

seho

ld

Land Size Group (m2)

Fig. 3. Land size distribution by household (m2).

Fig. 4. Compensation per household (million VND, Vietnam Dong) (1$ ¼ 22,000 VND).

Fig. 5. Compensation per square meter.

M.H. Vu, H. Kawashima / Habitat International 65 (2017) 49e58 53

In regard to employment, what kind of work agriculturalworkers have shifted to after land acquisition? In both cases ofHanoi and Ho Chi Minh City, the majority of former agriculturalworkers are nowworking in common jobs, including manual work,factory workers, shopkeeper, and service/sale staff. Only 3

individuals in Ho Chi Minh City managed to attain high employ-ment position as company owner, and experts in their field. Forthose without new employment, they could register as unem-ployed, stay home as housewives/househusbands, or enter (early)retirement (Table 3); as we observe, these rates all increased

Table 1Government farm land price in urban districts versus actual paid price (VND/m2).

Ho Chi Minh City Hanoi

Minimum 97,000 162,000Maximum 190,000 252,000Actual (based on Survey) 1,119,519.6 447,720.37

Source: Ho Chi Minh City's People Committee (2014); Hanoi's People Committee(2014).

M.H. Vu, H. Kawashima / Habitat International 65 (2017) 49e5854

significantly after land acquisition. Although unemployment levelin Ho Chi Minh City's survey is within the safety limit, under 5%, inHanoi such rate is quite alarming and unsustainable at 10.8%.Development in the suburban area in Hanoi therefore could bededuced as lagging and unsuccessful as jobs were not createdenough to accommodate the growing number of out-of-jobfarmers.

The surveys concluded with results showing the majority ofhouseholds in both cities perceive their lives more difficult afterland acquistion, 53.5% in Ho Chi Minh City and 61.8% in Hanoi.Major challenges such as in ‘income and employment’ and ‘changein living expenditure’ were applicable to both cities. However in

Table 2Households’ income and agriculture dependency.

Average Annual Total Income (thousand VND)

Average Share of Income from Agriculture (%)

N of households still work in agriculture or want to continue work in agriculture

Fig. 6. Household annual total income ‘before

Hanoi, due to the high dependency on agriculture, not only forincome but also for food supply, ‘food security’ problem was notedby 121 households (out of 325), as opposed to only 9 out of 200households in Ho Chi Minh City.

4.3. Analysis of factors impacting households’ livelihood outcome

4.3.1. EducationEducation level was the first factor observed, however our

analysis felt short given that the level of educational attainment inthe survey group was too average, meaning there were too manypeople graduated only primary or secondary school (Table 4).Educational attainments are classified here into 3 groups of ‘Low’,‘Average’, and ‘High’ education. Several methods were tested, suchas, choosing the education level of the head of household (oldestmale) to represent households' education level. However becausemany households include 2e3 families living together, or havingold people, thus this method faced too many problems. It wasdecided at the end that the average level of education by householdshould be taken as the ‘mode’ average of that household's mem-bers' educational level.

Ho Chi Minh City Hanoi

Before 13,286.50 2320.70Present 14,657.00 4997.10Before 44.6 80.8Present 3.8 12.7Still 17 (8.5%) 135 (41.5%)Want to 50 (25%) 196 (60.3%)

’ land acquisition and at ‘present’ (VND).

Table 3Change in agricultural workers and the possible redundant labour force.

Hanoi Ho Chi Minh City

Before After Before After

Agriculture 716(45.1%) 188(11.8%) 262(27.9%) 25(2.7%)Non-farm Employment 272(17.1%) 676(42.6%) 353(37.6%) 503(53.6%)In Education/Underage 537(33.8%) 359(22.6%) 248(26.4%) 190(20.3%)Unemployment 24(1.5%) 172(10.8%) 17(1.8%) 46(4.9%)Retirement 34(2.1%) 144(9.1%) 30(3.2%) 128(13.6%)Housewife/husband 5(0.3%) 49(3.1%) 28(3%) 46(4.9%)

Total 1588 1588 938 938

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Low Education: Illiterate, Kindergarten, Primary SchoolAverage Education: Middle School, High School, VocationalSchoolHigh Education: Vocational College, University, GraduateSchool.

The level of education by households' individual was reassessedfor the group of agricultural workers before land acquisition andthe current unemployment workers. In Ho Chi Minh City, higheducated individual generally did not work in agriculture, only 5out of 262 farmers attended vocational college or university. Thelogic also applied for the city's unemployment group, only 2 out of46 had high education but are currently jobless. On the other hand,in Hanoi, despite the small share of high educated individual tothese two groups, the percentage is still relatively high; 27 mem-bers (3.7% of farmers before land acquisition) and 18 members(10.5% of the unemployed) are highly educated.

4.3.2. Agricultural dependencyDependency on agriculture had been shown to be an important

factor affecting the livelihood outcome of suburban agriculturalhouseholds in Ho Chi Minh City after land acquisition (Vu &Kawashima, 2016). The result was based on the survey in Ho ChiMinh City and a cross-table framework to assess the relativeimportance between the total amount of compensation perhousehold versus the ability of households to sustain or increaseincome after land acquisition in determining their satisfaction.High agricultural dependent households were found to havereceived large overall compensation package, however their in-come tends to decline. Their livelihood satisfaction indicators werelow, indicating their unhappiness toward the current lifestyle afterland acquisition. The results reversed for households with lowagricultural dependent, low compensation, but managed to main-tain or increase their income overtime.

It is assumed that households that received high totalcompensationweremore likely to own large amount of land as wellas were more involved in agricultural practice prior to land acqui-sition. They became rich overnight after land acquisition ascompensation was paid. Such large amount of cash, although doesnot guarantee sustainable income in the future, could induce un-planned spending on households. This type of overspending

Table 4Households’ educational attainment level.

Individual Education

Ho Chi Minh City Hano

Low Education 313 (33.4%) 356 (Average Education 518 (55.2%) 1013High Education 107 (11.4%) 219 (

Total 938 1588

incident was recorded in previous study on land acquisition andcompensation in Vietnam (Nguyen, 2011). In contrast, those withsmaller land size and less dependent on agriculture generallyreceived less compensation but were more likely to have divertedtheir income sources to non-farm employment, thus minimizingthe impact of change when their lands were taken away. Because ofthe small compensation package, households’ spending optionswere limited. Wasteful use of compensation often therefore doesnot apply in this case.

Comparing the agricultural dependency of the two selectedcities, it is clear that Hanoi's suburban agricultural households wereand are still much dependent on farming for income (Table 2,Fig. 7). Basing such dependency on land holding, a tendency wasshown in Hanoi whereby households with larger land tend tosource more of their income from agriculture. In the case of Ho ChiMinh City, the trend was only consistent upward to the range of2500m2, then decline until the 4000m2 range, and became volatilefrom then on (Fig. 8).

With the assumption that the more agricultural dependent themore difficult it is for household to transition after land acquisition,it is expected that Hanoi's survey households faced more diffi-culties than its counterparts in Ho Chi Minh City. A simple analysison households' livelihood after land acquisition was done based onthe share of household income prior to land acquisition (Fig. 9). Inthe case of Hanoi, certain level of consistency was established inthat the stronger households relied on agriculture, the more likelythat their livelihoods are more difficult today. Analysis on Ho ChiMinh City’ households however did not show any clear pattern. Theauthors assumed this is because of the higher living standard andthe already urban integrated mentality of households in theSouthern city. With higher income and compensation package, andan inconsistent dependency on agriculture regardless of land size,the livelihood transition of Ho Chi Minh City's households is thusfar too complicated for any simple analysis.

5. Discussion and policy implications

5.1. Land acquisition and compensation in Hanoi and Ho Chi MinhCity

Our study showed a clear difference in urbanization phase andthe speed of suburbanization in Hanoi and Ho Chi Minh City. Beingpresently at a younger stage of urban development, future landacquisition and suburban development in Hanoi could draw outlesson fromHo Chi Minh City. Compensation, for instance, has beendone with negotiation, under a more market based orientedapproach in Ho Chi Minh City (Folkmanis& Nguyen, 2014). This hasresulted in the compensation per square metre in the Southern citybeing over 3 times higher compared to Hanoi, despite the former'slower government set land price framework. A good compensationpackage could always serve as a valuable initial support for agri-cultural household to successfully transition into the urban non-farm lifestyle.

Nevertheless, households should be able to sustain their income

Household Education

i Ho Chi Minh City Hanoi

22.4%) 46 (23%) 21 (6.4%)(63.8%) 125 (62.5%) 251 (77.2%)13.8%) 29 (14.5%) 53 (16.3%)

200 325

Fig. 7. Agricultural share of households' income before land acquisition.

M.H. Vu, H. Kawashima / Habitat International 65 (2017) 49e5856

after land acquisition. From our field research, in many occasions, itwas reported that households generally started to feel that theirliving budgetwere becoming insufficient after 2e3 years, especiallyin the case of those receiving gross amount of compensation butunable to sustain income after land acquisition. Therefore, gov-ernment should provide extra support to these households whowere heavily dependent on agriculture for living prior to landacquisition. They have been working in such sector for so long andthe sudden transition to the newly urban non-farm lifestyle couldbe a shock to households’ members. To which extent, financialpackage is not enough as a compensation. Households will need jobtraining, employment opportunities, and a mean of stable incometo push forward their urban integration.

5.2. The untold facts

Vu and Kawashima (2016) had pointed out, based on surveys inHo Chi Minh City, that misreporting and outlier cases may existwhen using survey method. Households’ livelihood is generallycomplex with issues which cannot be understood and reported byusing sample questionnaires. The dissatisfaction or distrustfulattitude toward local authorities in regard to land acquisition couldalso fuel tendency for misreport. In that sense, survey householdsmay hope to portray a more difficult livelihood despite generalimprovement to entice the media and readers for additional publicvoice and support.

In the study of Hanoi, an obvious fact was recognised in regardto households' involvement in the informal sector. As in previous

Fig. 8. Agricultural dependency

researches (Nguyen, 2011; Nguyen et al., 2016; Tran & Lim, 2011),increasing number of households were found working in theinformal sector after land acquisition. What if these householdshave worked in such informal sector before but failed to report it inthe survey? From the Hanoi's sample, households mainly sourcedtheir income mostly from agriculture, averaging 80.8%. Living andearning income solely on paddy field (rice) farming on land size lessthan 1ha however is not sustainable. Residing at such close prox-imity to Hanoi's centre, it is suspected that households' members,especially the younger generations, would already be involved inthe non-farm informal economy. It is understandable however dueto various reasons households may be unwilling to disclose suchinformation.

5.3. Policy experimentation

Our study suggests a number of experimental policies targetinghouseholds with low or no mean to sustain their income, mostoften those with high dependency on agriculture before landacquisition. These policies include: (1) annuity payment, and (2)land bonds. Such compensation could be done by dividing it in twoparts, one part is a one-off lumpsum payment to farmers by thetime of acquisition, the second part is to be paid as annuity, as aform of monthly pension for farmers for transitioning (Bardhan,2011). The suggestion came from our view point to regardcompensation as similar to winning a lottery, or entering pension.At all of these moments, people find themselves at a turning pointwhere they suddenly have a relatively large amount of money butoften do not know how to use appropriately. Some could put it togood use, but others could lose it all quite rapidly due to unplannedspending. The idea is the same in both policiese to provide a stableand regular source of income for households over a fixed period oftime.

No policy is perfect, however employment or annuity paymentof compensation was ratified under the Land Acquisition Act 2013in India to assist land owner for resettlement and rehabilitation(Government of India, 2013). In the case of land bonds, variouscountries have adopted this approach in case of land acquisition;Guyana, for example, allows their farmers to receive compensationfrom land acquisition in various land bonds instruments, thusguarantee their income in a fixed foreseeable future (Laws ofGuyana, 1959). The successful application of such policies wouldnot only facilitate the transition of traditional farmers out of agri-culture, but also hold government more accountable of their landacquisition scheme, either through assisting transition farmers(annuity payment and employment support) or making sure thatacquisitioned land would provide real benefit (land bonds).

based on land size holding.

Fig. 9. Livelihood assessment based on households' dependency on agriculture.

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6. Conclusion

Through household's surveys conducted in both cities, it isconcluded that Ho Chi Minh City's agricultural households aregenerally better offs. Their lands were larger, while compensationwas higher frommore negotiation, and from the already developedmarket-based mentality in the South. In addition, most householdsin Ho Chi Minh City had diverted their income to non-farmwork, orworking in agriculture typesmore suitable for urban farming. Beingthe capital of Vietnam, it is expected that Hanoi's urbanization andsuburban development will grow much stronger in the comingdecades to not fall too far behind its Southern rival. With strongerland acquisition demand, the government needs to carry outnecessary steps to ensure the smooth transition out of agriculturefor rural households.

Livelihood transition after land acquisition in Ho Chi Minh Citywas found to be more complex given their higher income and highcompensation package in general. Their attitudes to work andspending have to be taken into account for in-depth analysis. InHanoi however the impacts were more visible. Due to the highagricultural dependency and low income in Hanoi's surveys, landacquisition thus forced many out of farm employment and subse-quently increased general households' earning through higher paidnon-farm jobs. Nonetheless, the majority in this case still perceivetheir livelihood as more difficult, due to challenges in income,employment, and food security. Higher dependency on agriculturewas associated with more difficult livelihood after transition. Thesehouseholds often own larger land size, sourced their incomemostlyfrom agriculture, and then suddenly received a large sum ofcompensation money in the wake of the land acquisition process.Despite the importance of compensationmoney as a viable mean to

help agricultural households during their transition, such largeamount of cash could not generate a sustainable outcome as itcould be spent quite rapidly while many households saw their in-come gradually deteriorate.

The authors suggest a number of policies (land bonds, annuitypayment) that could be adopted to address the most vulnerablegroup of high agricultural dependent households through theirtransition period after land acquisition. The ability to work in newemployments and to sustain income is certainly most important forhouseholds to improve their livelihood perception.

Acknowledgement

The authors would like to express their gratitude to the Ho ChiMinh Institute of Development Studies (HIDS) and the VietnamInstitute for Economic and Policy Research (VEPR) for their assis-tance from establishing local government contacts, to providinglocal insights, and to helping in survey conduct. The surveys in HoChi Minh City and Hanoi would not have been accomplished insuch timely and comprehensive manner without their generoushelp and cooperation. The authors received no financial fundingsupport for the study.

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