However, it was only since the end of 1987 that such reformist intentions had been consolidated—when high inflation and food shortages threatened people’s living standards and eroded the state’s resources. Besides, it was clear by 1988 that Soviet aid would soon decline, implying that more domestic resources and changes in investment priority from heavy industry to agriculture and light industry were needed for economic growth. A soft budget policy could no longer be sustained.
In agriculture, Resolution No. 10 (popularly known as Contract 10 or Khoan Muoi), issued by the VCP in 1988, initiated the process of decollectivization and revived the development of the peasant household economy in rural areas. Resolution 10 obliged the agricultural cooperatives to contract land to peasant households for 15 years for annual crops and 40 years for perennial crops. Although the terms of land allocation varied across Vietnam, in most instances land was allocated on the basis of family size. With decollectivization, cooperatives no longer controlled capital stock, working capital, and other means of production. Instead, they retained ownership of these elements, but were obliged to rent them out to peasant households. Moreover, peasant households were allowed to buy their own capital stock and working capital irrespective of the supply available from the cooperatives. They could thus buy and sell animals, equipment, and machinery.