Vietnam provides clues for corruption fight in socialist countries

Posted on July 25, 2012

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The anti-corruption fight has increasingly been treated as having regional and international agendas. Nonetheless, there remain questions as to how anti-corruption may be concretized at national, sector, and local levels.

The experiences of Vietnam with anti-corruption can shed light on this process. Vietnam is a late-developer in the transition from socialism. In 2011, Vietnam ranked 112th on Transparency International’s Corruption Perception Index, similar to Senegal, Egypt, and Algeria. Compared to countries with similar political systems, Vietnam was slightly behind China and Mongolia, but ahead of Laos and Cambodia.

As seen in its 2005 Anti-Corruption Law and the 2009 National Strategy for Preventing and Combating Corruption Towards 2020, Vietnam has developed a comprehensive framework focusing on corruption in the public sector. The Vietnamese government is also committed to international frameworks on anti-corruption.

Multiple corruption risks
In Vietnam, corruption has been, to a large extent, a legacy of central planning whereby the government controlled both the allocation and management of resources and services. Studies indicated a diversity of risks and forms of corruption springing from state management and public service delivery functions.

In the area of state management, key corruption-risk areas stemmed from the use and management of investment funds. In the delivery of services, corruption was found in relationships between public officials cum service providers and customers where informal payments were made to obtain services.

Vietnam has developed a comprehensive framework to address the increasingly complicated corruption problems specific to the post-central planning era. Overall, Vietnam has adopted good practices drawn from both domestic and international experience.

Specifically, Vietnam’s anti-corruption strategy is multi-dimensional and focuses on prevention. Anti-corruption is currently being integrated into study programs in schools and universities.

Good governance measures target aspects of financial measures, transparency, and the linking of anti-corruption with public administration reform. Government agencies at central and local levels are required to develop a code of conduct. Public officials must comply with regulations on asset declaration, gift receiving, rotation of public officials in key positions, and post-retirement employment regulations. The head of each agency is responsible should corruption take place under their management. The existing legal framework outlines agencies responsible for auditing, inspection, investigation, and prosecution work.

Lessons learned
Vietnam’s comprehensive framework has the potential to curb corruption if properly executed. There are a number of implementation lessons to be drawn from the Vietnam experience.

The most important implementation lesson is the linking of anti-corruption efforts to other reform processes such as economic restructuring, and public financial reform. For example, measures related to public ethics, in both theory and practice, were closely linked to the reform of human resource management in the public administration system.

An increasingly assertive role of society is undeniably a fundamental prerequisite for fighting corruption. Another important lesson is to concretize national policies and legal frameworks at sub-national and local levels.

These considerations call for a balanced approach to the reduction of corruption in the short term with medium and long-term institutional, organizational and financial mechanisms for reform.

The strategic linking of anti-corruption with other reform programs, the concretization of anti-corruption measures at sub-national and sector levels and the use of a monitoring system have the potential to reinforce a comprehensive anti-corruption framework and support the improved performance and legitimacy of a one-party state.

Thaveeporn Vasavakul

Corruption Undermines Vietnam’s Stimulus Program

As governments around the world roll out trillions of dollars in stimulus spending to combat the global recession, debate is raging over whether the flood of money will provide much more than a short-term economic boost and whether much of the cash will ultimately be wasted. Vietnam, which like most Asian countries is being hammered by the downturn, is discovering that even the most direct form of stimulus spending — cash giveaways to citizens — can wind up in the wrong hands.

With the number of poor growing and reports of some going hungry, communist officials in Hanoi recently decided to hand out $12 to millions of impoverished Vietnamese on the eve of the nation’s most important celebration, Tet, the Vietnamese New Year. Tet is Vietnam’s equivalent of Christmas; it’s a holiday of family gatherings and lavish spending on gifts. But this year, a time for giving turned out to be a time for taking. It appears that many of the cash handouts were pocketed by corrupt local officials.(See pictures from the 1979 border war between Vietnam and China.)

 

In some cases, fees were deducted or the gifts were taxed to the point there was little left, according to local police. Families in Quang Binh province complained that they were required to sign receipts acknowledging they had received the handouts, but some villagers say more than 90% of the funds were siphoned off by petty bureaucrats. In the province of Quang Ngai, dozens say they were forced to donate to a so-called rural traffic fund. Other destitute villagers reported they had to contribute to a fund for the poor. Investigations of these and scores of similar cases have begun across the country.

Under the unusual giveaway, Vietnamese living below the poverty line (defined by the government as those earning less than $15 a month) qualified to receive a gift of 200,000 Vietnamese dong, or about $12. Families were entitled to a maximum of $57. Though it may seem a paltry sum, the cash was a windfall for Vietnam’s 10 million poorest. It was a way of helping people truly suffering from the economic crisis and a series of natural disasters that hit the country last year, says Ngo Truong Thi, the deputy director of social welfare at the Ministry of Labor, Invalids and Social Affairs, which oversaw the program. “Giving out cash to the poor was also part of measures to stimulate the economy,” Thi says.

The recent global economic slowdown has put the brakes on Vietnam’s decade of growth. The International Monetary Fund forecasts that Vietnam’s GDP growth will slow to 5% this year from a high of 8.5% in 2007. Hit particularly hard has been the country’s manufacturing sector, which helped lift millions out of poverty by providing relatively high-paying jobs. Declining orders from abroad have forced newly built factories to close, sending workers back to their villages.

Vietnam’s stimulus program pales in comparison to the $787-billion package approved by U.S. lawmakers last week, but the country is doing what it can to jumpstart its economy. The cash giveaway followed November’s announcement of a plan to spend $1 billion to subsidize interest rates for businesses and to lower taxes in order to boost investment and create jobs.

But Hanoi on its own can’t change the course of global events, says Alex Warren-Rodriguez, economic policy advisor at the United Nations Development Program in Hanoi. Vietnam is too dependent upon what is happening in the U.S. and Europe. “Even if you reduce interest rates to stimulate investment, that’s not going to happen because there is nothing to invest in,” he says. “They can do very little to stimulate the economy.”

Still, public perception of how well the government is handling the crisis is crucially important. Vu Thanh Tu Anh, director of research at the Fulbright Economics Teaching Program in Ho Chi Minh City, says the cash payments were clearly made for political, not just economic, reasons. “It’s very important for the government to be seen as doing something,” he says. “The political pressure is huge.”

So far, Hanoi appears to be falling short in its efforts to inspire public confidence. The Ministry of Finance announced the stimulus package months ago but the measures have only just been implemented in the last few weeks, says Tu Anh. Now the government’s image has been further tarnished because local officials have been stealing from the very people Hanoi was trying to help.

It may never be known how much of the cash meant for the poor has been diverted. One official from Lam Dong Province in central Vietnam was arrested last week, and dozens of others across the country have been demoted or sacked due to the scandal. Hundreds of provincial-level investigations are ongoing.

But few are surprised at the scope of the looting, says Tuong Lai, former director of the government-run Institute of Sociology in Hanoi. Vietnamese officials at all levels have a reputation for sticky fingers. Last Year, a survey on public-sector corruption by Transparency International ranked Vietnam 121st most corrupt out of 180 countries. “Stealing from the poor is nothing particularly new,” says Lai. “But after a year of terrible difficulties, the Tet gift was supposed to be a gesture to help improve the trust of the Vietnamese people.” Instead, Lai notes, it sabotaged it.

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