Vietnam has fight on its hands with corruption

Posted on February 26, 2013


A couple of years ago, Vietnam was surging ahead of regional rivals, including China, as the destination of choice for direct foreign investment, with many factory owners moving their operations to the southeast Asian nation where labour costs were low and the government was keen, like China a decade earlier.

A battle between Vietnamese (yellow) and Chinese soldiers (blue) is re-enacted this month in Hanoi during the 224th Dong Da Festival. photograph: ham/reuters

A battle between Vietnamese (yellow) and Chinese soldiers (blue) is re-enacted this month in Hanoi during the 224th Dong Da Festival. photograph: ham/reuters

That is still true, and companies are still investing in Vietnam, but the country’s reputation has been battered by a rash of corruption cases and the arrest of leading businesspeople, as well as by tales of inefficient state-owned enterprises and close links between the banks and the state.

Vietnam has been on a strong upward trajectory more or less since it began to open up in 1986, but the economy expanded by just more than 5 per cent last year, its slowest rate of growth since 1999.

It is now losing out to countries such as Indonesia in terms of efficiency and value for money.

Inflation is on the rise, the dong currency has weakened and untrammelled borrowing by the state-owned enterprises has put a strain on the banking system and left the banks heavily indebted.

Corruption crackdown

Faced with growing public discontent and increased scepticism overseas, the government has come up with a plan to crack down on corruption and overhaul 52 commercial state enterprises by June of this year.

It has also approved a plan to boost its economy to 2020. This master plan aims for a prudent monetary policy to tame inflation while ensuring “reasonable growth”.

Prime minister Nguyen Tan Dung’s administration will conduct tight fiscal policy, promote exports and tightly control imports while boosting domestic production of consumer goods.

Commercial state bodies account for 40 per cent of total output in Vietnam, but the public perception is that they are riddled with graft.

The government plans to sell all non- essential semi-states by the end of 2015 and will retain just 50 per cent to 75 per cent in most of its companies.

In October, Communist Party general secretary Nguyen Phu Trong apologised after a meeting of party leaders for what he described as “big mistakes”, including graft and poor oversight of state-owned conglomerates.

To repair the damage to its reputation, the Communist government even seems set to play down the socialist aspect of the administration.

A proposed revision to Vietnam’s constitution, which is due to be submitted to the national assembly for approval and is currently open for public comments, removes the concept of the state sector playing the leading role in the economy, the Saigon Times reports.

Recent months have seen a catalogue of embezzlement, fraud, corruption and mismanagement that have badly unsettled international confidence in Vietnam and caused widespread public anger at home.

Electricity Vietnam’s chairman Dao Van Hung was fired in February last year and a month later nine top officials were jailed for their roles in the near-bankruptcy of Vinashin – the Vietnam Shipbuilding Industry Group.

Shock waves rippled through Vietnamese society in August with the arrest of the banking tycoon Nguyen Duc Kien, one of the richest men in the country and famed for his close connections to the ruling Communist Party. He was suspected of “economic violations”.

His family was a co-founder in ACB Bank, Vietnam’s largest private lender by assets, and news that he had been picked up started a run on the bank, with depositors withdrawing hundreds of millions of dollars.

Police swoop

In September, police swooped on the former chairman of Vietnam National Shipping Lines, or Vinalines, suspected of falsifying contracts.

In January, Pham Thanh Tan, former head of state-owned Agribank, the country’s largest lender by assets, was arrested for “irresponsibility causing serious consequences”.

This came after a flurry of headlines about embezzlements at various branches, with bank staffers from tellers to executives.

A survey by the Vietnam Chamber of Commerce and Industry showed that half of businesspeople admitted bribing officials to win contracts.

“As Vietnam moves into the ranks of middle-income countries, the time to revisit the nature and causes of corruption, the time to bring new empirical data to bear on these issues, and the time for renewed vigour in the fight against corruption is now,” the World Bank said in a report on corruption in Vietnam.

Irish Times

Vietnam Seeks Constitutional Revision to Support Economic Change

Vietnam will amend its constitution to allow for changes to the economy, as it seeks to extend the growth dividends of a shift from Soviet-style central planning to a market-oriented model more than two decades ago.
The goal is to ensure synchronized political and economic change, Deputy Minister of Justice Hoang The Lien said in a question-and-answer session on the draft revisions, according to a transcript on the government’s website. Adjustments will be made in articles on the economy, education, environment and culture, according to Nguyen Van Phuc, deputy head of the National Assembly’s Economic Committee and the team drafting the amendments, the second set since a new constitution in 1992.

“The 1992 constitution was built when we were at the start of the economic reform process,” Lien said. “The 1992 constitution targeted economic changes, with an important switch from a centrally-planned economy to a market-oriented economy. We obtained great developmental achievements in the past 20 years. In reviewing the past 20 years implementing the 1992 constitution, we realized that there are still many issues.”

Once Southeast Asia’s fastest-rising destination for foreign investment, Vietnam’s expansion has eased since the early boom from the 1986 “Doi Moi” economic renovation that allowed private business. The Communist Party government has pledged to restructure banks, curb corruption and reorganize the public sector as the country loses out to faster-growing rivals such as Indonesia in recent years.

`Low’ Growth
Vietnam must accept “low” economic growth while it restructures its economy and should aim for annual expansion of at least 5 percent, according to President Truong Tan Sang. The economy expanded 5.03 percent in 2012, the slowest pace in 13 years, as a slump in bank lending damped domestic demand, adding pressure on the government to revamp the financial system and attract more foreign investment.

A draft of the revised constitution removes language stipulating that the state sector will “assume the leading role” in the national economy.

“It shows a huge advance and change in thinking,” said economist Le Dang Doanh, who has advised Prime Minister Nguyen Tan Dung. “If it’s approved, there’ll be no ground for state enterprises to continue being overly pumped with state money and receiving special treatment.”

The draft also indirectly acknowledges the role of the private sector.

Equal Treatment
“Vietnam’s economy is a socialist-oriented market economy with many forms of ownership and economic sectors,” according to the draft. “All economic sectors are important components of the national economy, and together, will be developed in the long term,” operating equally and competitively under the law, according to the draft, which was posted on the government website for public feedback this month.

The revised constitution will include an emphasis on human rights and citizens’ rights, Phuc said, according to the transcript released on the government’s website yesterday. Changes to the constitution will provide the “political premise for economic development,” Lien said.

The draft amendments will be submitted to the National Assembly for approval following public consultation. The assembly will complete the revised constitution draft by March 31 and it will be discussed at the next legislative meeting in May. A final version will be reviewed and approved at the end of the year, Nguyen Si Dung, the National Assembly’s deputy chief administrator, said by phone today.

Bloomberg News

Draft Constitution pushes judicial reform

The draft amendments to the 1992 Constitution are in the process of public debate. Compared to the 1992 Constitution which has 147 articles in 12 chapters, the draft revised Constitution consists of 11 chapters with 124 articles, in which 14 articles remain unchanged, 99 others have been revised and 11 new ones have been added. 

The Vietnam Law and Legal Forum (VLLF ) magazine published by the Vietnam News Agency highlights new provisions of the draft in its issue No. 221-222_ January & February 2013.

Perpetuating the nature and overall model of the law-ruled socialist state provided in the 1992 Constitution, the draft Constitution makes clearer the principle of assignment, coordination and control among state agencies and their functions in the exercise of the legislative, executive and judicial powers. It also adds three independent institutions being the Constitutional Council, the National Election Council and the State Audit.

The National Assembly 

Draft amendments to Article 83 of the 1992 Constitution reaffirm the National Assembly as the highest representative organ of the people and the highest state power body of the Socialist Republic of Vietnam. The National Assembly has the power to make the constitution and laws, decide on important national issues and oversee the State’s activities.

In the context of development of the socialist-oriented market economy, the National Assembly has the power to decide on objectives, targets, policies and basic tasks of national socio-economic development. This provision aims to more clearly define the role and responsibility of the National Assembly and relationship between the Assembly and the Government.

The draft provisions add a new power of the National Assembly to approve the appointment, relief from office or dismissal of judges of the Supreme People’s Court to meet the requirements of renewal of the model of people’s courts, thus defining more clearly the role of the National Assembly in relation to the judicial body and enhancing the status of judges in line with the judicial reform.

Another new power of the National Assembly is to supervise, prescribe the organisation and operation and decide on personnel of the Constitutional Council, the National Election Council, the State Audit and other bodies established by the National Assembly.

The draft Constitution specifies international agreements which the National Assembly can ratify or cancel, including those on war and peace, national sovereignty, fundamental civic rights and obligations and membership of Vietnam in international and regional organisations and international trade.

The competence of the National Assembly to form a provisional committee to research and verify a project or probe into a certain issue currently prescribed in the Law on Oversight Activities of the National Assembly and the Law on Organisation of the National Assembly is now enshrined in the draft Constitution.

The draft Constitution defines more clearly the competence of the Standing Committee of the National Assembly and its powers to lead the work of the Ethnicities Council and Committees of the Assembly, and to decide on the adjustment of boundaries of administrative units within provinces and centrally run cities.

It further says that the National Assembly would elect the heads of the Ethnicities Council and Committees, while deputy heads and members of these bodies would be ratified by the Standing Committee. It also defines more clearly the power of these bodies to request provision of information and adds their power to request explanation.

For National Assembly deputies, the draft Constitution grants them a new right to participate as members in the Ethnicities Council or Committees in Article 87. This provision, together with other provisions on the rights and responsibilities of deputies, aims to ensure that deputies can bring into play their strengths, qualifications and work experiences to fulfill their duties.

The President 

While retaining the provisions on the position and role of the President as head of the State, the draft Constitution defines more clearly the tasks and powers of the President in relation to the legislative, executive and judicial bodies.

In relation to the National Assembly, the draft Constitution continues stipulating that the President has the power to promulgate the Constitution, laws and ordinances and to propose the National Assembly Standing Committee to re-consider its ordinances.

In relation to the Government, the draft Constitution retains the provision on the President’s power to propose the National Assembly to elect, relieve from office or dismiss the Prime Minister and, on the basis of resolutions of the National Assembly, to appoint, relieve from office or dismiss Deputy Prime Ministers and other members of the Government. It further clarifies the President’s competence to attend cabinet meetings and request cabinet discussions on issues falling under his tasks and powers when necessary.

In relation to people’s courts and procuracies, the draft Constitution keeps the provision on the President’s power to propose the National Assembly to elect, relieve from office or dismiss the President of the Supreme People’s Court or the Chairman of the Supreme People’s Procuracy. It makes clearer provisions on the President’s competence to elect, relieve from office and dismiss judges of the Supreme People’s Court on the basis of ratification resolutions of the National Assembly, and adds the task and power to appoint, relieve from office or dismiss judges of other courts in line with the judicial reform.

At the same time, the draft provides more clearly the tasks and powers of the President in commanding the armed forces, acting as Chairman of the Defense and Security Council and deciding to confer general ranks in the armed forces.

The Government 

The draft Constitution continues affirming that the Government is the highest administrative state agency of the Socialist Republic of Vietnam and the executive body of the National Assembly. And it goes further in saying the Government is the body exercising the executive power in conformity with the viewpoint and principle on organisation of the state power.

The tasks and powers of the Government are rearranged and restructured to suit its position as the highest administrative agency. As per the draft Constitution, the Government is responsible for organising the implementation of the Constitution, laws, ordinances and resolutions of the National Assembly and its Standing Committee, and orders and decisions of the President; and submitting draft laws and ordinances to the National Assembly and its Standing Committee.

The Government is responsible for uniformly managing the state administration, building, and organising the implementation of, the official-duty regime; performing the state management of cadres, civil servants and public employees; and implements the assignment and decentralization in the state administrative system. It is in charge of leading operations of ministries, ministerial-level agencies, government-attached agencies and People’s Committees at all levels; and organising and leading activities of inspection, examination and settlement of complaints and denunciations.

The Prime Minister 

The draft Constitution has also rearranged and restructured the tasks and powers of the Prime Minister to correspond to those of the Government, defining more clearly the competence of the Prime Minister in directing and administering activities of the Government; leading the state administrative system from central to local level to ensure the uniformity and smoothness of the national administration. It adds a new power for the Prime Minister to direct the negotiation and signing of international agreements on behalf of the State as authorised by the President, the negotiation and conclusion of and accession to international agreements on behalf of the Government, and the implementation of international agreements to which the Socialist Republic of Vietnam is a contracting party.

Regarding ministers and other government members, the draft Constitution stipulates that government members take personal responsibility before the Government and the National Assembly for sectors under their assigned charge and take joint responsibility for activities of the Government.

It adds that ministers and heads of ministerial-level agencies must report their work to the Government and report according to regulations to the people on important issues under their management.

People’s courts and procuracies 

Basically perpetuating the provisions of the 1992 Constitution, the draft Constitution reaffirms that people’s courts are adjudicative bodies exercising the judicial power and people’s procuracies exercise the prosecuting power and supervise judicial activities.

In addition to the tasks of protecting the interests of the State, rights and legitimates interests of organisations and individuals, the courts and procuracies must protect justice as well as human and civic rights.

In line with the judicial reform on the establishment of courts not based on administrative units, the draft Constitution provides that people’s courts include the Supreme People’s Court and other courts as prescribed by law. The National Assembly may establish a special court in special cases.

Similarly, according to the draft amendments, people’s procuracies include the Supreme People’s Procuracy and other procuracies as prescribed by law.

The President of the Supreme People’s Court and the Chairman of the Supreme People’s Procuracy are elected by the National Assembly. Their term of offices is the same as that of the National Assembly.

To meet the requirements of judicial reform, on the basis of combination with the existing inquisitorial model, the draft Constitution revises and emphasises a number of principles in the organisation and operation of people’s courts. It upholds the principle of argument (after the adversary model) at court hearings and adds the principle of two-tier trial.

The draft Constitution adds a new principle that procurators must abide by the law and obey the direction of the chairman of the people’s procuracy when exercising the prosecuting power and supervising judicial activities.

The draft Constitution no longer mentions the establishment of appropriate people’s organisations at grassroots level to deal with violations and minor conflicts and the Procuracy Committee as prescribed in the 1992 Constitution, leaving these issues to be dealt with in relevant laws.

Local administrations 

Regarding territory-based administrative units, like the 1992 Constitution, Article 115 of the draft Constitution says that the country is divided into provinces and centrally run cities; a province is divided into districts, provincial cities and towns; a centrally run city into districts and towns; a rural district into communes and townships; a provincial city or town into wards and communes, and an urban district into wards.

To create a constitutional basis for renewing the organisation of local administrations, the draft Constitution does not specify the organisation, tasks and powers of each level of local administration. It reads that the establishment of People’s Councils and People’s Committees in territory-based administrative units is prescribed by law based on the characteristics of each unit and management decentralisation.

New independent bodies 

The draft Constitution has three new articles on three independent bodies, including the Constitutional Council, the National Election Council and the State Audit, which are all established by the National Assembly.

The Constitutional Council will rule on constitutional violations in legislative, executive and judicial activities. It has the power to consider the constitutionality of domestic legal documents, as well as international agreements concluded in the name of the Vietnamese State before submission to the National Assembly or President for ratification.

The National Election Council will organize National Assembly elections and direct and organise election of Peoples’ Council deputies at all levels.

The State Audit will audit the management and use of financial resources and national assets.

The organisations, tasks, powers and composition of the Constitutional Council, the National Election Council and the State Audit will be prescribed by law.

In its final article, the draft Constitution says that it will be passed when it is voted for by at least two-thirds of total number of National Assembly deputies and a referendum on the Constitution will be decided by the National Assembly.

Source: Vietnam Plus