Topic No.11. (Politics) Corruption is
rampant in every level of Vietnam’s political, economic and social hierarchy.

It takes on many forms, de-functionalizes the system the and heavily cripples
the life of its citizens. Give a detailed report of the extent of the problem,
at every level and aspect.

in Vietnam is serious, blatant and rampant” – said Le Van Lan, the deputy
office chief of the Central Steering Committee for Anti-Corruption in a conference
in July, 2012 held by the National Assembly’s Standing Committee. Corruption,
as it was defined in the Anti-corruption Law of Vietnam (Clause 2, Article 1,
No, 55/2005/QH11), is the behavior of individuals with status and power who
take advantage of their position to commit actions against the law in their own
interests. It is indeed one of major challenges in the era of integration and
sustainable development as it threats public expectation in the government and
affects the pace of social-economic progress. The problem can be encountered in
many sectors and at many levels. In the long term, unless corruption was
sufficiently addressed, a number of potential consequences brought to society
would be disastrous.

          To commence with, corruption from the
perspectives of citizens is a serious threat. According to the 2006 Global
Integrity Report retrieved in 2010, corruption accounted for 3-4% of lost GDP
for Vietnam each year. Moreover, in 2009, public procurement, considered the
most susceptible sector to corruption, had its total annual cost of around
388,958 trillion, accounting for more than 22% of the Vietnam GDP that year. A
report from VCCI in 2014 established a connection between corruption and
economic growth. In particular, the study said that
without any transmission channel, a one unit increase in Vietnam’s corruption
perceptions index (CPI) leads to an increase in annual growth rate by 0.23%
(from 2000 to 2012). For example, if Vietnam’s CPI in 2012 had increased by one
unit, its 2012-2013 growth rate would have ramped up to 5.65% and its GDP in
2013 would account for $164,624 million at 2012 price level. When investment is
included as a transmission channel, the analysis shows that a 1% increase in
the share of domestic investment in GDO will lead to an approximate 0.2%
increase in GDP growth rate. Statistics lend support to the view that
the situation is becoming widespread and devastating, and its financial and
social costs are astounding.  Estimates
show that corruption can add 10-25% to the costs of public procurement every
year, and in some case even 40-45%; government procurement is generally between
14 to 20% of Vietnam’s GDP, while on a global scale, it accounts more than 5%,
from $8.16 trillion to $11.65 trillion annually.

          Since Doi Moi, Vietnam has taken serious
steps toward analyzing and controlling corruption with varieties of
authorities’ perspectives covering in many aspects, one of which is the three
main levels of the situation. According to Business Anti-corruption website, Individual
Corruption exists primarily in relations between individual residents and
public official and authorities. One common example is when public authorities
sometimes postpone residents’ access to passport or documents processing in
order to extort bribes, according to the Human Rights Report 2013. Another case
can be observed in health sector, reported from Transparency International
Vietnam 2011, when patients have to give doctors or nurses some informal
payments to ensure that they receive better health care.  The second group in the list is business
corruption which occurs in relations between enterprises and public officials. A
good case in point would be kickback on procurement contracts, which is a sort
of bribe to obtain an undue advantage, that is, illicitly award the contract to
the firm in return. According to the Investment Climate State 2013, more than
50% of foreign investors surveyed in Vietnam responded that they paid a
commission when involving in public bids. Besides, about 26% domestic business
executives regard the use of bribery as an essential step to award contracts.

The third position belonged to political corruption, taking place in the higher
positions of public administration and on a political level. Probably this is
the most complex level since authorities and top officials often deploy their
powers and influences to hinder law enforcement forces and control mass media
over investigating the crimes. Yet there are several clues may lend support to
this secretive circumstance, for example a luxurious life-style or significant
increase in assets of some public officials that is inappropriate to their
legal income.

          Corruption presents in many forms, commonly
consist of gifts and facilitation payments. Vietnamese culture perceives gift
giving on certain occasions as a traditional practice to express respect and
gratitude. However, a certain sector in Vietnamese society recognize gift as a
form of bribery. To be specific, according to data reported from corruption
done by World Bank Group, in 2009, 15.2% of Vietnamese firms expected to give
gifts to get an operating license, whereas 53.7% of firms responded expected to
give gifts to secure government contract. “Showing gratitude
used to have more spiritual value than material value. But over the years, it
has become more material and less spiritual, and now in the market economy it
is like a transaction”, said Nguyen Huu Ngoc, a well-known scholar in Hanoi in
an interview with the BBC Vietnamese journal. And while the line between a gift
and a bribe has becoming blurred, there are yet a number of differences between
them that need to be identified. Tran Thu Ha, vice-director of Research and
Training center for Community development stated on BBC Vietnamese: “A gift can
be given in public or anywhere, it needs time to talk and to say thank you,
whereas a bribe is often given very quickly and both the giver and the receiver
are afraid of being seen by other people”.  Facilitation payments, on the other hand, made
with the purpose of expediting or facilitating the performance by an official
of a regular governmental activity. In other word, such payments seem to be a
norm, as they induce public authorities to perform their works. Nonetheless,
those unofficial payments, to some extent, change their purpose to the negative
side. Some factual information can be found to prove the point, especially in
health and education sector. Vietnamese citizens perceive that giving envelopes
as a cultural practices when they require medical treatment.  The situation has become widespread, according
to a survey in 2012 done by the World Bank and Vietnam’s Government
Inspectorate, as the number of patients giving envelopes to their doctors
increased two times over three-year period. 
In education sector, facilitation payments may perform in terms of
admittance to favorable schools, awarding academic grades or secure better

          As regards the frequency of corruption,
the issue exists early in 8 sectors related primarily to business operation, including
judicial system; police; licenses, infrastructure and public utilities; land
administration; customs administration; public procurement and contracting;
environment, natural resources and extractive industry. Several high-profile
corruption cases went to trial in Vietnam in 2012-2013. In Hanoi, former
chairman of the Vietnam National Shipping Lines were found guilty of
embezzlement when he paid $9 million dollar for a floating dock in poor quality
and alleged pocketing over $80 million dollar. Another case was the work
between the Ministry of Public Security and Interpol to apprehend fugitive Pham
Thanh Hai, an accountant in the government’s department of cinematography, with
stealing 42 billion VND from the department’s annual budget beginning in 2009. However,
the most dominantly debatable case related to ODA project working in
collaboration with Japanese partners. Japanese media reported that Japan
Transportation Consultants Inc. told police they had bribe Vietnam Railway
authorities to secure a contract for Hanoi’s urban railway plan. In recent time,
corruption appears prevalently in the management of land and natural resources,
where authorities take bribes to grant title deeds; in the financial banking
sector; in construction which inflate building costs; in management of state
assets where embezzlement, faking invoices occur; in human resource management
where bribers gives presents or an amount of money for jobs, promotion; and in
judicial sector where judges receive bribes to alter verdicts. In terms of banking
sector, for instant, one of serious corruption case was the loss of over 1.4
billion VND for the Asia Commercial Bank (ACB) allegedly caused by illegal
securities purchases and deposits by 6 former executives in 2009 and 2011. Another
proof was the alleged bribe-taking case of the former governor of the State
Bank of Vietnam, Le Duc Thuy, who received an undisclosed amount of money from
the Reserve Bank of Australia and helped this partner to win the banknote
supply contract from 2002 to 2009 in return.

     Corruption in Vietnam, as elsewhere around
the world, is a vast challenge and poses many obstacles for future development.

Its negative consequences result in various aspects, including investment,
business operation and public trust. From a macro perspective, a research done
by VCCI in 2014 reported that corruption affects the national economy mainly in
investment. Enterprises in Vietnam from 2005 to 2011 conducted by the research
showed that if a firm bribes, the probability of improving a product decrease
by 6.2%. The data might be inappropriate, however, since the time under survey
is probably long enough to identify and change the trends of the market and
firm’ direction. Nevertheless, the cumulative negative impact of corruption on
macroeconomic performance should not be denied, since another study of CIEM
(2012) concluded similar results, that bribe-paying SMEs are less able to
develop and expand their business, and more likely to leave the market. From
resident viewpoints, the PAPI (Public Administration Performance Index)
findings revealed that in 2012, 42% of citizens agreed that bribes are required
to receive medical care; 44% of them bribe to get a job in the civil service;
25% for their children to receive better treatment at schools. More
importantly, those who refuse to give bribes are less likely to have adequate
titles to their property which affects their ability to start and grow
business; receive inadequate health care, influence their lives and the health
status of their children; lose opportunities to obtain education leading to
further career advancement and wealth. Particularly in education, corruption in
education threatens to increase educational costs for families and worsen the
equality of accessing educational services. The total costs was more severe to
poor families compared to those middle-class as the former pay more for corrupt
practices to ensure their children enrolling in the same schools, especially
the gorgeous ones. Hence, corruption directly increases the inequality in
access to education. Considering the effects towards public administration,
corruption is recognized in AC Strategy of Government of Vietnam, 2009:
“Corruption is leading to adverse effects in many ways, eroding the confidence
of the people in the leadership by the Party and the management of the State,
giving rise to potential conflicts interest, social resistance, and protest,
and widening the gap between the rich and the poor. Corruption has become a
major obstacle for the success of Doi Moi and the fighting force of the Party,
threatening the survival of the regime”.

     Corruption is typically a national illness
which results in serious consequences in the future. Corruption adversely
affects long-term economic growth through its impact on investment, taxation,
public costs and human development. To be specific, the VCCI’s report published
on August, 2014 said that corruption is negatively correlated with Vietnam
economic growth through slow down the rise of GDP per capita over years, lower
growth rates, per capita income as well as human development.  A study from Rotterdam University about
Corruption and Growth found that corruption affect the quantity, quality, cost
and profitability of investment for companies. Private sector, although accounts
for nearly 90% of total number of enterprises, are mainly small and medium
scale. They have difficulties in getting access to resources such as land and
financing for development. In order to get things done more quickly
appropriately, they used petty bribery, by money, presents or compensation from
the revenue, to officials and authorities. Some reported that the expenditures
for corruption even cost 20-30% of an investment contract. What’s more, since
Sate-owned companies, based on their relationship with the government, take
advantage on regulatory privileges in allocating and using resources, they are
treated in a more favorable way, leading to economically inefficient growth for
companies in both sector and ultimately affect the government’s direction
towards a socialist-oriented market economy. In term of social growth,
corruption would raise the cost to obtain health services among resident, thus lower
people’s health and reduce longevity. Besides, the costs to acquire educational
services would rise as well, therefore reducing children going to school,
lowering education outcomes (scores, school rankings). Its impact on the human
development would finally undermine long-term sustainable development social

     General speaking, corruption, in the
modern world, is one of pressing issues that is identified in many sectors,
ranging from business operation, public administration to health, education and
other services. It can be encountered in many levels, from private to top
position of public authorities with increasingly complexity. Vital consequences
brought to society can be anticipated and, become more destructive once the
issue remains unsolved.    



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