Analysis of Corruption Risks for Investors in Vietnam

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This study was conducted by the Vietnam Business Forum's Governance & Integrity Working Group under the framework of the project "Promoting the application of international standards on business integrity to enhance international integration and improve business environment in Vietnam". Financial support were from UK's Prosperity Fund and ASEAN CSR Network's Small Grants Fund.

The Analysis of Corruption Risks for Investors in Vietnam which details the ethical dilemmas and the vulnerability to corrupt activities the private sector in Vietnam faces has been released as part of the high profile bi-annual Forums between the business community and Vietnamese leadership through specialized Working Groups cutting across sectors. 

The test was conducted across 21 companies in Vietnam, lasting approximately 1.5 hours and discovered the following results in brief:

General Conclusions

High Risk Business Practices were more prone to corruption risks in general and tended to prove to be a tremendous obstacle for foreign or foreign invested companies in the country. The culture of exchanging of gifts in Vietnam is perceived as a way of life in the local business community and government but poses a challenge to companies with heavy offshore influence or backing especially with regards to their ethical conduct rules.

Participating companies noted that refusing to grant government officials with generous gifts would be detrimental to a company's competitive well being in the nation, citing that procurement contracts were more likely to go to those who engaged in the custom of gift exchange as opposed to those who did not. Speculation remains as to whether the attitude of gift giving to government officials stems from the local culture and customs or the low salaries of government officials in general. Regardless, companies that failed to adopt this custom were left at a disadvantegeous position.

Conflicts of Interest

Participating Companies also noted that contracts were also typically awarded to third parties either due to an employee holding a financial interest in a particular company or a relative of said employee being employed within the third party company. This occured regardless of whether or not Participating Companies had an ethical conduct procedure concerning Conflict of Interests.

Requests of Proposals

Tender proposals also were areas of significant risks of corruption, with tenderers offering rewards to the tendering company in return for potential contracts. Employees were typically offered cash or percentage based incentives in return for including a service provier in an RFP. 

Routine Government Services

Requests for advantages by government officials to carry out services, despite being a criminal offence in Vietnam were common in up to 62% of the Participating Companies' experiences. All requests were for cash gifts. Failure to engage in such an exchange resulted in a denial of said service.

To read more about the Report and tits solutions to the problems and other unlisted problems above, visit our Resources Page here to access it.

Working Group Members :

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