Vietnam’s Anti-Corruption Campaign: A Transformative Reform

By James Borton

In the scorching furnace of Vietnam’s anti-corruption campaign, the flames have raged fiercely, engulfing Party officials like dry tinder. Some were swiftly cast aside, while others saw their political careers reduced to smoldering embers. Initially, this situation appears to signify a leadership crisis due to the dismissal of five out of 18 Politburo members, two presidents, one National Assembly chair, and two deputy prime ministers. However, less corruption holds the promise of enhanced economic prospects for the nation.

The Leadership Directive

Nguyen Phu Trong, the 80-year-old Secretary General of the Communist Party, known for his mantra “Blazing Furnace,” has made it clear that tackling endemic corruption is a priority. His focus on transparency and good governance hasn’t gone unnoticed by foreign investors who now experience reduced business costs and streamlined bureaucratic processes. The move to dismantle entrenched interest groups illustrates a commitment to fostering a competitive market environment.

Political Framework

In Vietnam’s unique political structure, principles like “democratic centralism” and “collective leadership, individual responsibility” govern the Communist Party’s operations. The recent 13th National Congress passed a resolution outlining the country’s developmental trajectory for 2021-2030. The rotation of high-ranking officials is not disrupting administrative continuity but is a mechanism to strengthen the political system and advance vital policies ratified during the Congress.

Economic Growth

Vietnam’s economic landscape has stabilized and grown over the past two decades, fueled by robust domestic demand and export-oriented manufacturing. This dynamic economy is now the envy of Southeast Asia, drawing praise from economists who predict that, as a member of the Association of Southeast Asian Nations (ASEAN) and the Greater Mekong Subregion, Vietnam might achieve rapid economic growth and emerge as the 20th largest economy by 2050.

Tackling Corruption Effectively

Credit for the anti-corruption efforts is due to Trong’s swift actions in ousting discredited officials, a move essential for promoting a favorable business environment. The recent actions involving the Van Thinh Phat Group garnered public attention but are believed to have a positive long-term impact on the financial system. The State Bank of Vietnam has taken measures to reassure depositors, ramp up control, and enhance transparency within the banking sector.

Institutional Efforts

Established in 2013, the Central Anti-Corruption Steering Committee (CACSC) has mandated investigations and prosecutions of over 800 corruption cases, per a recent study. However, it’s worth noting that politically connected firms may benefit more from anti-corruption efforts compared to their non-connected counterparts. Recent analyses indicate that these initiatives enhance investment efficiency in the public sector.

Historical Context

Corruption in Vietnam was officially recognized during the 6th National Congress of the Communist Party in 1986. Here, it was classified as a social evil to be curtailed through rigorous inspections. Vietnam signed the United Nations Convention against Corruption (UNCAC) in 2003, completing ratification in 2009. Along with participation in the Corruption Action Plan for Asia, these measures reinforced the country’s commitment to addressing corruption.

Growth Amidst Challenges

The anti-corruption campaign bolsters the Communist Party’s credibility without significantly hindering reform commitments. The government continues to roll out policies favoring economic growth, capital markets, and a healthy banking sector. High-tech products have become Vietnam’s primary exports to the U.S., transitioning from textiles and garments. The shift is notable, with exports of high-tech goods climbing from 13% in 2010 to 42% in 2020.

Resilience in Uncertain Times

Despite encountering global geopolitical challenges—including the war in Ukraine, conflict in Israel and Gaza, and recession concerns in developed nations—the World Bank projects Vietnam’s economy will grow by 5.5% in 2024 and 6% in 2025. The resilience in forecasts showcases the effectiveness of ongoing reforms and the commitment to maintaining economic momentum.

Changing Business Environment

As reported by the 2021 Provincial Competitiveness Index survey from the Vietnam Chamber of Commerce and Industry, the incidence of businesses paying unofficial fees, often referred to as “red envelopes,” has significantly decreased from 70% in 2006 to 41.4% in 2021. This decline reflects a positive shift in the public perception of business practices, signaling an commitment to transparency.

Societal Implications

Since the founding of the Democratic Republic of Vietnam, President Ho Chi Minh cautioned against greed as a national issue. The post-Doi Moi period, heralding economic renovations, brought about numerous bribery opportunities. Economic inequalities, stemming from the transition to a market economy, further fueled corruption, evidenced by low salaries among public officials, which exacerbate these issues.

Impacting Real Estate

The anti-corruption campaign has notably cooled the real estate sector, which represents a significant portion of Vietnam’s economy. The unprecedented rise in criminal cases tied to property dealings has broadly affected the real estate landscape. Nevertheless, shifts in the supply chain have created a burgeoning demand for factory land, reflecting an evolving market response.

Future Political Reform

Vietnam’s ambitious anti-corruption efforts have not only led to resignations but also aim to renew confidence among Party officials. This campaign serves to alert a stagnant bureaucracy that accountability is being closely monitored, potentially laying the groundwork for more political reforms aimed at addressing corruption’s root causes.