Vietnam Sets Stage for New Government Purge
Summary:
The Vietnamese Ministry of Finance on May 20 revealed that in a
review of government agencies, 5.8 billion dollars in assets are
unaccounted for. According to an official from the Public
Property Management Office of the Finance Ministry, this
represents nearly one-third of the total civil service assets.
While high levels of graft and corruption within the government
are already acknowledged, the release of these figures sets the
stage for an internal battle over who takes the blame. The stakes
are high, as the outcome could either further entrench government
corruption or lead to more open Vietnamese markets.
Analysis:
Pham Duc Phong, Director of the Office of Public Property
Management in the Vietnamese Ministry of Finance, revealed on May
20 that 5.8 billion dollars in assets are unaccounted for. Phong
said the missing assets, made up primarily of property, luxury
cars, and office equipment, came to light in a survey of more
than 55,000 government agencies, and represent 29 percent of the
total civil service assets of those agencies. Phong said, "We
don't know what happened to the property," and suggested the
blame for the assets failing to be accounted for was that
"accountants don't know their jobs properly."
The revelation that there is corruption and graft spread
throughout the government in Vietnam is not new. Indeed, since
Vietnam "opened up" to foreign investment, there have been two
significant consequences of this corruption. First, as foreign
investors discovered its true depths in Vietnam, they rapidly
decided not to commit large sums to the country. Second, regional
and local corruption has triggered protests and threatened civil
stability in some areas. On May 20, 250 Vietnamese from outlying
provinces gathered outside the National Assembly in Hanoi to
demonstrate against regional and local government corruption.
They complained that their local officials had tricked them, lied
to them, and stole from them, but they were unable to gain
restitution at any other level. The protestors have vowed to stay
outside the assembly until they receive a response from the
government.
The government has already taken several steps to address the
problem. Vietnam's largest graft trial was held earlier this
month, and the Finance Ministry has begun plans to conduct audits
on state owned enterprises by the end of the year. On May 18, the
Communist Party launched another self-criticism campaign as well.
In fact, the survey that discovered the losses in the first place
was in part to review government operations. However, while the
government has acknowledged that corruption exists and needs
weeded out, the release of the figures of missing assets opens up
a new battle within the government over who is responsible.
This will be a battle of high stakes. For nearly one-third of the
assets to be missing demonstrates the depth of corruption in the
government. As well, there is the continuous struggle between the
more hard-line communists and the more pro-western reformers,
neither of whom are willing to accept the blame for this scandal.
The political battle to attribute blame may also have a major
effect on Vietnam's economic reform process as well.
There are two main possible outcomes of this financial and
political battle. In the worst case for investors and businesses,
there could be a purge from the government of true reformers,
thereby further institutionalizing the already rampant
corruption. While this would severely set back any moves toward a
more transparent economic system in Vietnam, it would maintain
the status quo for investors and other cronies of the
administrative elite who are already operating within the system.
On the other hand, the battle could instead help to purge the
most corrupt out of the government, laying the groundwork for a
better investment climate. This would be welcomed by the
international community, which has been pushing Vietnam to speed
up its reform process. However, despite the more accessible
investment environment that would open up over the next few
months and years, there would be a change in the contacts within
Vietnam, as many of those dealing with foreign investors may be
removed in the purge.
As Vietnam continues to decide its financial future, a battle of
high stakes has begun. The result of the political changes this
may cause will carry over into the investment environment in
Vietnam. A further entrenching of corrupt and secret economic
practices may occur. Contrarily, as corrupt officials are
identified and weeded out, Vietnam could present a more inviting
location for investment dollars, though with a whole new set of
players. Either way, the political and economic situation in
Vietnam will enter into a period of turmoil as these issues are
sorted out.
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