VietNamNet Bridge - Eighty-nine percent of foreign-invested enterprises (FIEs) say if they do not pay “commissions” to state agency officials, they will meet  with unfortunate action or behavior.

 

The audience at the Spring Economics Forum organized in late April roared with laughter when Dau Anh Tuan, head of the Vietnam Chamber of Commerce and Industry’s (VCCI) legal department, noted that he could see some improvement in the “underground fee culture”.

In 2010, over 47 percent of FIEs, answering VCCI’s questionnaire, said they got things done with state agencies after they paid underground fees. The proportion was higher, at 58 percent, in 2014. 

This means that 53 percent of FIEs paid under-the-table fees to state officials some years ago but their problems still could not be settled. This means that FIEs paid money, but gained nothing. But the figure has decreased to 42 percent, which means that more state officials fulfill their work after getting money.

Tuan cited a survey conducted by VCCI as saying that 17.2 percent of businesses had to pay under-the-table fees when applying for investment licenses, 31.4 percent had to pay commissions when joining bids, 66.2 percent had to give “envelopes” (with cash inside) to customs officials. Meanwhile, 22.3 percent of FIEs said they do not intend to have disputes settled by the court for fear that the opponents may “come in through the back door”.

The government’s chief inspector last December made people “laugh on the other side of their face” when saying that embezzlement in Vietnam in 2012-2014 was “stable”. He meant that Vietnam’s Corruption Perceptions Index (CPI) has been in the same position over the last three years.

As such, businesses are glad because they can get things done after they pay underground money, while government officials say the embezzlement is not getting worse. However, the corruption and underground fee mechanism still exist, which, as Tuan said, makes Vietnam less competitive in foreign investors’ eyes than in other countries.

The authors of the report on PCI 2014 (provincial competitiveness index), who surveyed 1,500 FIEs from 43 countries and territories, found that over 30 percent of FIEs gave bribes to scramble for government-funded projects.

About 50 percent of FIEs, before deciding to make investment in Vietnam, considered making investment in China (20.5 percent), Thailand (18 percent) and Cambodia (13.9 percent).

Tuan commented that the higher percentages of foreign investors considering making investment in other countries before entering Vietnam showed that Vietnam is no longer the favorite destination for foreign investors as it was in 2007-2010. 

JETRO Chief Representative in Hanoi Atsusuke Kawada noted that 60 percent of the 458 surveyed Japanese businesses are worried about the lack of transparency in Vietnam’s legal framework, which they highlight as the biggest investment risk. 

Pham Huyen