Crime Law Soc Change

DOI 10.1007/s10611-016-9605-y

Corruption and corruption research

in Vietnam - an overview

Mathieu Tromme 1

# Springer Science+Business Media Dordrecht 2016

Abstract This article offers an introduction to both the state of corruption in Vietnam
and how the research community is taking on an active role to support policymaking. It
begins by contextualising corruption since Doi Moi, explaining that high corruption
levels has opened the door to interest groups, and therefore to corruption. The article
then discusses the different ways research helps us develop a better understanding of
corruption, both through more traditional as well as innovative measurement
techniques. The article reviews some of the more important literature on corruption,
including its costs, and discusses the different methodologies and approaches
employed to study and measure corruption. The article concludes by providing a short
overview of how the corruption research community is organised, and then goes on to
introducing this Special Issue.

The rapid pace of economic growth in Vietnam has resulted in some significant
transformations, including a significant rise in corruption. Coming out of a long period
of war and economic crisis in the early 1990s, Vietnam entered a period of ‘renovation’
- known as ‘Doi Moi’ - during which policies were dictated by socialist-oriented market
reforms that sought to shrink an overly bureaucratic system, while fostering growth
across various sectors of the economy. Vietnam was touted as the next ‘Asian Tiger’.
This period was generally characterised by a rapid reduction in poverty levels and fast
economic growth, though it was also affected by the Asian Financial Crisis of 1997 and
the more recent global economic downturn of 2008.
Overall, Doi Moi created a more productive and resilient economy and improved
standards of living. There were also downsides to this fast but uneven economic
growth, however: foreign capital flowed primarily to urban areas, many lacked access
to capital and productive land, productivity across sectors was uneven, environmental
degradation worsened, inequalities between the rich and the poor developed, disparities

* Mathieu Tromme
[email protected]

1
Coffey International Development, London, UK
 M. Tromme

between urban and rural centers grew, and prominently, public sector corruption
flourished [10, 87].
Public anti-corruption rhetoric in Vietnam dates back several decades. Shortly after
gaining independence from France, Ho Chi Minh warned against stealing public
property for private use [26: 42]. Ever since then, leaders of the Communist Party of
Vietnam (CPV) – the highest political organ in the country – have publicly denounced
corruption and have sought to address it in a number of ways. The CPV introduced several
resolutions mandating specific guidelines and policies. The National Assembly promul-
gated an ‘Anti-Corruption Law’ in November 2005 (which was subsequently amended in
2007 and 2012), containing measures to prevent, control and detect corrupt behaviors.
Vietnam later adopted a ‘National Strategy on Anti-Corruption to 2020’, which states:

corruption is still taking place in a rampant, serious and complicated fashion in

multiple areas, especially in such areas as administration and use of land,
construction investments, equitisation [i.e. privatization] of SOEs, management
and use of funds, natural resources, mineral resources and State assets. [This leads
to] adverse effects in many ways, eroding the confidence of the people in the
Communist Party’s leadership and the State’s management, giving rise to poten-
tial conflicts of interest, social resistance, and protest, and widening the gap
between the rich and the poor1 [30].

The strategy coincided with the ratification of the United Nations Convention
Against Corruption (UNCAC) in 2009. In 2012, the CPV took over control of anti-
corruption policy by disbanding the Office of the Central Steering Committee on Anti-
Corruption (OSCAC). In its place, it created the Central Steering Committee on
Preventing and Combating Corruption, managed directly by the Politburo, and housed
within the Internal Affairs Commission. Some analysts pointed to this as a sign of
growing tensions between Government and Party cadres, though the official line would
no doubt have it as a sign that corruption was (and still is) an important priority for the
CPV. Recently, Vietnam pledged to foster transparency by disclosing assets of public
officials, encourage rotation of civil servants and public officials and introduce votes of
confidence for top government and party cadres.2
Within this context, this issue of Crime, Law and Social Change focuses on recent
research that examines the costs of corruption in Vietnam. Research, which was funded
by the UK Department for International Development, was undertaken by a team of
independent researchers in 2014. In addition to building an evidence-base about the
causes, drivers and impact of corruption in Vietnam, the objective of this research is to

1
The view that corruption undermines confidence in the Party and the State and that it should be tackled head-
on is a recurrent feature in official pronouncements. These types of claims were already made by authorities in
the 1990s, when a number of corrupt scandals erupted. Nong Duc Manh, Politburo Member and then National
Assembly chairman commented around the time of the Tamexco scandal (1996) that corruption eroded
confidence in the regime [22: 78], a claim he later re-asserted as a General Secretary of the CPV [5].
2
In 2013, Members of the National Assembly cast their votes of ‘high confidence’, ‘confidence’ or ‘low
confidence’ in top Government officials. Prime Minister Dung came second to President Truong Tan San.
Votes of confidence go hand-in-hand with criticism and self-criticism campaigns for top Party cadres. PM
Dung, for example, has admitted he made mistakes in managing the faltering economy [6]. In January 2015,
the CPV Central Committee also conducted a vote of confidence on members of the Politburo, although little
details trickled out.
Corruption and corruption research in Vietnam - an overview

encourage public debate, support increased understanding and dialogue on needed anti-
corruption reforms among all key stakeholders, and discuss the policy implications of
the findings.
Using quantitative and qualitative methods, the research finds that, overall, corrup-
tion is inimical to growth. It has a negative impact on gross domestic investment and
GDP growth, private sector investment, employment and per capita income at the
provincial level and undermines firm innovation. Some articles in this issue delve into
the motivations for engaging in corruption, by showing that firms bribe because they
follow the existing rules of the game and abide by the existing culture of corruption,
which includes both extortion by officials and collusion by businesses.
Certainly, there is already a substantial international body of research literature
examining the costs and benefits of corruption. Researchers have tried to account for
different manifestations of corruption and understand their impact on society, politics
and the economy in an effort to devise sound policy interventions. This body of
evidence grew rapidly in the early 1990s [80]. Researchers have also tried quantifying
the costs and benefits to the economy of more or less corruption in terms of per capita
GDP or GDP growth. This evidence-base on the relationship between economic
growth, development and corruption has evolved, sometimes offering contradictory
results. However, a meta-analysis conducted by Campos et al. [11] found that there
is little support for suggesting that corruption ‘greases’ the wheel of economic
growth. In Vietnam, however, few rigorous cost-benefit studies have been
attempted to date.
In this introductory article, we offer an overview of the corruption situation in
Vietnam, describing how economic and political changes have produced the high
levels of corruption that we see today, despite some attempts by politicians (both from
government and the CPV) to address these vulnerabilities. Then, we discuss the current
state of research on corruption in Vietnam and describe the extent to which the
Vietnamese research community has pursued the analysis of corruption issues. Lastly,
we introduce the articles that comprise this issue.

Growth and corruption in Vietnam

A number of macroeconomic policies and other factors account for the success of
Vietnam under Doi Moi. In the early 1990s, Vietnamese authorities gradually eased
price controls on agricultural goods, allowing farmers to trade their surplus. Doi Moi
also brought about improvements in property rights, which increased macroeconomic
stability [84]. The devaluation of the Vietnamese dong made exports competitive, as
did the lifting of the US-led trade embargo. The State allocated financial resources
(through subsidies, preferential bank loans, land speculation, etc.) to State-Owned
Enterprises (SOE) for technology acquisition and industrialisation. Private investments
were formally encouraged and so in time were foreign-owned companies. Both foreign
direct investment (FDI) and development aid played a key role in developing the
economy, the former by funding export-oriented, labor-intensive industries, and the
latter by financing pro-poor policies.
In recent times, Vietnam’s focus has been on developing a modern industrialised
policy and ensuring that its economy is well connected to other important markets. This
 M. Tromme

has led it to signing a number of trade agreements,3 and progressively making its way
towards ‘middle-income’ country status according to World Bank criteria [93]. How-
ever, in addition to corruption, a number of significant macroeconomic challenges
threaten to arrest the country’s development and economic growth. From a fiscal and
monetary point of view, the economic crisis brought a sense of urgency about the
importance of curbing inflation, and managing the foreign exchange reserve as well as
the depreciation of the Vietnamese Dong. Policies have also focused on reducing
government spending and getting rid of bad assets, such as failing SOEs. Other
structural problems include the slow development of the private sector, as well as the
very low rate of return from capital such as big infrastructure projects.
Since the start of Doi Moi, Vietnam initiated a number of policy and legal reforms
geared at improving its public administration system. The main focus has been on
implementing legal reforms to improve the efficiency of administrative systems and
procedures, reduce graft and red tape. 4 There has also been a strong emphasis on
decentralisation of powers.5 As Buhmann notes [8], this has been critical in strength-
ening governance structures in Vietnam and building the capacity of the National
Assembly to exercise its oversight role over the executive branch [29, 32, 65]. Civil
society has also become progressively tolerated and recognised by the CPV as an
external oversight actor advocating for better government[9, 46, 89].6
The process of transformation in previous decades has, however, generated impor-
tant social and political challenges in Vietnam. This includes a growing gap between
the rich and the poor and a growing informal sector, increasing user fees in public
services like health and education (often at the expense of the poorest), growing cases
of land disputes, 7 and of course, corruption. In effect, the opening of the economy
created significant opportunities for diversification and personal enrichment for a
greater number of people by taking down barriers for corruption. Like many other
developing countries and transition economies with rapid economic opening and weak
economic and policy institutions [1, 88], the incidence of corruption in Vietnam is
thought to have increased since Doi Moi. 8 This is in part because marketisation,
internationalisation and decentralisation created more opportunities for both bribe-
takers and bribe-givers to extract lucrative rents. Some of these rents, for example
those created with the massive inflow of capital in the form of FDI or those associated

3
The country acceded to the World Trade Organisation (WTO) in 2007, and has since signed up to or is the
process of negotiating a number of multilateral agreements (e.g., the Trans-Pacific Partnership) and bilateral
trade agreements with the European Union.
4
Efforts were made to address abuse of power and corruption by establishing relevant entities: Anti-
Corruption Commission, State Audit, etc. The Criminal Code was also revised to review the type of sanctions,
and the supervisory power of People’s Committees and People’s Councils was also increased [8].
5
Recently, Vietnam has introduced a Public Administration Reform Index to monitor and rank public
administrative reforms across ministries and Provinces.
6
[9] also remarks that the strategy from Party and State has been to co-opt civil society in order to keep things
under control.
7
In Law, land belongs to all of Vietnam’s people but is entrusted for management to the Government who acts
as representatives for ‘land-owners’. This provides easy opportunities for politicians and other state officials to
commercialise land. It has led to violent clashes between farmers and the authorities, for example in Hai
Phong, where a farmer was handed a five-year prison sentence for attempted murder. Reports claim Doan Van
Vuon, the farmer, fought police officers who had come to kick him off the land plot he was occupying [78].
8
In the 1990s, an intelligence analysis described Vietnam as being B[…] in contention for the Imelda Marcos
golden shoe award for outstanding achievement in the category of corrupt activities^ [45: 155].
Corruption and corruption research in Vietnam - an overview

with preferential trade agreements, helped solve market failures and sustained growth
[39, 44, 45].
As several analysts argue; [21, 23, 24] the period of liberalisation did not coincide with
a retreat of the state; quite the contrary. Civil servants and politically connected people
took advantage of this situation, for example by creating administrative hurdles and by
profiting from obscure and inconsistent policies and laws. As [28: 143] states, written laws
were used as guidelines, but bureaucrats implemented them at their own discretion. Rapid
economic growth required an increasing amount of administrative functions, which
opened the door for ‘petty corruption’. Political elites and bureaucrats also acquired assets,
created companies, accrued wealth and distributed rents through the ‘equitisation’
(‘privatisation’) and diversification of SOEs. Patronage networks developed progressively
as the prerogative of public officials grew to include accessing and distributing the state
budget, deciding how to spend public monies, delivering licenses, and managing other
important property rights [21: 12–13, 39, 44]. This situation has much in common with
what Johnston calls the rise of ‘official moguls’. Here, minimal accountability allows
politicians to act with impunity and devote time and resources to illegally enriching
themselves and their clients at the expense of the public [37: 155–6].
Another by-product of this fast-paced economic transformation was the rise of
‘interest groups’. Interest groups can be defined as association of individuals or
organisations that seek to influence policies and politics in the defense of their interests.
As such, interest groups need not be corrupt per se, although they can wield significant
influence and lead to state capture and/or undue influence [79]. In Vietnam, where
spaces for advocating one’s interest openly and within the legal domain are relatively
limited, interest groups are more closely associated to politically connected people and
organisations with money. In his 2012 New Year address, Prime Minister Nguyen
Tan Dung acknowledged the growing influence of these groups, asserting that they
operate in the shadows and undermine Bdecision-making^ [72]. The influence of
interest groups is thought to be strongest in areas such as banking, property
development, and land [34]. Their role is thought to be related to changes in the
role of the State, from directing the economy to defining the rules for competition.
This changing process has led firms to carve out selective advantages by
organizing themselves [91: 58].
The role and prevalence of these interest groups has exploded onto the public
domain in recent years. Arguably one of the highest profile case dates back to 2006,
when a specialised Project Management Unit (PMU 18), implementing Japanese-
funded infrastructure projects on behalf of the Ministry of Transport, was alleged to
have embezzled millions of dollars of public funds by rewarding contractors that were
closely affiliated to politicians in the Ministry. This case cost the transport minister his
job. Several other ministry officials were charged and sent to prison. This incident
seriously tested Vietnam’s ability to deal with corruption cases, as Japan unilaterally
stopped ODA funding to the country.9 The PMU 18 case also ushered in discussions
within economic and political spheres and the wider public about corruption [21]. 10
Other ‘scandals’ include the arrest and subsequent imprisonment for 30 years of

9
To this day, Japan is one of Vietnam’s most significant ODA and trade partner.
10
As [21] states: BPMU 18 precipitated the first public discussion in Vietnam, certainly as far as I am aware,
of the fact that official positions are sometimes bought^ (note 42)
 M. Tromme

flamboyant businessman and chairman of the Asia Commercial Bank, Nguyen Duc
Kien, allegedly for embezzling money, swindling shareholders and evading taxes
(among other counts). Mr. Duong Chi Dung, former chairman of the Vietnam National
Shipping Lines (Vinalines), together with Mr. Mai Van Phuc, its former general
director, were sentenced to death for falsifying invoices and embezzlement. 11 Other
employees received 20 year prison sentences 12 [71]. In 2011, the leading graft
investigation body, the Government Inspectorate (GI), also uncovered instances of
corruption in a heavily indebted shipbuilding state-owned company, Vinashin, for
which a number of top officials were eventually investigated and prosecuted.
As is often the case, however, one must be wary of the underlying motives behind
‘corruption scandals’ as these can hide more sinister forces at play. Various theories
circulated in relation to PMU 18, suggesting that rivals vying for promotion ahead of
the 10th National Congress of the Vietnamese Communist Party (2006) and the 13th
Plennum of the CPV Central Committee held before the Congress used it as a way to
undermine their rivals. Parallels have also been drawn with the more recent case of
Nguyen Duc Kien, where some saw his arrest and prosecution as an attempt by
opponents of Prime Minister Tang Dung to destabilise him (Duc Kien is known to
be closely connected to him). The official line, however, is that these corruption cases
demonstrate a successful attempt by Government to clamp down on corruption,
particularly high profile cases.
Although there is no proper legislation on whistleblower protection, the Government
has recently vowed to address this gap and encourage denunciations. It is common for
state officials to recognise that while there may be political will, proper implementation
of the legal framework is often lacking [30]. Another weakness is the lack of
criminalisation of private sector corruption.13 Moreover, political leaders in the Gov-
ernment and Party are largely immune from prosecution as there are no real account-
ability mechanisms. The CPV is the supreme decision body, but the Judiciary lacks
independence to adjudicate and enforce decisions. Responsibility for prevention, edu-
cation and prosecution of corruption is devolved to a number of organisations and
collaboration among them is a challenge.14 Although improving, the asset recovery and
illicit enrichment regime is still too weak. And finally, transparency and accountability
is on the whole dwarfed by the lack of political rights and space, including for key
actors such as the mass media and civil society [21, 22, 26, 58].

11
The case got much uglier as Dung claimed he was tipped by a high-ranked politician, Pham Quy Ngo,
Deputy Minister of Public Security and member of the Communist Party's Central Committee (Mr Ngo. was
leading the investigation into Vinalines). This triggered Dung’s exile to Cambodia, aided by his brother, before
being captured by the authorities and brought back to Vietnam for sentencing. Pham Quy Ngo died shortly
after of cancer.
12
There is a growing list of people that have been charged with corruption (and for some, handed death
sentences), particularly in the banking and financial sector. In fact, a case could be made for arguing that these
‘big corruption’ cases are common in Vietnam. They are symptomatic of an economic and political system
marked by decentralisation and in which central Party and State authorities use these cases for political ends to
purge, discredit and/or discipline opponents, party members and government officials. Older scandals include
Tamexco (1996), Minh Phuong-Epco (1997), Tan Truong Sanh (1999) [22, 27]
13
The Penal Code is currently being revised, and criminal liabilities for private sector corruption considered.
14
Different agencies are responsible for the anti-corruption mandate: the Central Committee for Internal
Affairs (CCIA), the Party Inspection, the Government Inspectorate, the State Audit, the Ministry of Public
Security (MPS), and the Procuracy.
Corruption and corruption research in Vietnam - an overview

The failure to tackle corruption has been met with growing discontent among the
population. The Vietnam Provincial Governance and Public Administration Perfor-
mance Index (PAPI) flags a number of areas where corruption is perceived to be
endemic: state employment, construction permits, land use rights certificates, and other
public services [82: 19]. A sizeable portion of the population (55 %) believes corrup-
tion is on the increase, and overall levels of trust in the government’s resolve to tackle
corruption waning [76]. In a large-scale survey recently conducted by the World Bank
and the Government Inspectorate of Vietnam, firms ranked corruption to be the second
most serious issue affecting them (after the cost of living). Enterprises consider that the
top four most corrupt sectors include the traffic police, land administration, customs,
and minerals management and construction [93].15 A recent survey of decision-makers
operating in the private equity space also paints a similar picture, with 82 % of
respondents believing that corruption and government red tape are of great concern
[31]. Business representatives acknowledged in a high-level policy forum that Btackling
corruption is not easy and that, on many occasions, businesses perpetuate the problem
by agreeing to make illegal payments in an attempt to get things done. It will require a
joint effort from both the government and businesses to engender a shift away from the
current entitlement culture but this will ultimately benefit Vietnam in the long run^ [85].

From ‘traditional’ to new measurement techniques

This growing disenchantment with corruption seems to be associated with a shared

realisation that corruption constitutes a significant hurdle to development and economic
growth [4, 88]. It is customary to cite data from the World Economic Forum, for example,
which suggests that corruption equals more than 5 % of global GDP (equalling US$ 2.6
trillion), and from the World Bank, which states that US$1 trillion are paid in bribes each
year. The IMF also reports that investment in corrupt countries is approximately 5 % less
than in corrupt-free countries. World Economic Forum estimates suggest that corruption
increases the cost of doing business by up to 10 % on average [90, 95].
Be it in Vietnam or throughout the world, there is now a growing understanding of
how corruption can distort business activities, undermine innovation and productivity
levels, increase time spent on administrative transactions, and hinder the proper
functioning of government institutions. Academic research has focused policymakers
on evaluating the prevalence and effects of corruption on economic growth and
development. Research provides evidence for the negative relationship between
corruption and economic growth, GDP per capita, investment and other significant
macroeconomic variables of this kind [42]. Mauro, using a cross-section of data
spreading across a number of countries, studied the impact of corruption on economic
growth, concluding that perceptions of corruption are strongly and negatively
associated with investment rates [47] [see also 41, 70]. Rothstein and Holmberg [64]

15
Data from 2005 shows that cadastral and housing agency, customs import/export management agencies,
traffic police, public finance and tax agency, management/entities in construction industry were perceived to
be the most corrupt organisations [94]. In 2003, more than half of foreign and local businesses complained that
corruption and bureaucracy were major hindrances to doing business [66].
 M. Tromme

similarly use cross-country data to show that corruption is consistently correlated with
lower growth rates, GDP per capita, and human development levels.
Recent research has demonstrated that corruption can affect growth through a range of
channels – both direct and indirect – for example through inadequate provision of public
goods that are inefficiently allocated, poor allocation of contracts, and decreased produc-
tivity of investments. Although this ‘sanding the wheel’ approach is now the predominant
view, research has argued in the past in favour of seeing corruption as a way for firms and
citizens to overcome bureaucracy, and therefore as a way to increase productivity (i.e.,
corruption as ‘greasing the wheel’) [43]. For example, analysts argue, bribes can be seen as
additional income for state employees, who are incentivised to provide better services16
(see also [49] for a detailed discussion on sanding vs. greasing the wheel).
The debate on the actual costs and benefits of corruption is far from over, in part
because the measurement challenge confronting researchers means there are no single
methodologies or datasets that help us address this issue adequately [45: 149, 67]. For a
long time, both researchers and practitioners have relied on traditional measurement
techniques, often in the form of country-level corruption perception surveys of ordinary
citizens, businesspeople or experts. Typical references here are Transparency Interna-
tional’s Corruption Perception Index (CPI) and Bribe Payer Index (BPI), or the World
Bank’s Governance Indicators, all developed in the 1990s. These indicators, which can
be broken down into sub-national or regional dimensions, are often useful in raising
awareness, making comparisons or analysing macroeconomics [36, 40, 47] were
among the first to apply these indices in empirical studies. Many – including the
research included in this issue – have followed suit, using country-level perception
data that these indices provide to evaluate the relationship between corruption and other
economic, political and socio-cultural variables.
One advantage of these datasets is their ‘reliability’ and replicability over the years,
as well as the wide number of countries that are included [35, 38, 63]. So, while these
indices have played an important role in sparking new research and public debate as
well as developing our understanding of corruption, the literature abounds with anal-
yses of their limitations. Among the biggest is the fact that cultural or contextual
interpretations of corruption can create significant bias. 17 Moreover, perceptions of
corruption and measurement of actual corruption are not always correlated, and there is
a risk of using data that includes an endogeneity bias (i.e., where predictor variables
might be correlated with both the Btreatment^ and the outcome variables). Survey
responses and self-reported instances of corruption can also suffer from recall issues
and underreporting [7, 29, 38, 59, 63, 67].
It is well accepted now that standard measurement techniques, mainly survey-based,
are inadequate to measure corruption with complete accuracy. In part, this is because
there is no single definition of corruption, but also because it takes many forms that
cannot be easily measured within one single type of indicator (i.e., bribery, embezzle-
ment, nepotism, clientelism, fraud, extortion, administrative, political, economic, fi-
nancial corruption, and the list goes on). Corruption is also by nature secretive and
16
This line of reasoning has been critiqued extensively [62].
17
These weaknesses are acknowledged by the indices’ developers. Transparency International, for example,
warns that the Indicators measure perceptions, not actual corruption. To minimize the effect of methodological
pitfalls, [67] suggests that new indicators should aim to minimize sampling bias and misreporting, while
increasing the scope of corrupt practices that are captured.
Corruption and corruption research in Vietnam - an overview

cannot be measured directly. And yet, without a proper understanding of how corrup-
tion works and its extent, effective anti-corruption strategies cannot be tested easily
[67]. This has encouraged researchers to continue exploring ways of developing more
accurate, objective and replicable methods for measuring corruption. A new ‘genera-
tion’ of methodologies has arisen which is based in large part on quasi-experimental
and experimental methods that combine qualitative and quantitative analyses and real-
life cases. These creative measures use a mix of direct and indirect methods, for
example to identify gaps between administrative data or between administrative data
and survey data [19, 54, 55] or by observing corruption in the field [56]. Advancements
in these new methodologies has fostered our understanding of the nature of corruption
(how it occurs and why), but also of human behaviour, particularly why people engage
in corruption and the role of incentives [68].

Corruption research and the costs of corruption in Vietnam

Vietnam is a good testbed for these innovative measurement techniques.18 International

partners have supported large nationwide surveys to evaluate corruption and gover-
nance levels. This includes, for example, the Provincial Competitiveness Index (PCI).
As a nationwide indicator of domestic, non-state enterprises and foreign-invested
enterprises, the PCI was first rolled out about 10 years ago to report on the quality of
economic governance across provinces. 19 The Index champions an alternative and
more reliable way of measuring corruption that addresses some of the methodological
pitfalls of more established approaches. The PCI relies on the Bcutting-edge approach^
known as the Unmatched Count Technique, or ‘LIST questions’, used by many
researchers to explore different kinds of sensitive topics [29]. Essentially, UCTs present
respondents with a list of activities and asks that they identify how many of those they
engaged in. UCTs allow correcting Bfor measurement error in perceptions of corruption
by measuring corruption experience directly with respect to both foreign and domestic
firms. This approach allows [the authors] to offer the first unbiased assessment of the
impact of economic openness on corruption [in Vietnam]^ [29: 114].
The Provincial Governance and Public Administration Performance Index (PAPI)20 is a
national governance and public administration performance monitoring tool produced on
an annual basis by the Centre for Community Support and Development Studies
(CECODES), under the Vietnam Union of Science and Technology Associations
(VUSTA), the Vietnam Fatherland Front Centre for Research and Training, and UNDP.
Each year, PAPI assesses citizens’ experience and perceptions concerning policy making,
policy implementation, and the monitoring of public service delivery. However, PAPI is
faced with similar problems that PCI and other large surveys that study governance
patterns also experience: the reluctance of respondents to answer questions truthfully for
fear of self-incrimination or reprisals, and the risk that respondents overstate the corruption
problem but underreport instances of corruption when it affects them (i.e., the ‘social
desirability’ problem). To get around this problem, PAPI also uses UCTs. The 2012

18
What follows is not meant to be an exhaustive review of existing studies.
19
The PCI is led by the Vietnam Chamber of Commerce and Industry (see http://eng.pcivietnam.org/)
20
See http://papi.vn/en/
 M. Tromme

edition, for example, used UCTs to measure the scope and scale (i.e., share of participants
and size of the average bribe) in issuance of land use rights certificates, use of public
district hospitals, and in primary schools [82: 25]. PAPI also uses the ‘truncated estimation
strategy’21 in an attempt to measure the costs of corruption. With both these methods, the
Index finds that citizens pay on average between 100,000 and 600,000 VND (US$5-28) in
bribes in the primary school system (per student per semester) and between 40,000 and
150,000 VND (US$ 2–7) in healthcare (per patient per visit at a district hospital). Despite
using this Bpioneering and novel approach^ [82: 32], the methodology leaves out those
who refuse to pay or simply do not have the means to do so.
Proxy indicators are becoming more popular as Balternatives to ‘direct’ indicators
that more directly measure the phenomenon under study but that may be hard to
operationalize or require over costly data collection^ [36]. Examples include looking
at the ratio/rate of prosecutions, exploring kinship as a measure for nepotism, and
evaluating patronage and wastefulness. Focusing on Government procurement pro-
cesses, recent studies [73–75] demonstrate how, by making use of the internal records
of a firm paying bribes and with extensive qualitative interviews with CEOs, the rent
distribution between bribe payers and receivers can be evaluated, therefore providing a
more accurate picture of corruption in Vietnam. One advantage of relying on internal
documentation for bribes paid is that data is relatively accurate as firms maintain ‘dual
accounting’ systems (one for official purposes, one to record bribes paid), which makes
it possible to identify who was paid, how much, where and when. Moreover, while not
strictly statistically representative, the three firms studied actually interact with a
number of actors in a range of sectors. One obvious shortfall of this methodology is
the need for trust between the firm and the researcher, and another is the limited ability
to infer causal relationships from this analysis [67, 74: 18–19].
The literature on corruption in Vietnam is much richer, and goes beyond what was
gleaned through the above. Although it might not always use ‘cutting-edge’ or ‘new’
methodologies per se, this body of evidence is nonetheless valuable and insightful.
Roughly speaking, it comes from two sources: survey data and empirical research. One
important reference in the former group is the World Bank survey of corruption from
the perspective of firms, citizens and government officials, produced in 2005 and 2012
[94]. The latter version provides not only a more contemporary analysis of perceptions
of corruption and the effectiveness of anti-corruption measures across all three groups,
but also offers an investigation into issues that have become important concerns in
recent times, such as the role and influence of ‘interest groups’. The UNDP has also
produced the ‘Justice Index’ as a measure to assess people’s satisfaction with access to
justice and the challenges they face [81]. Transparency International and its local
contact organisation, Towards Transparency, have produced in-depth reports of the
country’s Integrity System through the National Integrity System (NIS). It has also
undertaken large-scale corruption perception surveys (e.g., the Global Corruption
Barometer) and surveys focusing specifically on youth (Youth Integrity Surveys). On the
government side, large-scale datasets that do not specifically focus on corruption but are
21
In this approach, Bthe probability of participating in a non-sensitive activity is estimated for every individual
in the sample using covariates available in the dataset for the control group. This estimation of non-sensitive
activities is then subtracted from the total amount of observed activities engaged in by each individual in the
treatment group. The difference is the probability of engaging in corruption for each individual in the survey.^
[83: 29].
Corruption and corruption research in Vietnam - an overview

nevertheless used in such research include the General Department of Taxation databases
and the Vietnam Living Standards Surveys (VLSS). Some ministries and state institutions
produce research on corruption (see next section), but to our knowledge, this tends to be
quite restricted to issues at a sector level and does not address the costs of corruption.
That said, researchers have tested hypotheses about the impacts of corruption in
Vietnam.22 Constructing a repeated cross-section across provincial industries from 2006
to 2010 [2] analyse data from about 13,000 individual firms to conclude that growth
leads to lower corruption. 23 [50] draw on a sample of firms collected from both the
2005 PCI and the World Bank’s Productivity and Investment Climate Survey to
conclude that corruption hampers the growth of firms in the private sector, but not in
the state sector. Using the PCI, [29] test the linkages between FDI and corruption. They
find that there is evidence of corruption during both registration and procurement
procedures, but that FDI has little or no effect on this. Economic openness, they argue,
is consistent with lower corruption [61] in turn, provide insights into the behaviour and
motivation of bribe-paying firms. They show that the likelihood of a firm paying bribes
depends on factors such as its size and formality/informality, size of capital, and level of
interaction with public officials, among other things. Likewise, [60], building his own
survey of 606 entrepreneurs in 2004, and 201 more in 2009, asks what are the firm-
level determinants of bribery and how it affects entrepreneurial performance. In line
with [61], he also suggests that firm characteristics (age, size, lifecycle), variations in
the business environment, and personal ties with local government officials affect a
firm’s likelihood of paying bribes [17] echo these findings and suggest that bribery
impacts firm revenue, and more specifically, find support for a diminishing return of
bribery to revenues. That said, the authors also acknowledge that more research is
needed to understand the direction of causality, since, even though they provide
theoretical arguments to suggest that bribery impacts revenues, the opposite could well
apply. By using up to fifty corporate governance measures (including the role of boards
of directors and shareholder rights) for 183 surveyed companies, [16] finds that
corporate governance of newly equitised (‘privatised’) companies has only a marginal
impact on company performance, showing instead that industry performance as a
whole is a greater determinant of corruption.
New research presented in this issue complements these findings by focusing
on the different transmission channels through which corruption affects growth
and also by studying its impact at the provincial level. Analyses showing the
underlying causal mechanisms that determine how corruption affects growth
(through which channels) and the consequences at the firm and provincial
levels are relatively rare, and these processes are not well understood [51–53,
60]. Some of the findings presented by our contributors, therefore, contribute to
bridging this gap by providing further evidence on the behaviour and rationale
for why firms engage in corruption c.f. [61], and by showing that firms –
especially formal household business – can suffer from extortion while also
colluding with the authorities [13].
22
This is not an exhaustive literature review. An online catalogue of available literature can be found here:
http://www.vdic.org.vn/en/library/subject-list/194-subject-list/363-corruption-in-vietnam.html (accessed
December 2014)
23
This would contradict the earlier claim that the incidence of corruption is thought to have increased in the
Doi Moi period; see page 3 and Table 1
 M. Tromme

Table 1 Vietnam’s key macroeconomic figures – 1990s and 2000s

1990 1995 2000 2005 2010 2011 2012 2013

GDP per capita 98 288 433 699 1,334 1,543 1,755 1,911
(USD) [92]
Annual GDP 5.1 9.5 6.8 7.5 6.4 6.2 5.2 5.4
growth (%) [92]
FDI (total registered capital) 735 6,937 2,838 6,839 19,886 15,618 16,348 -
(mil USD) [86]
CPI Corruption Ranking and - - 76/90 107/158 116/178 112/182 123/174 116/175
(Score /10) [76] (2.5) (2.6) (2.7) (2.9) (31a) (31)
World Bank Control of 39.5 31.7 24.9 31.4 30.8 35.4 36.8
Corruption [92] (1996)
Human Development - - 0.563 0.598 0.629 0.632 0.635 0.638
Index [82]

a
The score changed from a ranking of 0–10 to a ranking of 0 (highly corrupt) to 100 (very clean)

The corruption research community in Vietnam

The transition from central planning to increased market allocation reforms in

Vietnam has created a growing demand for understanding the process of transfor-
mation, as well as a need to guide the state and society through these economic
and socio-political changes. Moreover, as the political economy of Vietnam has
evolved, so has the space for addressing a greater number of issues, including
sensitive ones like corruption and the role of government in managing the
economy. The Government and Party have turned to ‘knowledge institutions’,
by which we mean state actors, such as national research institutes that operate
under the Vietnam Academy of Social Sciences (VASS), and non-state public
policy research institutes (PPRIs), universities, private researchers (consultancies
and NGOs), and donors [3, 15, 33: 90]. These knowledge institutions vary in their
ability to assist lawmakers and politicians in substantiating policy-making and
providing research, training and advice. On the whole, solid, creative and inde-
pendent research on corruption is rare [12, 18, 20, 25, 57, 58].
Within VASS (and state research institutes in general), hierarchy dominates.
Junior researchers tend to have few opportunities to take the initiative and undertake
research projects on their own. Directors tend to play an important role, particularly
where a sensitive subject like corruption is involved. Driven by low salaries and
complicated bureaucratic procedures, researchers tend to chase after donor contracts.
This requires more junior researchers to obtain formal permission from their supe-
riors, but in any event, leads researchers to keep their ‘out-of-hour’ work separate
from their day-to-day occupations. Researchers also minimise formal links with
externally funded projects so that they can keep some degree of autonomy and
control over these projects. This provides strong disincentives for cooperation, and
conversely encourages highly individualistic behaviours [48]. Moreover, political
connections of VASS researchers also undermine their independence.
Among state actors, ministries in Vietnam tend to have their dedicated public policy
research institutes (PPRIs). They are the principal body for designing development
Corruption and corruption research in Vietnam - an overview

strategies and master plans for specific sectors, industries or locations. Some are also tasked
with contributing to drafting legal documentation. Because Public Research Institutes are
located in Government ministries, with a few exceptions, they tend to lack independence
and can seldom engage in constructive criticism of their line ministries24 [15]. Although in
practice, policy issues like corruption need coordination across disciplines and therefore
ministries, public research institutes tend to prioritise the agenda of their own ministries,
which is also often their only funding source. Inter-ministerial coordination is therefore rare.
Next to public institutes, universities are primarily focused on teaching and have
little access to finances and resources to conduct scientific research. There is a high
turnover among academics, who often take their projects with them when they move
on. Universities lack younger research personnel, a strong research culture or manage-
ment knowledge [3, 15]. The role of mainly foreign-funded private research institutions
is slowly progressing in Vietnam, though the influence of non-state institutions on
policymaking is limited, with their role in policy drafting, advocacy or analysis not yet
fully recognised. On the other hand, independence from the state allows them to be free
to address sensitive topics, which is also the case for individual private researchers. A
significant source of knowledge on corruption in Vietnam (either directly by producing
it or indirectly by funding it) is the bilateral and multilateral donor community.

The contributions in this issue

Acknowledging the opportunity to carry out research on corruption and invigorate local
research in the process, DFID set out to fund research that was innovative, addressed
issues of policy-relevance and of public concern, and that targeted clear research gaps.
The purpose of the research grants was also to promote attention and policy
engagement on corruption issues by supporting Vietnam’s research community,
strengthening the evidence-base on corruption, and influencing the policy agenda of
future anti-corruption initiatives by disseminating the research findings.
Through an interactive and consultative process, DFID identified several research gaps
on corruption in early 2013, which would later become main themes for research grants.
Following a competitive application process, DFID awarded small grants to four study
teams that proposed to analyse the costs of corruption at the macro, provincial and firm
levels. Their research sought to answer the following questions: i) what are the costs of
corruption in terms of economic growth and a firm’s innovation capacity? ii) what are the
costs of corruption at the provincial level in terms of investments, job creation, and per
capita income? iii) what are the strategic and transactional costs and benefits of corruption to
firms, and how does it affect their growth?25; and finally, iv) what are the costs of corruption
for household businesses in Vietnam?

24
The Central institute for Economic Management, CIEM (under the Ministry of Planning and Investment), the
Institute of Labour and Social Affairs (under MoLISA), and the Institute of Policy and Strategy for Agriculture and
Development (IPSARD), under MARD, are often seen as producing quality research. The perceived effectiveness
of these institutes, however, is in part associated with their ability to attract foreign funding and to work on high
priority issues. As a result, these institutes are able to tap into international knowledge networks as well.
25
Strategic refers to the long-term impact while transactional refers to the day-to-day interaction between
firms, or between firms and government.
 M. Tromme

The studies were carried out over the course of approximately a year. Preliminary
findings were discussed at a symposium held in Hanoi on 25–26 August 2014, and final
results were disseminated through briefing and policy papers. Institutions were awarded
grants to tackle each of the research questions, but they worked closely and coordinated
efforts. Two teams – the Development Policies Research Center (DEPOCEN), and
Transformation and Change Management (T&C) together with the Asia Pacific Institute
of Management (APIM) – are private research organisations with strong links to the
academic world, while the Vietnam Chamber of Commerce and Industry (VCCI) acts as
a quasi-governmental organisation and conducts research on a range of issues in
addition to housing the PCI. A fourth team, the Center for Community Support and
Development Studies (CECODES) (which collaborated with MCG Consulting for this
project) is registered as an NGO that undertakes research on policy assessments and
implements capacity-building activities for mainly disenfranchised communities.
The first article, BCorruption and economic growth, with a focus on Vietnam^ [51]
presents research undertaken by DEPOCEN. It uses macro datasets to estimate the
impact of corruption on growth, with a focus on Vietnam as a special case. The study
confirms that corruption metes out important costs in terms of lower economic growth
when looking at direct effects. On the other hand, when analysing indirect effects, the
study shows some surprising results: corruption can have positive influences on growth
through human capital (education) and domestic investment channels, and it can also
have negative impacts on growth through the citizen voice and accountability channels.
For Vietnam, this means that had the Corruption Perception Index level improved by
just one unit between 2000 and 2012, then the economy would have grown from an
average of 6.73 % during the period to 6.94 %. Similarly, if corruption levels had fallen
one standard deviation, that is the CPI increased from 2.6 to 5.0, then Vietnam could
have grown by up to 7.22 %. This illustrates the main finding that corruption under-
mines economic performance.
Research conducted by VCCI and presented in the second article explores how
corruption impacts on development at the provincial level [13]. This is important since
Vietnam is a highly decentralised country where key financial and economic decisions
are taken at the provincial level. The Provincial Competitiveness Index (PCI), already
referred to above, is a good illustration of this. Reports suggest that key provincial
officials pay close attention to their Province’s standing in the ranking and treat
seriously the possibility of implementing tangible changes to climb up the ranking.
The study evaluates how and to what extent corruption affects economic and social
development at the provincial level. It analyses the impact of corruption on domestic
private sector investment (which is assumed to be an important determinant of growth)
and employment, as well as on household per capita income and the Gini coefficient.
VCCI’s key contribution lies in combining data from the PCI and the General Statistics
Office (GSO) to provide reliable estimates of the costs of corruption, as well as pointing
to the incentives structures that need to be addressed to tackle it.
The next article by APIM and T&C [53] constitutes a key contribution to the
literature on the determinants of corruption at the firm level. In line with studies by
[60, 61], the research team employs an astute dichotomy of strategic and transactional
costs and benefits of engaging in corruption. The authors discuss both the causes and
consequences of corruption from a macroeconomic point of view, and combine their
analysis with carefully chosen case studies in three sectors (pharmaceuticals,
Corruption and corruption research in Vietnam - an overview

construction, and banking) to show the rationale for engaging in corruption. They find
that most firms in Vietnam engage in corruption to ‘follow the rules of the game’,
because they are subject to significant pressures to bribe. And yet, typical benefits that
firms expect in return, such as less administrative hassles, do not always materialise or
do so only under certain conditions (depending on firm size, number of years in
operation, etc.). This research is an important contribution to our knowledge of
corruption in Vietnam, as it enriches the theoretical and methodological framework
for studying corruption but also provides new intelligence on corruption at the firm
level.
DEPOCEN undertook a second assignment [52], investigating the impact of
corruption on firm innovation, which is broken down into several component
parts (product improvement, overall innovation, and new innovation, for exam-
ple). Using panel data of Vietnamese Small and Medium Scale Manufacturing
Enterprises from 2005 to 2011, the authors find a positive and statistically
significant relationship between corruption and firm innovation. In other words,
results lend credence to the ‘greasing the wheel’ effect of corruption on a firm’s
decision to innovate. Though the authors acknowledge this finding is at odds
with most others in the literature, they explain this could be due to the short-
term view of firms, which consider the costs of paying bribes as inconsequen-
tial if it allows them to innovate and introduce new products to market. Also,
the authors guard against making long-term inferences, meaning that the find-
ings do not necessarily show that corruption is good for firms over the long
term. Another interpretation of the findings is that corruption and innovation
are characteristics of entrepreneurship, in that successful entrepreneurs are
creative people who get things done.
On the whole, the above studies show the damage being done to the Vietnamese
economy. They bring home the long-term implications of corruption on the Vietnamese
growth model and state-society relations. The focus of most of this research is on bribe-
paying firms and the costs this entails to them in terms of stunted growth or a lower
bottom line. However, it is clear that corruption can also benefit firms, for example,
where they are granted lucrative contracts in return for kickbacks. This dimension
(firms as both victims and perpetrators of corruption) comes to the fore in the next
paper in this issue.
Indeed, CECODES and MCG [14] show that businesses both suffer and profit from
corruption. The research considers the risks, forms and costs of corruption faced by
registered household businesses in Vietnam. Based on a large scale survey of 525
registered household businesses across eight geographical regions, the authors explore
corruption risks in administrative procedures, especially business registration/licensing
and tax compliance, as well as access to information and capital. Findings show that
corruption in licensing is more common than in registration (through the use of
middlemen, contacts or informal payments). Likewise, these practices are also used
to obtain access to credit, mainly from banks. The research reveals the relationship that
develops between firms and tax officials, whereby both instances of collusion and
extortion take place. Respondents complain tax officials use their prerogative and
authority to interpret laws, but businesses and officials often tend to settle on a deal
and therefore collude. This research provides further evidence that household firms
often perceive corruption as a normal cost of doing business.
 M. Tromme

Rather than only focusing on the negative costs of corruption, the next article by
Bertram Spector [69] provides an empirical analysis that emphasises the incentives and
benefits of anti-corruption programming for economic, political and human develop-
ment. An important implication of this, the author shows, is that policymakers can be
motivated to implement anti-corruption programmes because they provide citizens with
many positive results. The research compares low and lower middle income countries
(including Vietnam) with upper middle and high income countries. Findings show that
strengthening the legal-institutional framework to fight corruption tends to improve
socio-economic results, but that the active implementation of anti-corruption reforms
(over and above pure legal reform) produces even greater benefits. And although
implementing anti-corruption programmes can be more challenging for low and lower
middle income countries, the net effect for them of implementing anti-corruption
campaigns can be as satisfying as for the upper and middle income economies.
Drawing the issue to an end, Tromme [77] first considers some of the policy
implications of the research in this issue. The author then lists some of the challenges
of conducting anti-corruption research, both at a technical and practical level, but also
concerning the political environment research is produced within, and the changing
donor environment. He notes that researchers will need to become more creative over
time, and that donors that remain in the country can continue supporting anti-corruption
research in non-monetary ways, by ‘working with the grain’. Finally, the paper
identifies several research gaps (chief of which is our understanding of high-level or
grand corruption), as well as some tools that can help us unpack corruption in
innovative ways. The author concludes by showing some ways anti-corruption has
had a positive influence on policy in Vietnam.
Vietnam is well equipped to move beyond perception-based approaches to develop a
deeper understanding of the determinants and effects of corruption. As policymakers
and the wider public worry about corruption, research is able to provide relevant
stakeholders with scientifically rigorous evidence of corruption dynamics in Vietnam.
Researchers and practitioners in the corruption research field internationally should
continue to look to Vietnam as an important contributor to methodological and practical
discussions on the subject.
Special thanks to Andrew Wells-Dang, Bertram Spector, Clara Volintiru and Pham
Vu Anh for their comments on an earlier draft of this paper. Thanks also go to Nguyen
Thu Phuong for her research assistance. The research summarized in this issue was
sponsored by the UK Department for International Development (DFID) in Vietnam.

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