How will Vietnam’s “anti-corruption” politics affect your business in 2023?

Estimated reading time: 5 minutes

Vietnam’s expat community is grappling with the government’s response to geopolitical events impacting business over the short, medium, and long term. The country’s swift decision-making and strict enforcement stem from the ruling party’s top priority: sustainability. Any perceived threat to party leadership results in quick decisions, followed by the announcement of laws and decrees. The army and police then conduct investigations and arrests, rooting out the cause of the threat.

Vietnam’s Motto: Happiness, Independence, Freedom.

Vietnam’s national motto is “Happiness – Independence – Freedom,” and while it may sound unusual from a Western perspective, it makes sense to the Vietnamese people.

Happiness, for them, comes from steady economic growth maintained at an average of 7% year after year. Independence, earned through centuries of wars against the Chinese, French, and Americans, is non-negotiable. Internally, it means eradicating any systemic risks that threaten the party’s predominance. Freedom, on the other hand, is granted to the people within the party’s framework, as long as it does not go against the common interest or health of the nation. Pledging allegiance to any foreign nation or group is also a big no-no.

Vietnam’s WYSIATI Principle and Urgent Important Criteria.

Decisions in Vietnam are made based on the “What You See Is All There Is” (WYSIATI) principle and urgent important criteria. The government doesn’t always consider the short, medium, or long-term implications of their actions, which sometimes leads to abrupt decisions and enforcement. For example, in 2022, the government clamped down on the Ministry of Health, imposing decrees on the management of state hospitals due to organized corruption at the highest levels of 64 provinces’ health administrators. This led to shortages of anesthesia supplies, essential medicines, and equipment maintenance and replacements.

Post-Covid, the fight against corruption is business as usual. What’s new is the government’s top-down investigations that have frozen many ministries. The expat community in Vietnam remains divided in interpreting the government’s actions and reactions to geopolitical events impacting businesses.

Vietnam’s Crackdown on Corruption and Consequences: Who Profits?

The Vietnamese government is cracking down on corruption within its ranks, with ministers now being held responsible for the actions of their subordinates. The recent arrests and investigations at the highest levels of government are not just about embezzlement, but also about mismanagement that has caused serious consequences. Organized corruption within governing ministries and across ministries has become a major problem. For instance, the Vietnamese Covid repatriation scheme was an organized extortion racket involving eight ministries, with the transportation ministry’s vehicle technical control section playing a key role.

The question of who profits from corruption cases is an important one, with private individuals, government officials, and foreign commanditaires or nations all potentially involved. The Van Thinh Phat real estate case is a prime example. Ms Lan was given a centrally located piece of land, which then grew in size, leading to questions about who is giving away city land so easily and cheaply. Moreover, Ms Lan, who is CEO of VTP, is married to a Hong Kong real estate developer who has significant investments in China. This raises the question of who the ultimate owner is: an individual, a mafia group, or ultimately China?

Covid-related abuses threaten Vietnam’s political power

Several sectors have been hit hard by Covid-related abuses. The recent scandals may seem like the good old corruption. They differ, however, in how they threaten the president, ministers, and the parallel organizations within the government that are threatening the political power. The case of the Vietnamese chartered repatriation involved eight ministries colluding to extort $3,000 to $5,000 per person, with $50,000 per flight over 2020 and 2021, involving 2,000 return flights.

Viet A Company, which won every public bid for medical supplies and equipment over the past three years, has also come under scrutiny. This is particularly relevant during the Covid pandemic when the Ministry of Health and the CDC were buying and distributing Covid medical supplies in all 64 provinces.

These corruption cases pose a clear and present danger to the people of Vietnam. For instance, the nationwide Novaland bond issuance for mega-projects and the real estate bond issuance of Tan Hoang Minh are under investigation. F88 pawn shops are developing at a rapid pace, preying on people’s gaming vices and factory workers hit by inflation. These pawn shops are issuing bonds to people to finance their businesses, while advertising during football World Cup matches on TV.

Vietnamese Government Crackdown on Corruption and Mismanagement

Controls have escaped control in many cases, with stock markets and regulatory bodies failing to function effectively. Rogue companies are getting junk bonds out without proper supervision. There have also been cases of visa issuance during Covid to thousands of forged investors or specialists. This is raising questions about the effectiveness of foreign affairs and the Ministry of Interior, Security, and Immigration. Finally, FLC stock manipulations are also under investigation.

The Vietnamese government is taking a strong stance against corruption and mismanagement. High-level officials are now being held accountable for the actions of their subordinates. Ensuring the sustainability of the party and the happiness, independence, and freedom of the Vietnamese people critically depends on cracking down on corruption. The government must ensure that controls prevent further abuses and that regulatory bodies function effectively to protect the people’s interests.