Under-the-table fees block Vietnam enterprises’ way

Last update 12:00 | 14/04/2017
VietNamNet Bridge – If embezzlement continues, breakthrough reforms initiated by local authorities will not bring the desired effects, Dang Dinh Dao from the Institute for Economics & Development Studies has said.vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, PCI, VCCI, reform

VCCI, in its 2016 PCI report, pointed out that there are still many ‘big stones’ that block enterprises’ way, including lack of transparency, difficulties to access land, unfair environment and under-the-table fees.

State management agencies have established ‘one-stop-shop’ units to ease administrative procedures that people and businesses have to follow. However, the units still cannot help. Businesses still have to spend three months on procedures which can be completed in one month.

VCCI, in its 2016 PCI report, pointed out that there are still many ‘big stones’ that block enterprises’ way, including lack of transparency, difficulties to access land, unfair environment and under-the-table fees.

In fact, the existence of ‘under-the-table’ fee is not only mentioned in VCCI’s report. Prior to that, the World Bank’s report showed that businesses encountered troubles in administrative procedures, which caused the production costs to increase.

“The troubles force enterprises to pay unofficial fees to have their businesses. The money they pay in this case won’t encourage production and create profit, but just lubricate the state’s apparatus,” he said.

“In order to recover the cost, enterprises will have to raise selling prices,” he said, adding that this weakens products’ competitiveness.

Dao cited a report as saying that in order to create one dong of profit, Vietnamese businesses have to pay VND0.7-1 in under-the-table fee.

The big problem is that embezzlement encourages businesses to have their work solved by ‘going through the back door’ instead of focusing on improving their competitiveness.

He went on to say that the sharp increase in the number of Vietnamese billionaires is not good news at all, because there are billionaires who got rich by cheating in business and exploiting legal loopholes.

More seriously, Dao pointed the relation between embezzlement and the sharp increase in FDI from China. Embezzlement and lubrication fees do not make Chinese investors shrink back.

Chinese investors understand the ‘envelope culture’ in Vietnam. The understanding allows them to play tricks to obtain the right to develop huge projects in Vietnam.

The Cat Linh – Ha Dong highway project is a typical example. Chinese offered the low price of $553 million to win the bid to develop the project. But later, it raised the investment capital to $900 million.

Nguyen Hong Nga from the HCMC Economics & Law University noted 80 percent of investments from OECD countries target member countries and only 20 percent target developing countries because the investors want an investment environment with high transparency. Meanwhile, the FDI from China is contrary to that tendency.

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This entry was posted in Corruption - Tham nhũng, Governance - Công quyền and tagged , by Trần Đình Hoành. Bookmark the permalink.

About Trần Đình Hoành

I am an attorney in the Washington DC area, with a Doctor of Law in the US, attended the master program at the National School of Administration of Việt Nam, and graduated from Sài Gòn University Law School. I aso studied philosophy at the School of Letters in Sài Gòn. I have worked as an anti-trust attorney for Federal Trade Commission and a litigator for a fortune-100 telecom company in Washington DC. I have taught law courses for legal professionals in Việt Nam and still counsel VN government agencies on legal matters. I have founded and managed businesses for me and my family, both law and non-law. I have published many articles on national newspapers and radio stations in Việt Nam. In 1989 I was one of the founding members of US-VN Trade Council, working to re-establish US-VN relationship. Since the early 90's, I have established and managed VNFORUM and VNBIZ forum on VN-related matters; these forums are the subject of a PhD thesis by Dr. Caroline Valverde at UC-Berkeley and her book Transnationalizing Viet Nam. I translate poetry and my translation of "A Request at Đồng Lộc Cemetery" is now engraved on a stone memorial at Đồng Lộc National Shrine in VN. I study and teach the Bible and Buddhism. In 2009 I founded and still manage dotchuoinon.com on positive thinking and two other blogs on Buddhism. In 2015 a group of friends and I founded website CVD - Conversations on Vietnam Development (cvdvn.net). I study the art of leadership with many friends who are religious, business and government leaders from many countries. In October 2011 Phu Nu Publishing House in Hanoi published my book "Positive Thinking to Change Your Life", in Vietnamese (TƯ DUY TÍCH CỰC Thay Đổi Cuộc Sống). In December 2013 Phu Nu Publishing House published my book "10 Core Values for Success". I practice Jiu Jitsu and Tai Chi for health, and play guitar as a hobby, usually accompanying my wife Trần Lê Túy Phượng, aka singer Linh Phượng.

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