Vietnam's Corruption and Growth
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Carlyle Alan ThayerVietnam's Corruption and Growth
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Carlyle Alan ThayerThayer Consultancy Background Brief:
ABN # 65 648 097 123
Development and Corruption in
Vietnam
March 23, 2024
We are doing a report on the political and economic situation in Vietnam and we
request your assistance by providing your insights into the following questions:
Q1. The president of the country Vo Van Thuong has just resigned due to corruption
issues. He had only been in power for a year. What is happening with corruption
there?
ANSWER: There is no doubt that Vietnam’s one-party state is “ruled by law” rather
than “governed by law” and this contributes to a high incidence of public sector
corruption.
In August 2006, Vietnam’s National Assembly established Vietnam’s first dedicated
anti-corruption body the Central Steering Committee for Anti-Corruption headed by
Prime Minister Nguyen Tan Dung. It proved to be a lacklustre institution.
It was not until January 2011, when Nguyen Phu Trong was elected General Secretary
of the Vietnam Communist Party (VCP) at the party’s eleventh national congress that
the anti-corruption campaign really got off the ground. In 2012, Trong succeeded in
gaining approval from the Central Committee to transfer responsibility for the anti-
corruption campaign from the Prime Minister’s Officer to the Central Steering
Committee on Corruption Prevention and Control under the direction of the Politburo
which he headed.
General Secretary Trong has dedicated this life to party-building. He received a Phd in
party-building from the Soviet Union. His career was largely spent writing on party-
building and ideological issues for the party’s journal, Tạp Chí Cộng Sản.
General Secretary Trong’s anti-corruption campaign has two lines of effort, the first is
aimed at punishing party and non-party officials who have committed criminal
offensives under the law.
The second line of effort is to discipline party member for violating party ethics and to
hold party members accountable for dereliction of duty. This line of effort was
strengthened in October 2021 with the adoption of Secretariat Regulation No. 37-QD-
TW (Quy Định V ề những điều đảng viên không được làm) setting out nineteen
regulations on what party members should not do. For example, Article 14 forbids
party members from committing embezzlement; giving, receiving, or brokering bribes;
taking advantage of their position to broker bribery or bribe in any form; organising
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participating in or creating conditions for money laundering or illegal borrowing and
lending.
Collectively Trong’s anti-corruption campaign became known by the nickname
“burning furnace” (đốt lò).
In June 2022, on the tenth anniversary of Trong’s anti-corruption campaign, the
Ministry of Information released the following figures:
• 168,000 CPV members were disciplined and 7,390 “punished for corruption or
links with corruption,” including “170 officials under the Party Central
Committee’s management”
• 16,699 cases of corruption, abuse of position, and economic-related
irregularities were prosecuted. US$2.6 billion worth of ‘corrupt assets’ have
been recovered, including 76,000 hectares of wrongfully appropriated land.
US$41.8 billion in fines have been levied.
At least seventy high-ranking party officials, including five ministers or former
ministers were disciplined since 2021 alone.
Under General Secretary Trong Vietnam has improved its ranking on Transparency
International’s Perceptions of Corruption Index where scores are tabulated from 0
(highly corrupt) to 100 (very clean).
But – and this is significant – Vietnam’s PCI score rose from a low of 2.7 in 2010 (ranked
127 out of 175 states surveyed) to 31 in 2015 (111/168) at the end of General
Secretary Nguyen Phu Trong’s first term in office. Its PCI score rose to 36 in 2020
(104/180) at the end of Trong’s second term in office, and to 39 in 2021 (87/180) when
Trong was elected for a third term. Vietnam’s PCI score rose to an all-time high 42 in
2022 (77/80) but fell slightly to 41 (87/180) in 2023.
In sum, Vietnam’s PCI score improved over 38 points during Trong’s tenure as party
leader. Vietnam ranks just below the global average and still has a long way to go.
The recent resignation of Vo Van Thuong as state president is a result of General
Secretary Trong’s second line of effort to hold senior officials accountable for
supervising their subordinates and adhering to the strictures of VCP Regulations. In
January 2023, the then state president Nguyen Xuan Phuc, and Deputy Prime Minister
Pham Binh Minh were forced to resign from office for failure to properly supervise
subordinates who engaged in fraud and took bribes during the COVID-19 pandemic.
At that time, Phuc was prime minister and Minh was Foreign Minister.
The official announcement of Thuong’s resignation was vague and did not specifically
identify which law or party regulation he had transgressed. Social media suggested
Thuong failed to supervise/or benefitted from subordinates who engage in bribery for
a road development project in Quang Ngai province when Thuong was provincial party
secretary. That was twelve years ago, before Nguyen Phu Trong was party leader.
The timing of these charges raises all sorts of questions. The official announcement of
Thuong’s resignation said that information from the Ministry of Public Security and
other relevant agencies had “recently” come to light. It can only be speculated that
the Minister of Public Security To Lam was taking out a potential rival to improve his
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chances of holding high office after the next national party congress scheduled for
early 2026.
Lam is presently completing his second term as Public Security Minister, the maximum
permitted under current regulations. He would need a special exemption to serve in
another high-level position because he would be over the mandatory retirement age
of 65. Lam is a strong supporter of General Secretary’s Trong anti-corruption
campaign. Trong is serving out an unprecedented third term in office and will be 80 at
the time of the next national congress when he is expected to retire.
Vo Van Thuong was one of only four members of the current Politburo who were
qualified to continue serving after the 2026 national congress without seeking any
special exemption. Thuong is 53 years of age and could have served two full five-years
terms as party leader if elected at the next party congress.
Q2. How are the capitalist economic processes experienced in communist societies
such as Vietnam and China similar and different?
ANSWER: Both China and Vietnam are socialist countries but follow their own national
characteristics in practice.
Vietnam and China were estranged in the late 1970s when Deng Xiaoping initiated
economic reforms in China’s coastal provinces. Vietnam and China only normalised
their relations in late 1991, five years after Vietnam adopted a milestone reform
program known as đổi mới or renovation.
Vietnam jettisoned Soviet-style central planning. Vietnam encouraged direct foreign
investment and avidly sought economic engagement with all countries regardless of
their political-economic systems. A major turning point came in 2007 when Vietnam
became a member of the World Trade Organisation and had to adhere to its rules and
regulations.
Vietnam also permitted private capitalist activity in various industries as long as these
state industries and agricultural producers’ cooperatives met their quotas of goods to
the state.
Vietnam has what is calls a “socialist market economy.” The state retains ownership
of the major industries and the means of production as well as ownership over all land.
The private sector is recognised in law. There are party committees in all of Vietnam’s
ministries or equivalent organisations as well as state-owned enterprises and private
sector businesses.
Vietnam is now signatory to sixteen free trade agreements (FTA) including the ASEAN-
China FTA, Eurasian Economic Union-Vietnam FTA, Comprehensive and Progressive
Trans-Pacific Partnership, European Union-Vietnam FTA, Regional Comprehensive
Economic Partnership and is currently negotiating the Biden Administration’s Indo-
Pacific Economic Framework for Prosperity.
Vietnam’s program of renovation spurred high growth rates prior. Vietnam has
consistently maintained high GDP growth rates under General Secretary Trong (see
Chart I below ) except for the two-year period during the COVID-19 pandemic (2020-
2021). Vietnam’s growth rate recovered to 8% in 2022 and 5% in 2023 below the
target of 6.5%. Vietnam is aiming at a 5% GDP growth rate in 2024.
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Chart 1 – Vietnam’s GDP Growth Rates, 2011-2020
Source: Vietnam General Statistics Office, https://www.gso.gov.vn/en/data-and-
statistics/2021/01/viet-nam-economy-in-2020-the-growth-of-a-year-with-full-of-bravery/
Vietnam has benefited from the Trump-era imposition of tariffs on Chines exports.
This has given birth to the China-plus one expression referring to foreign companies
working China transferring some if not all of their production processes to Vietnam.
Some Chinese companies have likewise moved operation to Vietnam so they can sell
their goods as “made in China” to the US market.
In an important development, from late 2022 to March this year, Vietnam raised its
bilateral relations with South Korea, United States, Japan and Australia to
comprehensive strategic partnerships (CSP). They are now on a par with China, Russia
and India in Vietnam’s top tier hierarchy.
Vietnam is dead set on becoming a modern industrial country with a high level of
income by 2045, the 200th anniversary of the founding of its communist state. All of
Vietnam’s new CSPs are designed to enhance economic cooperation, trade and
investment and science and technology innovation. There will be an enhanced role for
foreign private sector investment.
Suggested citation: Carlyle A. Thayer, “Development and Corruption in Vietnam,”
Thayer Consultancy Background Brief, March 23, 2024. All background briefs are
posted on Scribd.com (search for Thayer). To remove yourself from the mailing list
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Thayer Consultancy provides political analysis of current regional security issues and
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