Unofficial Costs Still Burden Businesses

Bribery, party invitation, travel gifts and kickback for contracts approved are some popular forms of unofficial cost incurred by businesses.

 

Research findings showed that 40 percent of surveyed businesses said unofficial costs account for 1 percent of annual expenses; and 13 percent of respondents said unofficial costs took more than 5 percent. And, 80 percent of respondents said corruption originated from unofficial costs leaves negative impacts on the economy development and increase business costs.

 

As many as 39.9 percent of businesses believed that a company must “have relations to have land granted and transferred.” Although unofficial is a burden, it helps businesses to complete procedures quickly. In general, companies accept to pay for the works done smoothly.

 

VCCI’s ITBI receives financial support from the Swedish Embassy, the British Embassy in Hanoi, Siemens and Ericsson . Research Findings on Current Status of Corruption in Business Sector in delve into form, degree and scale of corruption in business environment in six provinces and cities, namely Hanoi, Hai Phong, Da Nang, Ho Chi Minh City , Dong Nai and Can Tho. In addition, the document assesses impacts of corruption on operations of enterprises, on the whole economy and on the society

As regards relations between enterprises and State management agencies such as tax, customs, market authorities, more than 10 percent of respondents said they pay much, even very much, for these agencies every year. Not only that, their access to bank credits also faces many barriers. 47.7 percent said they have to pay kickback to credit officials for loans approved. More than 60 percent agreed that relationships with banks or credit officers are required for State-supportd loans approved.

 

In general, most businesses are aware that they are the victim and the agent of corruption. They identify corruption arising from relations between businesses and State agencies. However, many are unaware of corruption insider their entities.

 

Mr Conrad F Zellmann, Deputy Executive Director of Towards Transparency under Transparency International (TI), said: Businesses are aware of their roles although they seemingly abet unofficial payments. “It is necessary to raise the awareness and introduce support guidance for businesses. There is an urgent need to further promote integrity in business, encourage collective actions and dialogues between the Government and businesses in some sectors and in public procurements, and fill the legal loopholes,” he recommended.

 

With respect to the cause for the occurrence of unofficial cost that bring about corruption, Nguyen Ngoc Anh, chief author of research findings, said: Up to 45 percent of businesses do not agree that the current legal system is strict enough to fight corruption while only about 32 percent agreed. Up to 87 percent of respondents agreed that the law still has loopholes for corruption. He recommended that corruption prevention must be carried out from top to bottom. Mechanisms and policies must be transparent and clear.

The business community plays an important role in working with the Government, civil social associations, and international organisations to improve business practices by means of collective actions to combat corruption. Businesses should not accept to pay bribes for short-term benefits because this will ruin fair business mindset and kill competition. Corruption also reduces the public confidence in public administration, holds up social development, including political, cultural, economic and future-generation development.

 

After five years of implementation, the corruption prevention and combat programme has achieved important results in both corruption prevention and combat. Now, Vietnam needs to create a fair, competitive, and transparent business environment to attract domestic and foreign investors; raise the sense of law compliance for businesses; and phase out bribery in business- State agency relationship and in business dealing. Businesses must actively build and implement appropriate codes of conduct in business, resolve to stop giving bribery in any form. Corruption prevention is successful only when there is the involvement of the entire society and the whole political system.

 

To diminish the enterprises’ role as an agent of corruption, it is necessary to enhance transparency of information and legal provisions; raise their awareness of corruption prevention, business cultural and ethnic construction, and corporate governance. Besides, it is important to build a strict legal environment. More importantly, officials should have a good wage mechanism to stay away from corruption.