There is a very high risk of corruption in Vietnam’s public services sector, especially in the form of gifts and facilitation payments. Over nine out of ten companies indicate they expect to give gifts to officials to “get things done”, and about one in seven expect the same when acquiring an operating license (ES 2015). One in four Vietnamese citizens considers most or all local government councilors to be corrupt (GCB 2017). The two biggest issues cited by companies are complying with burdensome, and at times inefficient, regulations and the high number of regulatory inspections, which most businesses believe are exploited to extort informal charges (GCR 2016-2017, PCI 2016). Nearly half of businesses paid a bribe during an administrative inspection in 2016; however, the inspector requested the bribe in less than one in ten cases (PCI 2016). In the remaining cases, either the manager himself offered the bribe or the bribe was offered out of a belief that it is simply common practice (PCI 2016). Many businesses believe that due to a large number of legal loopholes, rent-seeking opportunities and facilitation payments remain a common practice (CENSOGOR 2017). Businesses frequently encounter requests from government officials to use a third party intermediary when paying for government services; this may be a mechanism used for hiding inappropriate payments to government officials (VBF 2017). Foreign investors face different business licensing processes and restrictions compared to domestic firms (ICS 2017). Nepotism in the public sector has become a systemic problem, and has been worsening in recent years (PAPI 2016). In the Province of Thai Nguyen, only one in seven respondents believe paying a bribe to gain state employment is not necessary (PAPI 2016). The practice of government officials paying for promotions is also said to have led to demands of informal cash payments from officials who are trying to recover their “investment” in this manner (VBF 2017). The problems in the public sector are further reinforced by a lack of willingness to fight corruption, a lack of transparency, and inadequate mechanisms for accountability (ICS 2017).
Recent reforms have made it easier for businesses to enter the Vietnamese market by increasingly digitizing the business registration procedure (ICS 2017). Investors should be aware that decentralization of licensing procedures has, in some cases, streamlined the process and reduced processing times, while it has also led to regional differences and interpretations of investments laws and regulations (ICS 2017). A lack of clear guidelines may also prompt local officials to refer back to national authorities, which could cause additional delays (ICS 2017). Licensing procedures frequently take longer than the time frame mandated by the law (ICS 2017). Starting a business requires more steps, but takes the same time and is less costly compared to elsewhere in the region (DB 2017).