Vietnam: Complex Combinations, Dynamic Partnerships

SPEA professors Anh Tran and Matthew Auer discuss one of the world's fastest-growing economies.

Anh Tran and Matt Auer

Anh Tran (left) and Matt Auer

For many Americans who know Vietnam only from movies, the southeast Asian country is a place of war where tens of thousands of American soldiers lost their lives. But during the past several decades Vietnam has moved on, rapidly developing to become one of the world’s fastest-growing economies and attracting a surge of foreign investment.

SPEA has been at the forefront of an effort to study the fast-growing nation. Specifically, SPEA professors Anh Tran and Matthew Auer have found complex combinations of corruption and institutional reform. Corrupt officials and honest managers co-exist; bad natural resource management is accompanied by caring stewardship. Tran and Auer’s research has not only shed light on these trends but also, through their work on developing student exchange programs, helped established a valuable partnership between SPEA and one of the world’s most dynamic and fascinating regions.

Students from the VYLA pose together

The Vietnam Young Leader Award Program (VYLA) marks the first time that Vietnam has taken part in a specific program to send young people to the United States for training in public policy.

Greasing the Wheel

For SPEA assistant professor Anh Tran, the central questions concerning corruption in Vietnam are how and why unscrupulous business dealings there have failed to completely derail the economy. Unlike in many African countries, where widespread corruption has led to economic collapse, extreme poverty, and civil war, Vietnam has thrived despite corruption.

The types of corruption at play in Vietnam, Tran says, are not remarkable—mainly bribes and kickbacks paid by domestic and foreign companies to government officials to secure contracts for projects including building bridges, roads, and other infrastructure development. What is unusual is the extent to which Tran has persuaded his sources to talk freely about corruption.

Map of Vietnam

Vietnam, with its sharp contrasts between the old and the new, offers both opportunities and challenges for natives and visitors alike.

Most researchers, Tran says, have relied heavily on self-reported survey data that tends to misrepresent the scope of corruption. Tran, a native-born Vietnamese, has overcome this limitation by developing a network with dozens of business owners and government officials in Vietnam who, in his experience, have been more than willing to own up to their role in corrupt dealings. “People often ask me why firms provide their kickback data to me, and I sometimes joke that I ‘bribe’ them for it, but that’s not true,” Tran says. “Firm owners and workers share information with me as a favor and don’t fear reprisal. In a highly corrupt environment the probability of getting caught for bribery is very low since almost everyone is doing it. It’s not really a closely guarded secret if you know how and who to ask.”

So just how corrupt is the Vietnamese government? Although Tran describes corruption as “prevalent,” he also notes that, according to his research, only around 10 percent of government officials have taken bribes. But, Tran says, that’s enough to designate corruption as a problem that should at the very least be monitored. Tran has focused on three groups: private domestic firms, private foreign firms, and state-owned firms. And he’s found that after government-controlled businesses and agencies, foreign owned private firms are by far the most corrupt in terms of how much they shell out in bribes.

“People assume that because Western firms have high standards, high salaries, and good management skills, their employees are less prone to corruption,” Tran says. “But I’ve found the opposite. Unlike Vietnamese-owned businesses, the leaders of foreign firms usually know very little about the local economy and so are more easily pushed around by their Vietnamese employees. Local bosses are not above bribing politicians to get work, but they’re better at preventing their workers from taking kickbacks.”

Although Tran acknowledges the dangers of corruption that if left unchecked can ultimately rot a country from the inside, his research does not focus on solving the problem in Vietnam. Over the next few decades, he suspects, as the Vietnamese economy continues to grow and stabilize, the government will recognize the value in managing and eventually phasing out corruption.

In a more roundabout way, though, Tran has encouraged his native country to take a step in that direction, by helping to establish the Vietnam Young Leader Award (VYLA) program, a partnership between Indiana University and the Vietnam Ministry of Education and Training that involves sending several outstanding Vietnamese civil servants to SPEA for a two-year Master of Public Affairs degree. The program, which began in the 2010 fall semester, includes classroom training and a summer experience in Washington, D.C., New York, and Boston involving institutions including the World Bank, the International Monetary Fund, and the United Nations. The Vietnam Young Leader Award Program (VYLA) marks the first time that Vietnam has taken part in a specific program to send young people to the United States for training in public policy.

Trail through the forest in Vietnam

Skid trail through an intensely cut-over state forest in the Central Highlands of Vietnam.

The idea, Tran says, is for the Vietnamese students to learn as much as they can about modern public affairs and bring that experience back to their home country — an objective that suits program participant May Nguyen perfectly. “Pursuing a master’s degree at SPEA has been helping me deepen my understanding about public policy,” says Nguyen, who had worked as an official at Vietnam’s Ministry of Foreign Affairs and is now studying comparative and international affairs and nonprofit management at SPEA. “Studying public policy and analysis here is allowing me to learn how other governments function and compare it with practices in Vietnam to find solutions.”

Although VYLA students may not choose to study anti-corruption policy per se, Tran says being exposed to new ideas about public policy will help them educate their Vietnamese colleagues about the prudence of non-corrupt governance. “Corruption is somewhat like a disease,” Tran says. “If you grow up and live in a corrupt society, you tend to take corruption for granted and don’t necessarily see anything wrong. But if you’re away from it and see a better way to do things, you may want to go back home and change the system.”

Sustaining the Forests

The Vietnam Young Leader Award program is “only one among a suite of collaborative bridges SPEA is building with Vietnam,” says SPEA professor and dean of the Hutton Honors College Matthew Auer. Beginning in the summer of 2011, Auer will help build another bridge by taking several SPEA and other IU students to Vietnam as part of the Scholars in Global Citizenship Program to explore how the forces of globalization have shaped the country’s economy and society.

“I’m expecting students to feel some culture shock at the outset,” says Auer, who hopes to pair IU students with Vietnamese students from Hanoi University of Science. “Hanoi is crowded, very busy, and some creature comforts that American students are accustomed to are not widely available. I hope that they’ll return to the U.S. with a clear sense of the opportunities and challenges Vietnam faces as it rapidly develops.”

One of those challenges is illegal logging in Vietnam’s degraded forests. This past year, Auer, an international environmental policy expert, was asked by the Swiss government to evaluate a multi-year, donor-funded project aimed at reducing illegal logging and promoting sustainable forest management in Vietnam and Laos. A key objective of the project was to encourage sustainable practices that could be certified by a third party, such as the non-profit Forest Stewardship Council. Auer found many unmet goals but also signs of progress.

“In movies Vietnam is often depicted as a land of vast, undisturbed rainforests, but many of the forests I visited were very degraded,” Auer says. “Most of the big trees were cut down, leaving secondary growth mixed with farmland, abandoned fields, and timberland of poor quality.”

A pile of coconut shells

Tropical fruits—non-timber forest products—are sold on every street in Hanoi. At this cafe, a thirsty pedestrian can pull up a chair, have a coconut split with a machete, stick a straw in the center, and enjoy a sweet treat.

The problem, Auer says, has largely to do with state–run forest companies whose leaders lack the knowledge and incentives to practice sustainable forestry. A significant part of the challenge, Auer discovered, is that Vietnamese state forest companies are in the process of being “equatized” (the Vietnamese term for privatization) and the transition is not going entirely smoothly. “In order for a forest management company to be certified by the Forest Stewardship Council, the entity must have clear title to the land and to its own assets and liabilities,” Auer says. “But one legacy of communism is that’s it’s been difficult for the state to smoothly transfer ownership of resources like forests to private companies. And so forest companies don’t have clear ownership or incentives to take care of the land.”

Meanwhile, as a kind of social welfare program, the Vietnamese government allows poor farmers to occupy state forestland where they clear forests and till crops. Like the forest companies, the farmers’ rights to the land are tenuous. Pressure on the land is also exacerbated by illegal logging, the products of which frequently end up in Vietnam’s strategically important wood patio furniture and floorboard industries. The result has been haphazard deforestation and little in the way of organized plans to replenish harvested trees. Beyond harm done to forest ecosystems, illegal logging has forced Vietnam’s patio furniture industry to source an increasing amount of its wood from other countries.

Regulating logging and forest product manufacturing is worthwhile for Vietnam, Auer says, because stores including IKEA, Home Depot, Lowes, and others import (or plan to) an increasing amount of wood from certified, sustainably managed sources. If Vietnam wants to bolster its wood-products industry, it will need to find ways to better manage its forests.

Stack of wooden chairs

The wood patio furniture industry is one of Vietnam's main exports. Here, tropical hardwares are manufactured into chairs.

Auer did see some encouraging signs that Vietnam is getting the message and at the same time helping to address poverty. In 2010, with the aid of the World Wildlife Fund (WWF), a group of Vietnamese farmers in Quang Tri Province agreed to improve their forest management practices to achieve Forest Stewardship Council certification. The farmers had already secured private rights to the land, and the WWF trained them to improve land management, including soil preparation, pruning, and record-keeping. In 2010, the farmers achieved FSC group certification for 317 hectares of fast-growing acacia. A Vietnamese forest company bought harvested wood from the farmers, allowing the company to make and sell products bearing the official FSC stamp. Each of the stakeholders has had to make sacrifices: the loggers had to wait longer before harvesting timber; the manufacturers and exporters had to agree to buy timber at higher prices than they would have from non-certified loggers. But they have also been able to demand higher prices from foreign buyers, and so they can expect to see a decent return on their investment.

“It’s a good start, and I spoke with forestry officials in the region who want to spread the gospel of FSC certification to smallholder farmers in other areas,” Auer says. “I’m hopeful that this pilot project will grow and thrive, although it’s going to take continued support from the WWF to help farmers stay committed to the plan and develop other revenue streams while they wait for forests to reach the point of harvest,” a process that takes about 12 years. Vietnamese farmers and loggers also need money to pay for certification, for tools to grow trees sustainably, and for training to learn how to prune and manage forest plots. So far the Swiss government has covered those costs, Auer says, but in order to sustain the effort, more farmers must join the group to reduce the overall costs of certification.

“That’s the true test,” Auer says, “and I’m optimistic they’ll pass it.”

Auer is also optimistic that the IU students he’s taking to Vietnam and the Vietnamese students now studying at SPEA (with more to follow in the coming years) mark the beginning of a long and fruitful collaboration between SPEA and Vietnam. “[These programs] are a strong testament to SPEA’s commitment to growing its international presence and a great opportunity for students to gain the educational experience of a lifetime.”