Last week Denmark’s Ministry of Foreign Affairs suspended the official development assistance it was providing to three of four climate-change projects after finding that Vietnamese partners had misused over US$547,000.
The news of the suspension came just a couple of days before the Consultative Group meeting of major international donors to Vietnam (June 4-6).
The news was as shocking and disappointing. Shocking, not because corruption is something new and unknown, but that it is happening after a scandal has already rocked our country. When are we going to learn?
Nearly four years after the bribery scandal regarding the Japanese-funded East-West Highway project in Ho Chi Minh City, the country, which is still receiving considerable ODA for its development projects, now gets another slap in its face.
Compared to the previous case in which Japan, one of the biggest donors to Vietnam, suspended its ODA to the country from December, 2008 to March, 2009, the corruption seems to be on a smaller scale.
However, the government should not take it lightly.
Although since 1972, Denmark’s ODA has mounted to just over $1 billion, which is less than other donors’ loans, together with other EU countries like Sweden, the country mainly chooses environment-related projects aimed at helping Vietnam achieve sustainable development.
Given that Vietnam has been continuously considered one of the countries worst affected by climate change in international organizations’ reports, such projects are in no way less important than those building infrastructure.
More importantly, the latest scandal will make other donors doubt Vietnam’s capacity and trustworthiness in terms of using ODA.
We should not be surprised if several projects connected with ODA totaling $7.39 billion that international donors had committed at the Consultative Group meeting at the end of last year are delayed.
However, to lose donors’ trust and therefore loans worth millions of dollars are not the only consequences we need to worry about.
A more serious consequence is that Vietnam’s creditworthiness will be lowered, and in a domino effect, the country’s government bonds issued in international market will possibly be subject to higher interest rates.
Over the past 15 years, Vietnam has received nearly $30 billion in ODA, helping develop thousands of projects ranging from building infrastructure to alleviating poverty and improving the environment. But a very small part of it is non-refundable. Most of it are loans with interest rates which are not as preferential as we assume. Interest rates and loan fees increase if disbursement is delayed and the use of loans is ineffective.
Given the evidence of increasing corruption and the absence of effective solutions, I am afraid the ODA burden will become too heavy and unreasonable for coming generations.
So, what we need now is prompt and bold action from the Vietnamese government in response to the latest ODA scandal so that its impact is mitigated. Investigate the accusations thoroughly and punish involved people.
In fact, in the highway corruption case, Japan only resumed its ODA to Vietnam after local agencies stepped in and pledged a thorough investigation.
In the end, Huynh Ngoc Si, former deputy director of the city’s transport department, was sentenced to life in 2010 for accepting $262,000 in bribes from the Tokyo-based Consultants International to help the company win contracts to build the highway.
This is also a chance for Vietnam to improve transparency and clarity in its development projects, something that the donors have wanted for many years. A program reviewing all projects funded with international assistance is a must.
At the same time, the government should send an official message, if not an apology, to the Danish government for the incident.
This action would show donors that Vietnam also desires transparency in ODA projects and it would show the Vietnamese people that their government is determined to fight corruption.
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