Wall Street Journal
June 14, 1999
U.N. Says Vietnam Wasted
By ANYA SCHIFFRIN
Up to $680,000 in Foreign Aid
Staff Reporter of THE WALL STREET JOURNALHANOI, Vietnam -- A United Nations internal report sharply criticized one of Vietnam's poorest provinces, Quang Binh, for misuse of up to $680,000 in aid money that was supposed to be used for "improving government administration."
The report said the province wasted as much as 40% of the $1.7 million it received in foreign assistance last year, spending $78,000 for motor scooters and cars and using aid money to pay for junkets abroad for bureaucrats. The report, prepared by the United Nations Development Programme, concluded that all proposals in the pipeline on the Quang Binh project should be annulled.
Vietnam has become increasingly aid-dependent in the past two years as foreign investment in the country has collapsed. Foreign investment in Vietnam reached about $600 million last year, according to World Bank estimates. This year, foreign assistance is expected to fall to some $200 million to $300 million, according to the Asian Development Bank.
The UNDP is one of Vietnam's largest donors, along with the World Bank, Asian Development Bank and the governments of Japan, Australia, Sweden and France. News of the problems at the Quang Binh project comes as major donors prepare to meet with government officials at a conference Tuesday aimed at reviewing Vietnam's progress on economic reform.
Backed by the Netherlands
Vietnam received about $1.7 billion in low-interest loans and aid last year from foreign donors. The Quang Binh project, mostly paid for by the Netherlands, was designed as a three-year, $3 million project; only $1.7 million of it has been spent so far.
The UNDP report, dated last December, has circulated recently at the UNDP's office in Hanoi. A copy of the document was obtained by Dow Jones Newswires. The report recommended that "no expenditures should be made in this project on training, study tours, short-term consultants and equipment. English-language training and computer training should continue in this period at no more than the existing case of expenditure."
Foreign aid to Vietnam has come under increasing scrutiny recently. Some analysts have argued that it has served to delay economic reform in Communist-controlled Vietnam.
The UNDP project in Quang Binh, which began in 1997, was aimed at improving the administration of the provincial government, or the "People's Committee," as it is known in Vietnam.
But instead a UNDP evaluation team found that provincial officials were paying $2,000 for computers that could have been bought for $600 locally; taking lengthy car trips in UNDP-purchased vehicles without explaining why; and spending $60,000 on English courses in Hanoi without being able to subsequently pass their exams.
The report says $290,000 was spent on study tours abroad that had "minimal" effect, and concluded "this is considered to be no value for money." The report also says that petty cash has gone unaccounted for. The UNDP also believes it was over charged for $54,000 of subcontracting.
Poor Region
Quang Binh has a population of 800,000 and is one of the poorest provinces in Vietnam, with per-capita income of less than $200 a year, compared with a national average of more than $300. In the report, the UNDP said that poverty in the province should have been taken into account when the project began. Civil servants in Vietnam earn as little as $10 a month in some areas, with salaries rarely topping $150. As a result, corruption is endemic, with officials demanding bribes for performing even small services and often asking for kickbacks when purchasing office supplies.
So serious is the problem that the Vietnamese government has made the elimination of corruption a national priority. Last month, the government launched a two year "self-criticism" campaign aimed at combating corruption among Communist Party members.
A local official said the People's Committee was satisfied with the UNDP project. "Generally, the project went well," an official at Quang Binh said. He added, however, that the number of provincial officials taking overseas trips will be sharply reduced.