A Relationship-Based Economy
By Hong Phuc
At a seminar on the sale of the State’s capital, the general director of a securities firm ascribed his company’s tendency to recruit men ahead of women to the fact that Vietnamese entrepreneurs often had to drink beer or alcohol at networking sessions. His remark sent the audience into fits of laughter. However, it does stand as a testament to the view that Vietnam is a relationship-based economy.
When ministerial-level officials set up companies, their ties may contribute up to 50% of their success. With a good social network, they can clinch deals easily or win a contract at a low cost and transfer it to someone else for an enticing profit. This explains why speculation and demand for some realty projects in the new Hanoi have both heated up even before site clearance and compensation are completed or the zoning plan is fleshed out. Officials can easily buy cheap and sell dear when it comes to land transactions by virtue of their insider knowledge.
Consequently, non-State or consultancy firms often seek advice from retired officials, whose relationships are more than enough to ensure a life of affluence for their relatives and family members. For instance, the son of a department head can profit handsomely from arranging meetings between enterprises and officials. Of course, commissions and bribes may also play an important part.
Not all senior officials are crooked. Nevertheless, as a former banking official who once dealt with the most serious problems plaguing the sector puts it, those determined to combat interest groups, uphold objectivity, obtain as much information as possible on a project awaiting approval and avoid cashing in on their relationships often have to grapple with isolation.
A National Assembly deputy says that, as human beings, lawmakers also have to struggle with an intricate web of socio-political networks before making decisions of national importance. Among nearly 500 National Assembly deputies at present, how many are sufficiently courageous to accept ostracism and object to unfeasible megaprojects?
Those in the hot seat clearly have a difficult choice to make – that between their conscience and isolation. If relationship-based decision-making continues to prevail, integrity will suffer. Socio-economic relationships will be distorted as a result.