Vietnam is in a phase of transition from a centrally planned economy to a 'market economy with socialist orientation'. Vietnam's efforts to attract foreign investment have led the ruling party to seek to improve the business climate for foreign investors. This involves attempts to combat corruption which is rampant throughout the country and permeates the activities of the many state companies that still dominate the economy's strategic sectors. The lack of implementation and weak enforcement mean corruption continues to be cited as one of the most problematic factors for doing business in the country.

Positive developments in relation to corruption and investment:

• Corruption has moved up on the political agenda in Vietnam, and the legal framework for curbing corruption is now well-developed.
• Although the burden of licences and permits on private companies is still considerable, Vietnam has abolished almost 200 'unnecessary' permits for operating a company.
• Companies indicate that special relationships with provincial authorities have declined in importance and fewer companies feel that friends are important for negotiating with the government.

Risks of corruption:

• Private providers should be particularly aware of continuing corruption related to public procurement and contracting procedures.
• Several sources indicate that land management is the most corrupt sector in Vietnam. Policies and laws on land are incoherent and have many loopholes, while supervision and enforcement of the law within land administration is fairly lax and paves the way for corruption.
• Despite there being laws offering some protection for whistleblowers, some observers argue that the inability to report corruption anonymously, coupled with the lack of faith in the system, is preventing many citizens and state officials from reporting on corruption.
• Even though Vietnam has one of the most comprehensive Anti-Corruption Laws in Asia, implementation and the lack of independent anti-corruption agencies still present major hurdles that prevent the reduction of corruption.