Rampant Corruption Remains


BMI View : Corruption will continue to affect Vietnam ' s pharmaceutical and healthcare business environment and potentially delay the introduction of universal healthcare coverage for its people. While corruption is a clear downside risk, we maintain that the sector still offers strong growth opportunities for foreign investors.

A survey by the World Bank, 'Corruption from the Perspectives of Citizens, Enterprises and Public Officials', showed that corruption remains an issue in Vietnam's healthcare system. Key findings included:

  • Healthcare is ranked seventh out of 22 sectors. Approximately 60-70% of the people (5,400 in total) surveyed (comprising public officials, enterprises and citizens) perceived high levels of corruption; more so than other sectors such as transport, customs and construction.

  • There is a 25% chance of paying a bribe when using healthcare services or dealing with these healthcare agencies. This figure is lower than the 49% for traffic police and school education (32%) but higher than that for business registration (12%) and taxation services (3%).

  • Approximately 76% of the 'unofficial' payments or gifts made for healthcare services were voluntary.

The existence of rampant corruption will continue to hinder the country's progress in the pharmaceutical and healthcare sector, bringing downside risks to its business environment. In August 2012, it was revealed that Vietnam's social health insurance funds are running a deficit, in part due to mismanagement of fund as well as a result of corruption. In March 2012, Doan Van Cuong, an ex-employee of the Can Tho social insurance department, made fraudulent claims. He used the names of pregnant women and asked for postnatal assistance worth VND119.5bn (US$5,730), even though these women were not his employees.

An Attractive Industry

We maintain that Vietnam's pharmaceutical and healthcare sector presents strong growth opportunities for foreign investors, although corruption will continue to pose a downside risk. Through to 2021, we forecast that Vietnam's pharmaceutical and healthcare sectors will grow at local compound annual growth rates (CAGRs) of 12.3% and 9.9% respectively. In BMI's Q113 Pharmaceutical Risk/Reward Ratings, the majority of Vietnam's sub-indicator scores remained unchanged - with the exception of the score for industry rewards which increased from 50 in Q411 to 57 in Q113, highlighting the attractiveness of the sector. Much of this attractiveness is supported by the country's increasingly affluent and ageing population, a rise in non-communicable diseases as well as the country's aim to provide universal healthcare coverage.

Mostly Unchanged
Vietnam Pharmaceutical Risk/Reward Ratings
This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: Vietnam, Vietnam, Vietnam, Vietnam

Related products in our Store...

Check out our most popular reports below or view more in our store