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Donors Raise Aid to Vietnam Despite Corruption Worries

Foreign donors meeting in Hanoi have pledged $4.4 billion in aid to Vietnam next year, $700 million more than this past year. The increase comes despite concerns over corruption, highlighted by the news that Vietnam intends to repay to Japan aid money misused by officials to buy luxury cars. Matt Steinglass has more in this VOA report from Hanoi.

Daisuke Matsunaga, deputy chief of mission at the Japanese Embassy in Hanoi, explained Friday what happened to $260,000 in development aid Japan provided to the Vietnamese Transportation Ministry.

"There has been some inappropriate use of funding associated with the purchase of the vehicles," he explained.

Vietnam's Transportation Ministry announced Thursday that an internal investigation had found the PMU-18 unit used the money to buy four luxury cars.

But Matsunaga said Japan was confident Vietnam was taking the necessary steps to prevent further abuse of aid. And other donors to Vietnam agree.

At the Consultative Group meeting to coordinate foreign aid, donors announced they would raise assistance to Vietnam to $4.4 billion in 2007. That includes almost $900 million each from Japan and the World Bank, and over $1 billion from the Asian Development Bank.

Klaus Rohland, the World Bank's country representative for Vietnam, said donors were reassured at meetings with the government on Thursday.

"Donors, after the two meetings, were confident that the fight against corruption is center stage for the Prime Minister of Vietnam." Rohland says donors understand the difficulty of Vietnam's struggle. "They all know that to fight corruption, you will not win overnight," he added.

Vietnam has long been a so-called "donor darling," because it is considered to use aid more effectively than some other developing countries. But with Vietnamese income rising at eight percent a year, the country is hoping to phase out development assistance entirely within a decade.

In the meantime, Rohland says, aid should focus on infrastructure improvement and on closing the gap between rich and poor, especially among Vietnam's poverty-stricken ethnic minorities.