HANOI, May 29 (Reuters) - Vietnam will soon ratify the United Nations Convention Against Corruption, one of the country's top graft fighters said on Friday, a milestone in tackling an endemic problem that threatens investment and aid.

"It is on the desk of the Prime Minister already," state Inspector General Tran Van Truyen told reporters, adding that it would soon go to President Nguyen Minh Triet for approval.

The document, which Vietnam signed in December 2003, is binding and according to Ran Liao, senior programme coordinator for East and Southeast Asia with Transparency International, would make it criminal for Vietnamese officials to accept bribes from foreign companies or pay bribes overseas.

"It is a very big deal," Liao said on the sidelines of a half-day anti-corruption dialogue in Hanoi between the government and the international donor community.

But several participants in the dialogue on Friday said legislation was not the problem for Vietnam, which already has a robust anti-corruption law.

"The real challenge, or maybe one should say the real problem, is implementation," Swedish Ambassador Rolf Bergman said.

Corruption is rife in Vietnam, from contractors skimming funds off large-scale infrastructure projects to traffic cops extracting money from motorists. The country ranked 121 out of 160 included in Transparency International's corruption perception index for 2008.

In the first quarter of this year, the number of new legal cases, prosecutions and trials for corruption all fell compared with the same period last year, a report by the Office of the Central Steering Committee on Anti-Corruption said.

It was unclear whether the decline was because there was less corruption or the problem was being monitored less effectively, Bergman said.

Last year, Vietnam's biggest single official development assistance (ODA) donor, Japan, suspended aid over a corruption scandal at a Japanese-funded project. It has since agreed to resume new aid commitments and also established measures with Vietnam to avoid future problems.

The problem, however, still runs deep.

"The issue of corruption is a serious concern for the Asian Development Bank as well as for the government, because if there are problems we will have difficulty to continue assisting Vietnam's development process," Ayumi Konishi, the ADB's Vietnam representative, said.

"For us, it's really the issue of our raison d'etre, so to speak." (Reporting by John Ruwitch; Editing by Valerie Lee)

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