The emerging legal framework for private sector development in Viet Nam's transitional economy

Abstract

A major objective of Viet Nam's transition to a market economy has been to reactivate the private sector in a mixed economy. Several new laws have been introduced in the past five years to implement this policy and to create an enabling environment for the private sector. The author reviews some of the more important laws and regulations that affect Viet Nam's private sector activities, including laws on real property, intellectual property, companies, domestic investment, foreign investment, bankruptcy, contracts, and dispute resolution. Anti-monopoly law has not yet been introduced in Viet Nam. The issue of competition is addressed in the context of trade law, the relative roles of the state and private sector, and restrictions in company law. These areas all establish the foundation of a legal framework for a market economy. The author concludes that Viet Nam's legal framework, like China's, is still influenced by ideology, which causes problems in such areas as private ownership of real property and with such fundamental legal concepts as"due process of law."It is noted that the private sector is constrained by the lack of an independent judiciary, the absence of private land ownership, other uncertainties in property law that limit the develpoment of financial markets, and the inherent bias of the system in favor of the state sector (and collective ownership). Also noted is a law-abiding attitude, equally important to development has been slow to develop. The author goes on to point out that the foreign investment process is too complicated, and its company law too restrictive. A first priority should be to strreamline regulations, as well as liberalize trade policy and increase efforts in privatization of state enterprises. In this respect the author notes that export processing zones may be a useful interim instrument to attract foreign investment but should be phased out over time. More important in the long term is a good investment climate resting on a strong legal foundation.Legal Products,Environmental Economics&Policies,Banks&Banking Reform,Municipal Housing and Land,Municipal Financial Management,Environmental Economics&Policies,Banks&Banking Reform,Municipal Housing and Land,Legal Products,Municipal Financial Management