Institutional improvement and legal reform in Vietnam

1. Major Achievements            

In the process of transition from the centrally-planning economy to the market economy, the economic reform in Vietnam has gained significant achievements. The annual average growth of GDP was approximately 7%. The total amount of mobilized investment for the country’s development purposes has increased by 18.2% per year, of which domestic investment accounted for 67.2%, and registered foreign direct investment (FDI) was 7 times higher than the figure in the previous 5 years combined. The country’s GDP in 2010 has doubled the GDP in 2005; GDP per capita is about USD 1,200.  Despite of the recent economic recession in the region and in the world (especially economic and financial crisis in 2008 and public debt crisis in 2011), the national economy of Vietnam has developed stably and achieved important projected purposes.

Concerning the legal policy making, in more than 20 past years since 1986, in a difficult situation where Vietnam lacked of experience and the majority of the country’s public officials have been trained to manage the centrally-planning economy, Vietnam has made vast efforts to expand her relations with the outside world and to learn foreign experience on how to develop the market economy. Thank to these efforts, Vietnam has successfully shifted her long-existed command economy to the market economy. To facilitate the development of the adopted market economy, Vietnam has established a relatively effective legal system with many market-economic oriented laws and regulations. The followings are major achievements in the current Vietnamese legal system:

-  The forms and regime of ownership is clearly defied. Private ownership is protected equally to other forms of ownership. Property rights on shares, other securities and right to make investment are recognized by laws. Land users are entitled to explore interests of various kinds on their land ownership.

- The legal system has contributed to creating a good legal environment for business by protecting the right to do business and prohibiting unfair competition in conformity with the WTO’ rules. The Law on Enterprises and other concerned laws and regulations guarantee an equal legal framework to Vietnamese and foreign investors in Vietnam.

The process of changing state-owned enterprises into stock companies or public utility supply entities has gained initial good results, where stock companies have become a popular form of business. So, the law has created more opportunities for the private sector to engage in business activities.  

- Interference by the State through administrative measures in economic, commercial and civil matters has been decreased sharply. The role of the State in resolving problems faced by enterprises and traders has been enhanced.

- Key institutions of the market economy have been established such as contract, finance, banking, taxation, estate market, labor market, technology market, securities market and environment protection.

  - In developing laws and regulations on its international integration, together with the accession to the WTO, Vietnam has actively participated in the negotiation process and has joined the FTA between the ASEAN countries and China, Republic of Korea, Japan, India, Australia, and New Zealand. In addition, Vietnam has established legal mechanisms to expand and promote relations with other countries around the world.

- The Constitution of Vietnam requires that the state agencies must be  organized and operate in compliance with the rule of law, economic reform and international integration requirements. Measures to guarantee human rights and citizen’s rights must be adopted and strengthened.

Since the promulgation of the 1992 Constitution, the National Assembly and the Standing Committee of the National Assembly have passed 368 laws and ordinances. These laws and ordinances regulate almost all of the social and economic areas, including international integration, not merely international economic integration. On the basis of the Constitution, laws and ordinances passed by the National Assembly and its Standing Committee, the Government has issued a large number of decrees to implement them. The purpose of these legal acts is to bring into full play all production capacities of the country and create an environment for fair competition and help enterprises of all economic sectors to realize their production potentials and use their resources more effectively.

            2. Present requirements for further institutional improvement and legal reform

The institutions of the market economy in Vietnam now are generally assessed incomprehensive as expected. Markets of various types have not been established and improved timely. Macro management of the national economy could not keep pace with the present economic development needs. The country’s resources and production capacity have not been mobilized and utilized efficiently. More concretely, the process of establishing the market economy’s institutions has been delayed due to various problems and difficulties encountered. The legal system is not really comprehensive and effective. The current business environment is not truly equal and transparent. Domestic enterprises are still in a very small size, and there lacks close ties among them; markets of different types have not yet been in existence. There was confusion found in managing the national economy and in determining priorities of the nation’s economic development strategy. National resources have not been used in an efficient way. One of the reasons of this situation came from the legal system. Another important reason was that the rule of law is not complied with in the organization and operation of the state apparatus.

It is necessary now to further improve market economy’s institutions and reform the legal system in order to:

- Determine the extent of legal regulation in the relation between the need for state management and the need to create as much as possible favorable conditions for development.

- Ensure comprehensiveness of the market economy’s institutions and implementing agencies.

- Ensure the harmonization between Vietnam’s specific institutions and widely recognized “rules of play” of the international community.

- Enhance the quality of drafting laws and regulations in order to ensure their feasibility once enacted.

- Ensure transparency and easy accessibility of the legal system.

 Generally speaking, for Vietnam now, institutional building remains one of the problems that may cause serious obstacles to the country’s further development. Therefore, we have determined that institutional building is one of strategic missions, whose direction is shifting from the phase “building of institutions” to the phase “improvement of the institutions for the socialist oriented market economy, focused on establishing an equal competition environment and administrative reform”.

            The legal reform in Vietnam, which was started in 1990s of the past century, is continued more speedily, with larger in extent and deeper in contents. The aim of the reform is to create a legal basis for changing the model of development from mainly extensive into one of appropriate combination of intensive and extensive development with a view to enhance efficiency and sustainability of the national economy. Accordingly, the legal system should be improved extensively, i.e. covering all social and economic fields, and intensively, i.e. enhancing quality of drafting legal acts and revise these acts to make them able to better regulate social relations.

            It is important to improve the laws and regulations making process to enhance the quality of enacted legal acts to make them able to keep pace with the current dynamic development of the market economy in the country. The enacted legal acts must be certain, definite, reasonable and consistent. Transparency in the legal system should be assured and law implementation must be strengthened. All shortcomings identified in the existing legal system should be rectified effectively.

Basic contents of the institutional improvement and legal reform in Vietnam are to improve market economy institutions in a way of modernization and synchronization ensuring the transparency and fair competition for all economic sectors. It is then required to improve the forms of ownership, especially to promote efficient use of state owned assets; financial, monetary and land issues, state owned enterprises, collective/public economy; private economy, foreign invested enterprises, various types of markets; further renovate the organization and operation of the state apparatus, enhance the effectiveness and efficiency of public administration, and the control of the state apparatus in the protection of human rights, and the rights of citizens.

The objective of improving the institutions and legal reforms in the current period is  to strive, at the end of 2016 (the end of office term of the National Assembly XIII), to basically complete the legislations governing every area with focus on improvement of socialist oriented market institutions, building a rule of law state of the people, by the people, and for the people; playback promote the role and effect of law to contributing social management, to strengthen the role and effectiveness of the law in administration to ensure political stability, economic development, expansion of international integration; implementation of human rights, freedoms and making contribution to enable Vietnam to become an industrialized country with the modern direction by 2020.

3. Ministry of Justice and the institutional improvement and legal reform

With two unique functions – the administration of legislation development and enforcement and unified state management of justice services, the Ministry of Justice of Vietnam is given a great responsibility for institutional improvement and legal reform. The MOJ is the core force in improving institutions and legal reform, involving not only macro-activities such as assisting the Government and National Assembly in formulating national legal strategies, development and enforcement of legislation to meet the requirements of socio-economic development, but also micro-activities as drafting specific legal normative documents specific, the Justice Department is the core force, the judiciary is an important part of improving the institutional, legal reform.

The role of the Ministry of Justice of Vietnam in improving institutions and legal reform is reflected in the following mandates:

- To assist the National Assembly, the Government in solving the problems of theory and practice of the institutional improvement and legal reform, and of building a socialist rule of law state in Vietnam.

- To promote and facilitate the improvement of legal system; directly draft the significant legal normative documents; and to monitor the law enforcement.

- To accelerate judicial reform and assist the Government in the administration of justice activities.

In order to fulfill these tasks, the Ministry of Justice is currently focusing on the followings:

- Actively participate in the study for revision of the 1992 Constitution, particularly, the recommendations for redefining the status and role of  the  legislature, executive, judiciary; the functions of central and local governments in the state apparatus;  the role of each agency in relation to close and rational cooperation with reasonable control to ensure an efficient and effective administration; effective mechanisms for protection of human rights, the rights of citizens and democratic rights of the people.

- To renovate the way of thinking of development of legislation to timely respond the ongoing problems. Accordingly, it is necessary to make radical changes in the law making process with focus on policy formulation in legislative process. Legislative development (laws and ordinances) should meet the requirements of social and economic developments ensuring a comprehensive, coherent, transparent and predictable legislation system that could solve prioritized and urgent needs.

- To develop a mechanism for mobilizing human resources for revision and improvement of fundamental statutes/codes such as the Civil Code, Penal Code, Law on Procedures of Issuing Legal Normative Documents ...; actively codify the legislation with a start of development of the first Code of legal normative documents of Vietnam; to collaborate with other ministries and local governments in issuing legal normative documents that are feasible and operational to dealt with addressing obstacles on institutions, administrative procedures in socio-economic areas, social security, environmental protection,  the protection of the rights and freedoms of citizens, and international integration.

- To develop institutions for the enforcement of laws with an aim to legalize the legal mechanism to ensure the effectiveness of law enforcement.

 - To solicit the Government to fully perform its executive power in the principle of organization of a rule of law state powers ensuring a clean, strong, transparent government that is compliance with the law, close to people and for the people.

The next ten years will be a decisive period for the completion of the legal system underpinning the industrialization and modernization of Vietnam. With the assigned mandates, the Ministry of Justice of Vietnam has a greater opportunity to retain a pivotal role in the course of institutional improvement and legal reform. Along with that, Vietnamese legal scholars, lawyers are likely to make intellectual efforts to the development of the country.