Vietnam: Vietnam Finance Profile

Viet Nam: Developments in Regulatory Reform

Key features of Viet Nam’s regulatory reform

Next additional than 20 years of Renovation (often referred to as Doi Moi), some significant improvements have been made to the Vietnamese legislative and regulatory framework to accommodate the transition to a market-oriented economy. As Viet Nam does not have a complete legal framework in place, regulatory reform in Viet Nam is focused on improving the quality of new regulations rather than on reviewing, augmenting and improving existing regulations.

Since the implementation of three laws on issuing procedure for regulations,14 the legislation procedure has been gradually enhanced. A huge number of fundamental laws and regulations have been promulgated, making the legislative and regulatory framework additional comprehensive, enabling policy-based management in areas such as economic and social activities, securities, defence and foreign affairs.

Legislation, Policy and Principles

Three laws on issuing procedure for regulations have been essential to governing drafting and issuing regulations. The initial one was promulgated in 1996, becoming effective 1 January 1997. It set up entire institutions governing legislation, whereby regulatory reform is made in a regular basis. The second law, ratified in 2002, amended and augmented the initial law; the third was promulgated in 2008 and has been in result since 1 January 2009.

Taking into account the specific conditions of the country, and at the same time adopting relevant international best practice; harmonising culturally specific and modern features of the legislative framework.

Ensuring democracy inclunding strengthening jurisdiction during drafting, improving and implementing regulations;

Ensuring, in tandem of regulatory reform with administrative reform, judicial reform; paying attention to both quantity and quality of regulations, identifying priorities; anticipating sufficient conditions to ensure effectiveness and efficiency of the implementation.

Objectives of Regulatory Reform

The overarching objective of regulatory reform is to establish a legal framework that is comprehensive, unified, viable, open and transparent. The focus of the reform is on improving the
socialist market-oriented institutions, building up a socialist policy-based national of the people; radically renovating the mechanism of making and implementing legislation; maximising the role and effectiveness of legislation in governing the society; maintaining political stability; promoting economic development and international integration; making the national strong; executing human rights, citizen freedom and democracy; and facilitating Viet Nam’s transformation into an industrialised economy by 2020.

For the last five years, specific reform objectives have been set in relation to improving the legal framework regulating business environment, tax reform, encouraging the development of markets, the environment and natural resource protection and inclusive social development.

Mechanisms and institutions to oversee regulatory reform
Institutions

Overall institutional framework

A National Steering Committee has been established to oversee the implementation of SEILF. The committee is responsible for translating SEILF into action plans, programmes and projects to be implemented within a specific time period. The Steering Committee makes regular monitoring and supervision of SEILF and reports on implementation to the Politburo.

The advocacy role, involving the promotion of long-term regulatory framework goals such as policy change, the development of new and improved tools and institutional change, is in the hands of the National Assembly (NA), the highest ranking regulation-making body that approves both the programme of development of laws and ordinances (PDLO) for its five-year term inclunding annual programmes.

The procedure for law and ordinance inclusion in PDLO is as follows: The President of Viet Nam, the Standing Committee of National Assembly (SCNA), Council of Ethnic Affairs (CEANA) and all committees of NA, Government, People’s Supreme Court, People’s Supreme Procuracy, Vietnamese Fatherland Front (VFF) and its member organisations. NA members send their proposals to both SCNA and the government. A proposition should specify the necessary, objectives and scope of the proposed law or ordinance; include the viewpoints and major contents, its ex ante socio-economic impacts inclunding suggest resources to ensure implementation and conditions for drafting.

The government in its turn prepares a draft programme and submits it to SCNA. The Legislative Committee of the National Assembly (LCNA) in collaboration with CEANA and other relevant NA committees investigate the draft programme. The final approval of the programme rests with the NA.

At the proposition stage, the government and involved NA committees play the advisory role to the NA in selecting the majority relevant proposals. At the drafting stage, the advisory role goes to VFF, social and economic organisations, government bodies, the military and individual citizens, who can contribute their comments and suggestions on the draft law. Upon the approval of SCNA, NA members are as well asked for comments.

The Ministry of Justice vets all draft laws before they are submitted to the NA. The Ministry appraisal includes inviting different stakeholders’ opinion. At the final stage at the same time as the draft is with the NA, CEANA, related NA committees or provisional committees act as gatekeepers with the right to challenge the drafting institutions on content or investigate the issues that are the subject of the draft regulation.

Other regulation makers at lower levels in the hierarchy include the President of Viet Nam (approving orders and decisions), the government (resolutions and degrees), the Prime Minister (decisions and directives), Ministers (decisions, directives and circulars), the Supreme Court (resolutions, decisions, directives and circulars), the Supreme Procuracy (decisions, directives and circulars), People’s Councils and People’s Committees.

Key policy decision-making bodies

As specified above, key decision-making bodies depend on the type of regulations and the level of regulation makers. It should be noted that at the highest level, NA is the key policy decision-making body, with leading roles belonging to LCNA and CEANA. The Ministry of Justice is a key policy decision-making of the government.

Awareness and support

The level of awareness and support for regulatory reform has been increasing. In fact, anyone can make a regulatory reform proposition via their membership of VFF member organisations. At the drafting stage, all citizens as individual or as members of VFF can make comments suggesting improvements in, or abolishment of, clauses in draft regulations. The new Law on Issuing Procedure for Regulations in 2008 streamlined and strengthened the participation of the public in regulation making and enhanced the effectiveness of co-ordination and co-operation part all stakeholders. There have been cases at the same time as a low-quality draft law has not been promulgated as scheduled and was revised and improved due to objections from the public, inclunding citizens.

Transparency and predictability

The procedure for issuing and applying regulations became additional transparent next the 2008 Law. Draft laws are made publicly available on the official website of the government at least 60 days before they go to the appraisal authorities.

However, the predictability of the whole legal framework in Viet Nam is still a challenge due to the low quality of a number of regulations. Major causes include less relevant expertise part regulationdrafting groups, weak coordination part ministries and some overlap in functions and mandates of government bodies.

Improving the quality of regulation

Regulatory tools, systems and processes for improving the quality of new regulations
(Flow)

In Viet Nam, Regulatory Impact Analysis (RIA) has been conducted on a pilot basis for regulations governing businesses. The government co-operates with various international organisations to provide technical assistance to the key national stakeholders to implement RIA.

In co-operation with local and international stakeholders, the initial RIA in Viet Nam was implemented in the making of the Enterprise Law and Investment Law in 2005. Various parties have helped provide inputs on the RIA methodology and techniques, inclunding tips on implementation to help build Viet Nam’s initial RIA capacity. The Ministry of Justice has undertaken a number of RIA exercises under the framework of other draft laws and is aiming to institutionalise RIA in the law-making process in Viet Nam.

Regulatory tools, systems and processes for improving the quality of existing
regulations (Stock)

Government bodies within their rights and mandates have responsibility for regularly reviewing regulations. If violations, contradictions, duplication or irrelevance to ongoing development are discovered, they should be reported to competent government bodies for amendment, augmentation, replacement, revocation or suspension.

Future challenges and lessons learned in promoting regulatory reform

Lessons learned in promoting regulatory reform and major evolution in the completed five
years

Successful cases of regulatory reform include the amendment and issuance of business laws, inclunding the Enterprise Law and Investment Law in 2005. The Enterprise Law aims at creating favourable conditions for business development, differentiating between different economic actors, not only in the procedures of entry and exit but as well with respect to internal government.

The Investment Law, which is highly regarded by investors, was part of a long process of improving the investment environment, creating an equal “playing field” for both domestic and international investors through the simplification of investment procedures.

The lessons from the completed regulatory reform show that to make real evolution the government has to demonstrate strong commitment to carrying out reform; it should be a whole-government approach; the regulation making should be a participatory process; technical assistance from international stakeholders is significant; and the capacity of key drafting-regulation players should be of a good standard.

Future challenges
Although there have been significant improvements in reviewing and amending policies and regulations that aim to ensure the public benefit, next challenges include:

The poor quality of a number of regulations, reflecting inconsistent content, partial coverage of regulated issues; ambiguity in clauses and other loopholes in laws and regulations

Some law making remains subjective and not attuned to the market economy nor cognisant of the net benefits to society

The assurance of laws and regulations enforcement is still low