7. State-Owned Enterprises
The 2020 Enterprises Law, which came into effect January 1, 2021, defines an SOE as an enterprise that is more than 50 percent owned by the government. Vietnam does not officially publish a list of SOEs.
In 2018, the government created the Commission for State Capital Management at Enterprises (CMSC) to manage SOEs with increased transparency and accountability. The CMSC’s goals include accelerating privatization in a transparent manner, promoting public listings of SOEs, and transparency in overall financial management of SOEs.
SOEs do not operate on a level playing field with domestic or foreign enterprises and continue to benefit from preferential access to resources such as land, capital, and political largesse. Third-party market analysts note that a significant number of SOEs have extensive liabilities, including pensions owed, real estate holdings in areas not related to the SOE’s ostensible remit, and a lack of transparency with respect to operations and financing.
Vietnam officially started privatizing SOEs in 1998. The process has been slow because privatization typically transfers only a small share of an SOE (two to three percent) to the private sector, and investors have had concerns about the financial health of many companies. Additionally, the government has inadequate regulations with respect to privatization procedures.
8. Responsible Business Conduct
Companies are required to publish their corporate social responsibility activities, corporate governance work, information of related parties and transactions, and compensation of management. Companies must also announce extraordinary circumstances, such as changes to management, dissolution, or establishment of subsidiaries, within 36 hours of the event.
Most multinational companies implement Corporate Social Responsibility (CSR) programs that contribute to improving the business environment in Vietnam, and awareness of CSR programs is increasing among large domestic companies. The VCCI conducts CSR training and highlights corporate engagement on a dedicated website in partnership with the UN.
AmCham also has a CSR group that organizes events and activities to raise awareness of social issues. Non-governmental organizations collaborate with government bodies, such as VCCI and the Ministry of Labor, Invalids, and Social Affairs (MOLISA), to promote business practices in Vietnam in line with international norms and standards.
The Extractive Industries Transparency Initiative was introduced to Vietnam many years ago but the government has not officially participated in it. Overall, the government has not defined responsible business conduct (RBC), nor has it established a national plan or agenda for RBC. The government has yet to establish a national point of contact or ombudsman for stakeholders to get information or raise concerns regarding RBC. The new Labor Code, which came into effect January 1, 2021, recognizes the right of employees to establish their own representative organizations, allows employees to unilaterally terminate labor contracts without reason, and extends legal protection to non-written contract employees. For a detailed description of regulations on worker/labor rights in Vietnam, see the Department of State’s 2020 Human Rights Report.
Vietnam participates in the OECD Southeast Asia Regional Program since its launch in 2014 and has cooperated in several policy reviews with the OECD, notably Investment Policy Reviews (2009 and 2018), Clean Energy Finance (2021), and the Vietnam Economic Review (forthcoming). Vietnam also participates in the OECD-Southeast Asia Corporate Governance Initiative. Engagement with businesses will include activities in the agriculture (with a focus on seafood), garment and footwear sectors, and building resilient supply chains. Vietnam doesn’t have any domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas.
Vietnam’s Law on Consumer Protection is largely ineffective, according to industry experts. A consumer who has a complaint on a product or service can petition the Association for Consumer Protection (ACP) or district governments. ACP is a non-governmental, volunteer organization that lacks law enforcement or legal power, and local governments are typically unresponsive to consumer complaints. The Vietnamese government has not focused on consumer protection over the last several years.
Vietnam allows foreign companies to work in private security. Vietnam has not ratified the Montreux Documents, is not a supporter of the International Code of Conduct or Private Security Service Providers and is not a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).
Vietnamese legislation clearly specifies businesses’ responsibilities regarding environmental protection. The revised 2020 Environmental Protection Law, which came into effect on January 1, 2022, states that environmental protection is the responsibility and obligation of all organizations, institutions, communities, households, and individuals. The law also specifies that manufacturers bear two responsibilities, including responsibility for waste recycling and responsibility for waste treatment.
The Penal Code, revised in 2017, includes a chapter with 12 articles regulating different types of environmental crimes. In accordance with the Penal Code, penalties for infractions carry a maximum of 15 years in prison and a fine equivalent to $650,000. However, enforcement remains a problem. To date, no complaint or request for compensation due to damages caused by pollution or other environmental violations has ever been successfully resolved in court due to difficulties in identifying the level of damages and proving the relationship between violators and damages.
In the past several years, there have been high-profile, controversial instances of impacts on human rights by commercial activities – particularly over the revocation of land for real estate development projects. Government suppression of these protests ranged from intimidation and harassment via the media (including social media) to imprisonment. There are numerous examples of government-supported forces beating protestors, journalists, and activists covering land issues. Victims have reported they are unable to press claims against their attackers.
Department of State
- Country Reports on Human Rights Practices;
- Trafficking in Persons Report;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
- Xinjiang Supply Chain Business Advisory
Department of the Treasury
Department of Labor
At COP 26, the Prime Minister announced Vietnam’s commitment to net zero emissions by 2050. Right after the event, Vietnam established a National Steering Committee on Implementation of COP 26 Commitments headed by the Prime Minister. The Prime Minister has requested all relevant ministries to study and develop programs to fulfill Vietnam’s commitments. Vietnam issued a climate change strategy in 2011 that will be valid through 2030, with “a vision” to 2050, and it has reviewed implementation for the 2011-2020 period. Vietnam is revising the strategy to achieve the net zero commitment, with the new version expected to be released by the end of 2022. The country is also updating its Nationally Determined Contributions in line with its net zero emission commitment.
On October 1, 2021, Vietnam issued its National Strategy on Green Growth in the 2021-2030 Period, with a Vision to 2050. The strategy sets specific goals on GHG reductions and tasks various Ministries to develop specific plans and strategies. The strategy also targets at a 35 per cent green procurement proportion of the total public procurement.
On February 7, 2022, Vietnam approved the National Biodiversity Strategy for the 2021-2030 period. Vietnam will increase the size of its protected and restored natural eco-systems under the new strategy, aiming to conserve and use biodiversity as a sustainable response to the effects of climate change.
The New Decree 08/ND-CP issued in January 2022 regulating in details the implementation of the 2020 Environment Protection Law has specified three groups of environmental businesses that will be qualified for incentives, including businesses involved in the waste collection, treatment, re-use or recycling; businesses manufacturing or supplying technologies, equipment, products and services serving the environmental protection and non-business operations related to the environmental protection such as application of best technologies earlier than regulated, installation of waste water, air quality monitoring systems earlier than scheduled. The incentives listed under the Decree include investment capital support from Environmental Protection Funds, Vietnam Development Fund, preferential terms for taxes, fees and charges, and land support.
Vietnam has laws to combat corruption by public officials, and they extend to all citizens. Communist Party of Vietnam General Secretary Nguyen Phu Trong has made fighting corruption a key focus of his administration, and the CPV regularly issues lists of Party and other government officials that have been disciplined or prosecuted. Trong recently expanded the campaign to include “anti-negativity,” described loosely as acts that can cause public anger or reputational harm to the CPV. Nevertheless, corruption remains rife. Corruption is due, in large part, to low levels of transparency, accountability, and media freedom, as well as poor remuneration for government officials and inadequate systems for holding officials accountable. Competition among agencies for control over businesses and investments has created overlapping jurisdictions and bureaucratic procedures that, in turn, create opportunities for corruption.
The government has tasked various agencies to deal with corruption, including the Central Steering Committee for Anti-Corruption (chaired by the General Secretary Trong), the Government Inspectorate, and line ministries and agencies. Formed in 2007, the Central Steering Committee for Anti-Corruption has been under the purview of the CPV Central Commission of Internal Affairs since February 2013. The National Assembly provides oversight on the operations of government ministries. Civil society organizations have encouraged the government to establish a single independent agency with oversight and enforcement authority to ensure enforcement of anti-corruption laws.
Contact at the government agency or agencies that are responsible for combating corruption:
Mr. Phan Dinh Trac
Chairman of Communist Party Central Committee Internal Affairs
4 Nguyen Canh Chan, Ba Dinh, Hanoi
Tel: +84 0804-3557
Contact at a watchdog organization:
Ms. Nguyen Thi Kieu Vien
Executive Director ,Towards Transparency International National
Floor 4, No 37 Lane 35, Cat Linh Street, Dong Da, Hanoi, Vietnam