Vietnam’s inconsistent legal framework poses problems for FDI sector: Deep C exec

Vietnam’s legal framework lacks consistency and the foreign direct investment (FDI) sector will soon face challenges related to the Law on Environmental Protection, says Bruno Jaspaert, CEO of Deep C Industrial Zones.

He was speaking at a seminar on “Removing legal bottlenecks for infrastructure and property investment”, organized by the Vietnam's Association of Foreign Invested Enterprises (VAFIE) and The Investor in Hanoi on Tuesday.

The law has different interpretations, especially among authorities at different levels, Jaspaert said. While Deep C is doing well in Vietnam, the firm anticipates that the underdeveloped legal framework will soon pose challenges, he added.

Referring particularly to the Law on Environmental Protection, Jaspaert said it can lead to conflicting interpretations by local and central authorities. Such inconsistencies can undermine Vietnam’s growth potential, he cautioned, stressing the need for updating the nation’s legal framework.

Citing another example,Jaspaert noted industrial park developers have to register their business sectors and tenants are not allowed to make investments outside those sectors. It would take as many as six to nine months for industrial park developers to adjust their licenses and register new sectors.

The legal framework for the renewable energy sector is not practical, impeding transmission from Deep C to its customers. Reuse of rainwater is not possible in Vietnam at the moment, he noted.

Deep C has conducted 25 surveys during the eight years it has been operating in Vietnam and the most popular concerns they have found are the lack of transparency in the legal framework and problematic customs clearance procedures, Jaspaert said.

Expressing similar concerns, Nguyen Dinh Cung, former director of the Central Institute for Economic Management (CIEM), said the lawmaking process was “stuck” and based on serving the administration. Instead, the process should be based on the “inner power” of the country and its businesses, he said, but did not explain.

The unclear legal framework leads to officials holding back from approving business documents, causing projects to proceed at a slow pace.

Ben Ding Khoon Yew, general director of Soilbuild International in Vietnam, echoed the concerns of other speakers and urged Vietnamese authorities to ensure legal framework consistency for FDI businesses.

Vietnamese authorities should establish a special committee under the National Assembly or the Government to oversee changes in the legal framework towards ensuring that such changes do not lead to conflicts.

In Singapore, this is a task implemented by the Coordinating Minister for Economic Policies, he noted.

‘Amateurish’ process

Nguyen Van Phuc, former vice head of the National Assembly Economic Committee, said the lawmaking process is amateurish in Vietnam.

Instead of laws being drafted by ministries and the government and then approved by the National Assembly, laws should be made by “professional” lawmakers, he proposed.

In agreement with Phuc, Duong Dang Hue, former head of the department of economic-civil legislation under the Ministry of Justice, said it is not feasible that the National Assembly simultaneously approves and amends the law.

He also felt that the law-making process should involve more consultations with business leaders.