Legal reform and private enterprise : the Vietnamese experience

Abstract: Decades after the rise and fall of the Law and Development movement, crude theories about the relationship of law to economic development have reappeared in the wake of "transition". Having observed the process of creating laws governing ownership and contracts in Vietnam, the author of this thesis seeks to determine whether the perceived problems exist in reality and whether the "standard legal prescription" for solving them actually works. The official aspect of the legal reforms, i.a. goals and drafting, has been discussed with legislators, officials and other informed people. The response of those meant to benefit from the laws, the actors in the marketplace, has been explored in interviews with businessmen in and around Hanoi.Vietnam's reliance on foreign legal models is pardy a consequence of the absence of effective means for developing viable organic solutions and partly of a reluctant recognition that overseas trade and intercourse necessitate international compatibility. A favoured technique is to single out individual elements of foreign laws that are considered acceptable and appropriate, while rejecting others. Thus, while much of the new legislation appears to be fairly "modern" and "conventional", certain underlying fundamentals have been rejected for fear that they should be carriers of "dangerous" ideas and practices. Most businessmen nevertheless feel safe in the sense that they are not afraid of expropriation or other immediate threats to their existence. The objective factors of law are intertwined with political "moods" and other subjective factors, and those who believe in their ability to correctly interpret these subtle signals have confidence in the future. That many successful businessmen still rely on kinship ties and moral concepts for day-for-day transactions is another reason to doubt the urgency of the need for "Western-style" laws. However, in this case, changes in the expanding marketplace, e.g. more diverse moral concepts, in the wake of expanding trade, alter the relative costs of formality and informality and promote the new Civil Code and Commercial Law as providers of model terms for impersonal transactions.That Vietnamese businessmen consider these laws basically good, but at the same time describe the legal system as a whole as "unattractive", indicates a need for judicial reform incorporating traditional concepts of rule of law. The leadership however is ambivalent. It regards the presence of discretion and corruption as a threat to its authority and appreciates that uniformity is important for state-building purposes, but is not willing to compromise with the Party's leading role in society. The resulting policy, a refined version of "socialist legality" or rule by law, meaning that state organs are bound by legislation and that citizens are assured that their economic rights will be upheld as long as they follow the rules, is inherently untenable and incapable of providing the kind of protection associated with conventional rule of law.