Vietnam's construction of an optimal legal framework for reattracting foreign investment: challenges and recommendations

Abstract

Since 1986 Vietnam has sent a clear message to the world about its intention to develop a market economy of which attracting foreign investment is among the key economic goals. The challenge is to create a legal framework which can facilitate the development of a market economy whilst at the same time retaining Vietnam’s socialist characteristic. The thesis argues that, in the absence of a ready-made model of a market economy with socialist orientation, Vietnam ought to develop a socialist market economy with its own characteristics. The key to Vietnam’s success in re-attracting foreign investment is to shape Vietnam’s socialist characteristics in a manner that accommodates the operation of a market-oriented economy. Vietnam offers foreign investors with very good opportunities to invest because of its political stability and educated labour force. Accordingly, Vietnam will regain its position as a destination for foreign investment as soon as the remaining legal impediments such as the inconsistencies and the lack of transparency and unpredictability of the legal system are removed. The thesis examines the current legal framework for Foreign Investment in Vietnam. Further, it seeks to identify the fundamental challenges facing the Vietnamese legal system in achieving the objectives of re-attracting foreign investment as well as suggesting some possible reforms. For example: 1. Whether or not offering generous fiscal concessions will attract foreign investment; 2. The principal concerns of foreign investors in relation to the protection of their legitimate property and disputes settlement arising from the inconsistency of the existing legal system, which remained unsolved; 3. As well as reform to the legal system there also needs to be enforcement of the optimal legal system.Vietnam has demonstrated an ability to change quickly and adapt to new situations. Such ability will assist Vietnam in achieving its twin objectives of attracting foreign investment while ensuring its socialist orientation continues.