Vietnam company law: new rules attractive for foreign investors
Since 1987, Vietnam has moved from a centrally planned economy to a market economy. Vietnam law has adapted to these political developments. Vietnam company law now favours foreign investment and the establishment of foreign companies.
Vietnam company law, a traditional civil law adapted to the communist regime
Vietnam law is civil law inscribed in tradition, quite similar to French law. However, some laws are reminiscent of the socialist orientation of the country, such as the right to ownership. The Constitution adopted in 2013 sets the organisation and functioning of the state, and is superior to the laws. Vietnam standards hierarchy is as follows:
- International treaties
- The Constitution
- The laws (including codes) and the various resolutions adopted by the National Assembly
- Prescriptions/ordinances and resolutions adopted by the Standing Committee of the National Assembly
- The decrees, regulations and resolutions issued by the government
- The decisions and directives of the Prime Minister
- Circulars and decisions of ministers
Vietnam company law, now promoting the establishment of foreign companies
Doi Moi policy led Vietnam to engage in multiple reforms of its legislation. Vietnam law seeks to be competitive and modern, as evidenced by the 2014 laws on investment and enterprises, and new laws on real estate, taxation or labour law. Vietnam is reforming its laws to open up to foreign investment and has become the second most open country in Southeast Asia after Singapore.
Many steps have marked the opening of Vietnam to the world economy, in particular the signing of free trade agreements. Vietnam’s accession to the WTO was one of the most significant stages of its integration. Vietnam has also ratified the New York Convention on the Recognition and Enforcement of Arbitral Awards and the Paris Convention for the Protection of Industrial Property.
Vietnam is also a member of ASEAN, leading it to implement a diversification of external relations policy. The Asian Economic Community (AEC) is also a strong accelerator of Vietnam’s opening. AEC seeks to liberalise the movement of goods, services, investment and capital. The AEC is based on four pillars:
- the creation of a single market and a single production base
- a highly competitive economy
- a balanced development in the region
- full integration of ASEAN in the global economy
In addition, a free trade agreement with the EU and Vietnam was announced in December 2015. Finally, the Trans-Pacific Partnership Agreement, which is expected to create the largest free trade area in the world, was signed 4 February 2016. It aims to integrate the economies of Asia-Pacific and America and to break down barriers to trade and investment among its members.
Vietnam plays an undeniable role in globalisation and is undergoing radical legal changes. It must still face high levels of corruption and attempts to improve transparency in the conduct of its business.
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