Abstract
Since Vietnam joined the World Trade Organisation, it has pursued an active trade and investment policy and negotiated bilateral and multilateral agreements deepening its integration in the global value chains and investment flows. Recently, Vietnam ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA). Concurrently, Vietnam has implemented reforms of the state-controlled economic structure leading to the equitisation of Vietnamese state-controlled entities (SCE) to improve their management and governance. The provisions of the free trade agreements that directly relate to state-controlled entities will be reviewed with an overview of the treaties’ other obligations. The chapter sustains that the obligations established in the free trade agreements constitute new norms that stimulate incremental reform of Vietnam’s state-owned entities, though with several carve-outs and exceptions that allow for special treatment for some of the most important SCEs.
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Notes
- 1.
See Albert Park, Angela Tritto and Dini Sejko, ‘The Belt and Road Initiative in ASEAN – Overview’ (HKUST December 2020) IEMS Reports No. 2021–03 <https://cutt.ly/KEEBQnD> accessed 25 October 2021.
- 2.
Tu-Anh Vu-Thanh, ‘Does WTO Accession Help Domestic Reform? The Political Economy of SOE Reform Backsliding in Vietnam’ (2017) 16(1) World Trade Review 85–109.
- 3.
UNCTAD, ‘Investment Policy Hub’ <https://cutt.ly/aEWwqvB> accessed 25 October 2021.
- 4.
Kunmin Kim and Nguyen Anh Tru, ‘Reform Of State-Owned Enterprises In Viet Nam To Increase Performance And Profit’ <https://www.adb.org/sites/default/files/publication/524106/adbi-wp999.pdf> accessed 25 October 2021.
- 5.
ibid, cfr Mai Fujita, Vietnamese State-owned Enterprises under International Economic Integration, RIETI Discussion Paper Series 17-E-121.
- 6.
Alexander Ewart, ‘State-Owned Enterprises in Viet Nam’ in Edimon Ginting and Kaukab Naqvi (eds), Reforms, Opportunities, and Challenges for State-Owned Enterprises, (ADB 2020).
- 7.
Viet Nam has been a member of the WTO since 11 January 2007. Viet Nam and the WTO, Member information, World Trade Organisation, <https://www.wto.org/english/thewto_e/countries_e/vietnam_e.htm> accessed 28 October 2021.
- 8.
Tu-Anh Vu-Thanh at n 2.
- 9.
Decree 64 (19 June 2002) and Decree 187 (16 November 2004) on transforming SOEs into joint-stock companies.
- 10.
OECD, ‘Multi-dimensional Review of Viet Nam: Towards an Integrated, Transparent and Sustainable Economy’ <https://www.oecd-ilibrary.org/sites/c8ba4a5e-en/index.html?itemId=/content/component/c8ba4a5e-en> accessed 25 October 2021.
- 11.
Decree No. 109/2007/ND-CP of June 26, 2007, on conversion of enterprises with 100% state owned capital into shareholding companies.
- 12.
ibid.
- 13.
Prime Minister’s Decision No. 151/2005/QD-TTg.
- 14.
Sovereign Wealth Funds 2020 Fighting the Pandemic, Embracing Change, IE Business School 2020.
- 15.
OECD, ‘Corporate Governance Frameworks in Cambodia, Lao PDR, Myanmar and Viet Nam’ (OECD 2019, <https://www.oecd.org/daf/ca/Corporate-Governance-Frameworks-Cambodia-Lao-PDR-Myanmar-Viet-Nam.pdf> .
- 16.
See n 10.
- 17.
SWFs that are members of the IFSWF and comply with the Santiago Principles generally have better governance, higher degree of transparency regarding their organizational structure, and better economic performance. See International Forum of Sovereign Wealth Funds, https://www.ifswf.org/general-news/international-forum-sovereign-wealth-funds-welcomes-expansion-one-planet-sovereign and cfr n 14.
- 18.
Law on Enterprise No. 68/2014/QH13 (“Law on Enterprise 2014”).
- 19.
Decree on State Economic Groups and State Corporation, No. 69/2014/Nd-Cp, Hanoi, 15 July 2014. transparent, from the tasks assigned by the state owner; information on ownership structures and assets; list of investment projects, investment forms, total investment budget, and schedule for implementation of current investment projects; transactions, loans, large-scale loans. Process of using capital, land, natural resources and other resources; the process of implementation and results of the implementation of long-term strategies and plans of the parent company; decide on the annual plan of the parent company that the owner has approved; to decide on strategies, long-term plans and business lines of subsidiaries which the parent company wholly owns; The use of profits or the handling of losses are required to be reported periodically.
- 20.
ibid.
- 21.
World Bank and Ministry of Planning and Investment of Vietnam “Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy” Washington, DC: World Bank 2016. https://doi.org/10.1596/978-1-4648-0824-1.
- 22.
Trade Policy Review Report Viet Nam, WT/TPR/S/410.
- 23.
ibid These enterprises are involved in electricity distribution, grid management, multipurpose hydropower, railroad infrastructure, air traffic services and related safety services, maritime safety, public postal services, lottery businesses, and publishing.
- 24.
ibid food (rice wholesale), energy (large-scale mineral mining, gas, manufacture of basic metals, petrol and oil importation, electricity retail), telecommunications services with a network infrastructure, aviation (airport management, air navigation systems, air transport services), and financial and banking services.
- 25.
Dini Sejko and Albert Park, The Belt and Road Initiative in ASEAN – Vietnam HKUST IEMS Reports No. 2021–07.
- 26.
World Bank and Ministry of Planning and Investment of Vietnam (n 21).
- 27.
ibid (n 21) 78.
- 28.
Clause 3, Art 2 of Decision No. 1908/QD-BKH dated 8 November 2010 by the Minister of Planning and Investment on Functions, Responsibilities and Structural Organization of the Enterprise Development Agency.
- 29.
Art 1 of Decision No. 2123/QD-BTC dated 26 August 2014 by the Minister Finance on Functions, Responsibilities and Structural Organization of the Corporate Finance Department.
- 30.
State Capital Investment Corporation (SCIC), Viet Nam Oil and Gas Group (PVN), Electricity of Viet Nam (EVN), Viet Nam National Petroleum Group (Petrolimex), Viet Nam National Chemical Group (VINACHEM), Nam Rubber Group (VRG), Viet Nam National Coal-Mineral Industries Holding Corporation Limited (VINACOMIN), Viet Nam Post and Telecommunications Group (VNPT), Viet Nam Mobile Telecom Services One Member Limited Liability (MobiFone), Viet Nam National Tobacco Corporation (VINATAB), Viet Nam Airlines; Viet Nam National Shipping Lines (VINALINES), Viet Nam Railways (VNR), Viet Nam Expressway Corporation (VEC), Airports Corporation of Viet Nam (ACV), Viet Nam National Coffee Corporation (VINACAFE), Viet Nam Southern Food Corporation (VINAFOOD 2), Viet Nam Northern Food Corporation (VINAFOOD 1), Viet Nam Forest Corporation (VINAFOR).
- 31.
The Socialist Republic of Vietnam, Online Newspaper of the Government, ‘Committee for State Capital Management to make debut’ (Chinhphu.vn, 30 September 2018, <http://news.chinhphu.vn/Home/Committee-for-State-Capital-Management-to-make-debut/20189/34783.vgp> accessed 25 October 2021.
- 32.
The Chinese support of RCEP as part of their engagement under the BRI framework has led to the inappropriate identification of the treaty as a Chinese agreement.
- 33.
J. S. Fleury and J.-M. Marcoux, ‘The US Shaping of State-Owned Enterprise Disciplines in the Trans-Pacific Partnership’, 19 Journal of International Economic Law (2016).
- 34.
Julien Chaisse and Dini Sejko, ‘The Latest on the Best? Reflections on Trade Defence Regulation in EU-Vietnam FTA’ in Marc Bungenberg, Michael Hahn, Christoph Herrmann and Till Müller-Ibold (eds), The Future of Trade Defence Instruments: Global Policy Trends and Legal Challenges (European Yearbook of International Economic Law. Springer 2018) 295–313.
- 35.
Mitsuo Matsushita ‘State-Owned Enterprises in the TPP Agreement’ in: Julien Chaisse, Henry Gao, and Chang-fa Lo (eds), Paradigm Shift in International Economic Law Rule-Making. Economics, Law, and Institutions in Asia Pacific (Springer 2017).
- 36.
cfr Mitsuo Matsushita and C L Lim. ‘Taming Leviathan as Merchant: Lingering Questions about the Practical Application of Trans-Pacific Partnership’s State-owned Enterprises Rules’ (2020) 19(3) World Trade Review 402–423, 403.
- 37.
OECD, ‘OECD Guidelines on Corporate Governance of State-Owned Enterprises, 2015 Edition) (OECD Publishing 2015), 14. The 2005 edition used to define SOEs as “enterprises in which the state has significant control, through full, majority, or significant minority ownership.”.
- 38.
OECD (n 38) 15.
- 39.
See generally, Chaisse and Sejko (n 34).
- 40.
Julien Sylvestre Fleury and Jean-Michel Marcoux, ‘The US Shaping of State-Owned Enterprise Disciplines in the Trans-Pacific Partnership’ (2016) 19 Journal of International Economic Law 445.
- 41.
European Union – Vietnam Free Trade Agreement, Chapter 11, Art 11.1 (g).
- 42.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was released on 21 February 2018, Chapter 17, Art 17.1 The CPTPP was signed by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, and by 7 August 2018 has already been ratified by Mexico, Japan, and Singapore.
- 43.
GATT Article XVII.
- 44.
The TPP text was agreed in November 2015 and released in January 2016, like the first version of the EVFTA text.
- 45.
See Chap 3.5 for an analysis of the influence of Santiago Principles on the treaty-drafting and their incorporation in the language of new treaties.
- 46.
See, for example, Temasek that does not identify itself as an SWF, but is often classified as one and is comparable to Khazanah Nasional (Malaysia), or Qatar Investment Authority and Mubadala (UAE) that identify as SWFs. See Khalid A Alsweilem, Angela Cummine, Malan Rietveld and Katherine Tweedie, ‘A Comparative Study of Sovereign Investor Models: Sovereign Fund Profiles’ The Belfer Center for Science and International Affairs, and The Center for International Development, Harvard Kennedy School (2015).
- 47.
See secs 2.3.1.3 and 3.2.1.2.
- 48.
Clause 9 Art 4 of the Law on Enterprises 2014.
- 49.
Clause 1, Art 3 of Vietnam Commercial Law 2005.
- 50.
This Section shall not apply to the adoption, enforcement or implementation of the privatization, equalization, restructuring or divestment of assets owned or controlled by the Government of Viet Nam. This Section shall not apply to measures by the Government of Viet Nam related to the ensuring of economic stability in the territory of Viet Nam. In achieving this policy objective, the government may require or direct a state-owned enterprise or a designated monopoly to sell or purchase at a regulated price, quantity or other terms and conditions than that enterprise could decide on commercial consideration basis, subject to its laws, regulations, or a governmental measure. This Section shall not apply to measures by the Government of Viet Nam aiming at development issues in the territory of Viet Nam, such as income security and insurance, social security, social welfare, social development, social housing, poverty reduction, public education, public training, public health, and childcare, promoting the welfare and employment of ethnic minorities and people living in disadvantaged areas, provided that the activities to implement such measures do not circumvent the application of Article 4 to the commercial activities of the enterprises.
- 51.
On the procurement rules in the CPTPP, see generally Jędrzej Górski, ‘The Impact of the TPP on Opening Government Procurement to International Competition in the Asia-Pacific Region’ (2016) 8(2) Trade, Law & Development 65–150; Jędrzej Górski, ‘TPP and Government Procurement’ (2019) 16 (5) TDM 1–44.
- 52.
Art 5.1 of the Law on Enterprises 2014.
- 53.
“Competitive neutrality implies that no business entity is advantaged (or disadvantaged) solely because of its ownership.” See Antonio Capobianco and Hans Christiansen, ‘Competitive Neutrality and State-Owned Enterprises: Challenges and Policy Options’ (May 2011) OECD Corporate Governance Working Papers No. 1, https://doi.org/10.1787/22230939.
- 54.
Capobianco and Christiansen (59), OECD Corporate Governance Working Papers No. 1 Competitive Neutrality and State-Owned Enterprises: Challenges and Policy Options.
- 55.
Art 10 of the Commercial Law 2005.
- 56.
Art 7 of the Law on Enterprises 2014.
- 57.
EVFTA Article 11.5 Regulatory Framework.
- 58.
EVFTA Annex 11-A: Specific Rules for Vietnam on State-Owned Enterprises, Enterprises Granted Special Rights or Privileges, and Designated Monopolies.
- 59.
This information includes the following: (a) the ownership and the voting structure of the enterprise, indicating the percentage of shares and the percentage of voting rights that a Party and/or an enterprise defined in Art 1 cumulatively own, (b) a description of any special shares or special voting or other rights that a Party and/or an enterprise defined in Art 1 hold, where such rights differ from the rights attached to the general common shares of such entity, (c) the organisational structure of the enterprise, the composition of its board of directors or of an equivalent body exercising direct or indirect control in such an enterprise; and cross-holdings and other links with different enterprises or groups of enterprises, as defined in Art 1, (d) a description of which government departments or public bodies regulate and/or monitor the enterprise, a description of the reporting lines, and the rights and practices of the government or any public bodies in the appointment, dismissal or remuneration of managers, (e) annual revenue or total assets, or both, (f) exemptions, non-conforming measures, immunities and any other measures, including more favourable treatment, applicable in the territory of the requested Party to any enterprise defined in Art 1.
- 60.
CPTPP Chap 17 Annex 17-C.
- 61.
cfr n 22.
- 62.
World Bank, ‘Vietnam: Deepening International Integration and Implementing the EVFTA’ (World Bank, May 2020) <https://openknowledge.worldbank.org/bitstream/handle/10986/33787/Vietnam-Deepening-International-Integration-and-Implementing-the-EVFTA.pdf?sequence=1&isAllowed=y> accessed 26 October 2021.
- 63.
Bryce Baschuk and Jiyeun Lee, South Korea ‘Seriously’ Looking to Join CPTPP Following China Bid, Bloomberg, 8 October 2021, <https://www.bloomberg.com/news/articles/2021-10-08/korea-seriously-looking-to-join-cptpp-following-china-bid?sref=RW26lVU0> accessed 28 October 2021.
- 64.
Yuichi Shiga, Philippines explores joining TPP to expand free trade network, Nikkei Asia, 2 April 2021, <https://asia.nikkei.com/Economy/Trade/Philippines-explores-joining-TPP-to-expand-free-trade-network> accessed 28 October 2021.
Acknowledgements
Dr. Sejko would like to acknowledge generous support from the Institute for Emerging Market Studies at the Hong Kong University of Science and Technology under the ‘Green and Smart or Black and Clumsy? Examining the Role of Chinese Investors in ASEAN’s Sustainable Development’ Research Grant. This study has greatly benefited from the fieldwork that Dr Sejko conducted as a Postdoctoral Fellow at the IEMS-HKUST.
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Sejko, D., Hoang, V. (2022). Vietnam’s Reform of State-Owned Entities: Domestic and External Drivers. In: Chaisse, J., Górski, J., Sejko, D. (eds) Regulation of State-Controlled Enterprises. International Law and the Global South. Springer, Singapore. https://doi.org/10.1007/978-981-19-1368-6_23
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