A story of growth built on a legal foundation

Nicolas Audier has been in Vietnam for more than two decades and has seen much of its development firsthand

The first time I came to Vietnam was in the early 1990s. Following many exploratory trips – including various backpacking excursions in the north of Vietnam – I decided at the end of 1994 to leave a well-settled life in Paris and to take an active part in the fantastic challenge of transforming an emerging country into a modern country with a booming economy, fully open to the nascent globalisation. That was in 1995, when I arrived in Hanoi at Noi Bai Airport on a cold day in January. It was then a very small, one-storey airport, and I drove into Hanoi in an antique ‘Volga’ car, on two-lane winding roads, with rice fields and water buffalo on either side. Hanoi was a charming city to discover for Western visitors, with a lot of bicycles and cyclos, and had managed to keep the elegance of a French city with its opera house, its ancient landmark buildings combining the lovely French architecture with the Asian style – such as Ecole Française d’Extrême d’Orient – with wide, tree-lined boulevards, and many beautiful lakes and parks. Hanoi is still one of the most fascinating and charming capital cities in Asia today and has no equal in Southeast Asia.

At the time, the economy of Vietnam was mainly dominated by state-owned companies, co-operatives, agriculture, and fishery and the GDP per capita was around $288 in 1995, compared to more than $2,200 in 2016. Vietnam is now a booming and diverse market economy with many thriving sectors, in addition to the traditional foundations of farming and seafood, including energy, industry and manufacturing, services, tourism, as well as banking and insurance. But despite its rapid development, Vietnam still retains its charm and warm hospitality and is always an attractive destination for tourists.

Doi Moi was launched in 1986, and the first Law on Foreign Investment was passed in 1987, which enabled the first wave of foreign direct investments (FDI) to enter Vietnam. This resulted in Vietnam becoming the leading FDI recipient among developing countries and economies in transition, in proportion to the size of its economy.

In the early 1990s, Vietnam joined the IMF, signed a trade agreement with the European Union (EU) in 1992, and started the process of opening the country to western investments and technologies. 1993 was also an important year for diplomats, as the French President François Mitterrand paid a state visit to Vietnam, the first ever president of a western country to visit since the introduction of the open-door policy. This state visit still sticks in the mind of many Vietnamese officials.

In 1994, the US ordered the lifting of its trade embargo, which allowed the establishment of diplomatic liaison missions in Washington and Hanoi. Another significant milestone in Vietnam’s international integration happened in 1995, when Vietnam officially became the seventh member of ASEAN, and in 1997, when Vietnam held the Francophonie Summit with leaders from 84 countries gathering in Hanoi. That was one of the first major international summits that Vietnam organised, with great success, after the launching of Doi Moi.

That contributed to raising Vietnam’s international prestige and promoting its image as a dynamic and open country with a foreign policy of independence, self-reliance, peace, co-operation, and development.

Another milestone occurred in 2007, when Vietnam became the 150th member of the World Trade Organization (WTO) following 12 years of negotiations. Joining WTO marked an important landmark for Vietnam, showing its willingness to create better conditions for the country to efficiently participate and compete in the world market. Being a WTO member gave Vietnam the chance to strengthen its external relations and engage more actively in international relations.

Since then, Vietnam has continued its globalisation policy and has signed various international trade agreements such as bilateral investment promotion and protection agreements with Japan, Singapore, and others. And in December 2015, the EU and Vietnam signed a free trade agreement (FTA), the main purpose of which is to give Vietnamese companies access to a market of 650 million people with high incomes.

With increased international integration and improved investment and trading policies, Vietnam is now one of the leading countries within ASEAN and has witnessed a GDP growth rate of nearly 7 per cent with a $4 billion trade surplus in 2017. The ‘Made in Vietnam’ designation is now synonymous with quality and reliability, not only in the garments and textiles industry, but also in high-tech industries.

As a foreign lawyer practicing in Vietnam, I had the chance to work with various ministries in the drafting of the new legal framework. The ‘House of Law’ in Hanoi was an excellent platform and was deeply involved in the drafting of the Civil Code, Commercial Code, Foreign Investment Regulations, regulations governing capital markets, the revisions of the law governing state-owned enterprises, the land law and regulation of land titles, Notaries, and more. All of these laws and regulations have deeply contributed to establishing Vietnam as a state of law.

Over the years, Vietnam has managed to establish an efficient legal system with market-oriented laws and regulations and has become a reliable economic partner for foreign investors. Indeed, Vietnam faces many other challenges such as the building of a strong and reliable judicial system and improving the mechanisms for the settlement of disputes and enforcement of judgements and arbitration awards. But overall, the Vietnamese legal system has contributed to creating a reliable legal environment for businesses by protecting the right to do business and prohibiting unfair competition in accordance with the WTO and various free trade agreement rules. The expected entry into force of the EU-Vietnam FTA will contribute to strengthening the reliability of the legal system.

The Law on Enterprises and related laws and regulations guarantee an equal legal framework for Vietnamese and foreign investors in Vietnam. Furthermore, the process of restructuring state-owned enterprises into joint stock companies or public utility supply entities has achieved good initial results. The legal framework has created more opportunities for the private sector to engage in business activities.

Vietnam is now ringing in the Year of the Earth Dog, and although I have been in Vietnam for nearly 25 years and had the chance to witness the fantastic progress that Vietnam has achieved, I still feel the warmth and happiness of the upcoming Tet festival. I have spent the happiest years of my life in Vietnam.

Having experienced the exceptional development of Vietnam through the years, I am optimistic for a prosperous new year in Vietnam with continuing economic growth and closer integration into the global economy.