Arbitrary discretion in the rule making process

IV. Arbitrary discretion of government: obstacle to the rule of law in Vietnam

According to the 1992 Constitution, the National Assembly of Vietnam (NAV) holds the supreme legislative power and decides the most important issues of the nation. The NAV implements its duties and competences through promulgating a Constitution, Laws and Resolutions and supervising the observance of those legal documents²⁷. Especially, Resolutions of the NAV are used not only to solve important issues of the nation but also to amend Laws and even the Constitution. For example, the 1992 Constitution is amended through the Resolution No 51-2001/NQ-QH 10 issued by the NAV on 25^th December 2001.

Although the NAV has a great deal of powers and competences, almost all NAV representatives, however, have no permanent professional positions. This is because the NAV meets twice a year and term of each session is about one month. For such reason, there are two weaknesses in the legislation of Vietnam.

First, most of the drafts of law in Vietnam are not prepared by parliament members, but by other government organs such as various ministries in government. The law-making process in Vietnam can be briefly described as follows. The government delegates a group of officials who work at a certain governmental organ to draft the law. After much discussion among concerned ministries, departments, social organisations and local authorities, the final draft law will be submitted to the NAV for voting and issuing²⁸. In recent years, many draft laws have been publicized to gather public opinions before being submitted to the NAV. However, the rule-making process is mainly a procedure of bargaining and compromising among ministries, their departments and local authorities. For this reason, the laws frequently reflect state interests rather than common interests of every individual in society.

Second, because the NAV representatives are lacking professional skills and time, the NAV frequently delegates powers of supplementing, guiding and interpreting laws to administrative bodies. Although these powers of governmental organs are also stipulated in the 1992 constitution and many laws (e.g.: the 1996 Law on promulgation of Legal documents), they are commonly so vague and broad that it is difficult to define their limitations. This leaves arbitrary discretion to the governmental bodies in executing laws as analysed in the next section. Therefore, the effectiveness of a law entirely depends on the behaviour of governmental organs. For instance, in order to implement a law, it is in need of under law guidelines. However, in some cases, although the law was enacted for two or three years, guidelines still have not been promulgated, which leads to inefficacy of the law. Analysing

27 The 1992 Constitution, Articles 83 and 84

28 The process of rule making is regulated in the Law on promulgation of legal document issued in 12/11/1996.

the laws and regulations on foreign investment in Vietnam, Schot (1996, p. 33) claims that there are a lot of stipulations, but no factual implementation. In short, Vietnam has failed to create an effective legislature which many economists regard as a direct driving force of growth and development (UNDP 1997, Gonzalez and Mendoza 2002).

Because many state organs can promulgate laws and regulations, the legal framework of Vietnam commonly is very complicated. According to the 1996 Law on promulgation of Legal documents (the 1996 LOPLD) issued on November 12^th 1996, the Vietnamese legal system is structured in the hierarchical order as follows.

(i) Constitution, laws and resolutions issued by the NAV;

(ii) Ordinances and resolutions enacted by Standing committee of the NAV;

(iii) Decisions of the President;

(iv) Degrees, resolutions and decisions of the Government and the Prime Minister;

(v) Decisions, directives and circulars issued by Ministries;

(vi) Resolutions and decisions made by the Supreme people’s Court and the Supreme people’s Prosecutor; and

(vii) Resolutions, decisions and directives issued by local administrative authorities i.e., people’s council and committee of provinces, districts and communes.

All legal documents mentioned above are regarded as official sources of Vietnamese laws and implemented directly by administrative authorities or judges to regulate specific relationships or to solve disputes in society. Additionally, there are a large number of administrative documents issued by officials in government’s organs at central and local levels, for example announcements or guideline and directive letters. Strikingly, in the Chinese legal system, such kinds of normative documents also dominate. As Wang (2000) points out, although these documents are not binding in theory but in reality often serve as agency’s “secret weapon” in regulating society. In Vietnam, there are a lot of normative documents which are contrary to the constitution and laws. However, it is very difficult to remove them because Vietnam has no judicial review mechanism. Rather, all superior governmental organs are entrusted the power of removing or suspending illegal normative documents which are issued by inferior

ones. For example, Article 82 of the 1996 LOPLD provides the Standing Committee of NAV with the power of supervising and reviewing normative documents as follows:

“The Standing Committee of NAV shall repeal whole or a part of normative documents issued by Government, Prime minister, Supreme People’s Court, Supreme People’s organs of Control if those documents are contrary to Ordinances and Resolutions of the Committee; suspend the implementation of whole or a part of those documents if they are contrary to constitution, laws and resolutions of NAV and submit to NAV to repeal them”.

One could thus say that Vietnam has a very broad system of judicial review. Yet the judicial system of Vietnam cannot review legislation as well as normative documents issued by the government. Remember that the U.S. has broad judicial review mechanism as every court can strike down legislation as unconstitutional. Moreover, while the power of reviewing normative documents is entrusted to various organs at both central and local levels, there is still lack of transparent procedures for appealing and examining the normative documents which are supposed to be illegal. Consequently, most of governmental organs could not use this power. For example, the NAV and its Standing Committee have never exercised this power in reality.

Since laws and regulations frequently reflect and protect interests of governmental officials, this has led to the aforementioned problems of great contradiction and rapid changes in the legal system. More seriously, the governmental agencies and local authorities seem to deliberately or undeliberately issue under-law regulations violating private rights and interests of individuals or enterprises which are stipulated in the constitution or laws. Infringement of business rights is an example for this kind of violation. For instance, although freedom of business has been stipulated in the 1992 Constitution and many laws since Doimoi, governmental organs issued many under-law regulations providing more than 300 kinds of licenses, permits and their derivatives. Such legal documents seem to be unuseful for state management, but they cause difficulties and unnecessary costs for investors. According to Pham Duy Nghia (2002), many of these licenses, for example the license for typing, license for photocopying, or license for portrait painting, are not based on any laws. None of these permits could be annulled or suspended until enacting the Enterprises Law in 1999. It is worthy to note that reviewing the legality of regulations and normative documents does not fall within the competence of administrative courts in Vietnam because these courts only examine the specific administrative decisions, which will be mentioned in chapter 6.

Strikingly, many studies (e.g. Johnson et al. 1998, Kaufmann et al. 1999, and Djankov et al.

2001) demonstrate that in many countries, people are also facing regulatory burden.

According to the survey of Kaufmann et al. (1999), Vietnam, Laos and Myanmar stand in as the economies with the heaviest regulatory structure in the Southeast Asian region (see Figure 3.1).

Figure 3.1: Index of regulatory burden in Southeast Asian (higher score = lesser burden)

Source: Kaufmann et al. 1999, cited in Gonzalez and Mendoza (2002)

Johnson et al. (1998) show evidently causal links between regulatory burden with corruption and the unofficial economy. These links can be found in the case of Vietnam. In Vietnam, the complex legal system can cause difficulties for individuals, especially for private enterprises in searching and understanding laws and regulations. Individuals thus respond to such complex legal systems in two ways. First, they will bribe officials just to get possible instructions or to assure that all their activities will not be sanctioned. Secondly, they will carry out their activities without regarding whether their business is illegal or not. The fact that more than 80% of private houses in Vietnam were built without permits is the best example for this situation²⁹. In order to get a license for building a house, Vietnamese individuals have to submit documents to several organs and meet a lot of officials, which costs a lot of time and money. Consequently, individuals often build their house without permission and are willing to bear administrative sanctions (normally having to pay a certain amount of money) instead of legally following the burdensome procedure for getting permits

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of house building. This fact illustrates the failure of the formal legal system in transition countries as I already mentioned in chapter 2.

In summary, the reality of burdensome regulatory structure in Vietnam manifests the failure of the National Assembly in performing its supreme rule-making power. Therefore, the NAV has to de-facto entrust more arbitrary powers to executive bodies, which is described by Lipson (1997) as rule by the bureaus rather than rule by law. The next section will illustrate Lipson’s view by explaining how Vietnamese executive bodies abuse arbitrary powers in the rule executing process.