by John Gillespie
The document was excerpted from Gillespie’s paper, ‘TOWARDS A DISCURSIVE ANALYSIS OF LEGAL TRANSFERS INTO DEVELOPING EAST ASIA,’ pp.689-712.
Full citation: Gillespie, J 2008, ‘Towards a discursive analysis of legal transfers into developing East Asia‘ New York University Journal of International Law and Politics, vol 40, no. 3, pp. 657 – 721.
Note: All footnotes omitted; some Vietnamese words have been corrected
V. A BRIEF OVERVIEW OF LEGAL TRANSFERS INTO VIETNAM
When French colonial officials imported civil and commercial codes into Vietnam during the late nineteenth century, domestic resistance arose from sources beyond the standard narrative of an uneasy encounter with a different intellectual system and colonizing power. Although such factors were undoubtedly important, resistance arose primarily from a profound difference in mental categories or modes of thought, and from differences in the conception of human agency. Much of what colonial law had to say about individual legal rights, legal doctrines, and a democratic liberal rule of law made limited sense in a society governed according to virtue-rule and neo-Confucian and traditional village-based prin-ciples.
Following the declaration of independence in 1945, it took decades for the incipient Democratic Republic of Vietnam to entirely replace the colonial legal system with Soviet-inspired laws and institutions. Vietnamese versions of socialist institutions governed Vietnam for thirty years until doi moi (renovation) reforms introduced by the Sixth Party Congress in 1986 opened the country to Western legal ideas.
By the mid 1980s, rampant inflation, falling production, a vibrant informal economy, and the booming economies of Vietnam’s capitalist neighbors could no longer be ignored. Party leaders feared that unless Vietnam rapidly expanded its industrial and technological sectors, the economy would fall further behind, ultimately compromising Party legitimacy and national sovereignty. In short, Vietnam faced a national crisis and needed to establish a legal system that would attract foreign direct investment and allow its economy to catch up with the world.
The first wave of new commercial laws, comprised of the Law on Foreign Investment 1987 and the Ordinance on Economic Contracts 1989, were closely modeled on Chinese market reforms. Only in areas where China lacked appropriate experience were laws imported from the capitalist West. But lawmakers sought to tame imported market legal principles with discretionary licensing powers. Unlike in the former socialist countries in Eastern Europe, the “state economic management” (quản lý kinh tế nhà nước) powers designed to regulate a command economy have eroded but not entirely collapsed in Vietnam.
Large-scale commercial legal importation did not begin in Vietnam until the early 1990s, when international economic integration gained political momentum. For example, the Law on Business Bankruptcy 1993, the Commercial Law 1997, and the Enterprise Law 1999 were inspired by legal models supplied by bilateral and multilateral agencies.
The importation of Western rights-based laws presented an ideological dilemma for Party leaders. Private property and contractual rights were incompatible with socialist ideology and had the potential to undermine party supremacy. Party leaders sought to resolve this conflict by adding two new ideological sources to the long-standing socialist legality (pháp chế xã hội chủ nghĩa) doctrine privileging Party paramountcy.
The first new ideological source was the “law-based state” (nhà nước pháp quyền), a set of principles based on the Soviet pravovoe gosudarstvo, which advocated a form of Rechtsstaat in which the government ruled through law rather than policy instruments. The second new ideological source was derived from Ho Chi Minh’s eclectic writings, which embraced an eclectic array of Western legal principles, socialism, and neo-Confucianism.
This syncretic mix of old and new thinking opened ideological space for drafters to smuggle Western legal rights into legislation without openly challenging socialist orthodoxies. For example, some legal writers have enlisted Ho Chi Minh’s vague and eclectic teachings to invest imported political-legal ideas with political respectability. They argue that Ho Chi Minh supported the rule of law principle that law should con-strain political power when he demanded constitutional rule for colonized people in 1919. Others creatively use Ho Chi Minh’s thought as a “political umbrella” to introduce democratic liberal precepts such as legal “transparency” (rõ ràng) into the legal discourse.
After Vietnam entered a bilateral trade agreement with the United States in 2001, the rate of legal borrowing dramatically increased. Compliance rules for international treaties, especially the WTO, compelled Vietnam to introduce dozens of commercial laws and amend many more to recognize property rights and level the “playing field” between foreign and domes-tic investors. At the same time, foreign investors and lawyers have been importing legal doctrines and procedures into commercial contracts that bypass state structures and directly influence domestic business behavior. In 2005, more than a decade after the introduction of the law-based state doctrine, Party leaders accepted the core rule of law principle that businesses can carry out any activity that is not directly prohibited by law.
The study of corporate law reform clearly illustrates the way regulatory discourse influences legal transfers into Vietnam. As the following discussion suggests, corporate law is a central tenet of capitalism. Its introduction into Vietnam during the early period of socialist reforms directly confronted deeply entrenched epistemological views about economic regulation. Later, as rule of law ideas entered elite-level dis-course, corporate law was seen by economic reformers as an instrument to break down official resistance to capitalist modes of production. Corporate law reforms chronicle the changing attitudes among law-making elites. Discourse analysis adds to this story by providing a methodology for analysing how communicative events transferred corporate law principles to Vietnamese recipients.
VI. DEVELOPING A CORPORATE LAW REGIME IN VIETNAM
Some commentators believe that, in addition to pursuing catch-up development, Party leaders in the late 1980s were struggling to control a vibrant entrepreneurial economy. In order to regain control they decided to prepare a company law (CL) that legally recognized private economic activity. The contests, negotiations, and compromises involved in the selection, adaptation, and enactment of the law resist classification as a fit or congruence between legal transfers and recipients. By focusing attention on regulatory conversations, discourse analysis enables a closer analysis of the interaction between le-gal transfers and the principal actors shaping corporate law.
This study is based on over ten years of research into legal change in Vietnam. Working with international agencies and domestic law firms, I was able to gain close access to officials, legal advisors, documents, and discussions.
A. (Re)introducing a Corporate Law Regime
The Politburo in 1988 instructed the Central Institute for Economic Management (CIEM—Viện Nghiên Cứu Quản lý Kinh Tế Trung Ương), a research organization attached to the State Planning Commission, to draft a law that regulated private commercial organizations. During this early stage of doi moi reforms, private trading was still unconstitutional—a situation that was not remedied until the new Constitution of 1992. In the meantime, Politburo Resolution 16 of 1988 paved the way for a company law by recognizing legal equality for all economic sectors, freedom for private enterprises to conduct business activities, and the right to own and bequeath “the means of production.” The Party’s instructions to CIEM nevertheless stressed the need to balance private business freedoms with discretionary controls to preserve “state economic management” (quản lý kinh tế nhà nước). As we shall see, drafters interpreted these instructions to mean that they should subordinate private corporate rights to the “state benefit” (lợi ích của nhà nước).
Corporate law based on the French Droit de société existed in the North before partition in 1954 and until reunification with the South in 1975. However, by the 1960s, the legal system in the North did not sanction a role for private commercial organizations and only permitted state owned enterprises (SOEs) and cooperatives. When drafters commenced work on the CL, the official discourse regarded companies as colonial and capitalist artifacts standing outside indigenous experience. There were few domestic laws or institutional practices to guide the drafters, who were compelled to search for inspiration beyond the socialist world.
The main difficulty facing members of the drafting committee was their lack of knowledge about Western commercial law. With the exception of Lưu Văn Đạt and Phan Huu Chi, French-trained lawyers, other drafters knew and cared little for market principles and corporate law. Their attitudes were conditioned by an interpretive tradition that preferred concessionary licensing to private commercial rights as well as the tacit assumption that private businesses required strict state management. For decades, a potent combination of neo-Confucian anti-mercantilism and socialist class theory had instilled state bureaucrats with antipathy toward the private sector. Surveys show that many bureaucrats considered private entrepreneurs incompetent and probably fraudulent and corrupt. Such views were inimical to the neo-liberal market principles and private rights underpinnings of Western corporate law.
The drafting committee initially considered borrowing corporate law from the former Republic of Vietnam (RV). However, the Party rejected this initiative on political grounds because the adoption of a law from the RV would confer too much legitimacy on the discredited “Sai Gon government.” Instead, the committee based the CL on French Law 66-537 on Commercial Companies 1966 (the “French Law”). With a mere 46 articles, the new Vietnamese CL was a skeletal facsimile of the 509 provisions in the French Law. Though brief, the CL contained most elements of modern corporate law, such as limited liability, corporate governance rules, and provisions establishing shareholding companies (công ty cổ phần or société anonyme) and limited liability companies (công ty trách nhiệm hữu hạn or société à Responsabilité Limitée). In short, the drafters imported the legal rules that enabled entrepreneurs in the Western world to create wealth from the “surplus value” of employees while protecting personal assets from business losses. But, as we shall see, the imported principles were subordinated to the discretionary powers of state officials.
The few changes made to the French legal template reflected the drafters’ Soviet legal training. For example, drafters varied the French law by giving limited liability companies with fewer than twelve members the right to appoint only one director to act on behalf of the company. In Soviet law there was no need for executive directors and boards of directors to represent SOEs, because supervising authorities, such as ministries and people’s committees, ran SOEs like administrative agencies. In another example, the drafters did not see the need for complex corporate governance rules, especially directors’ duties, because in the command economy supervising authorities used discretionary administrative penalties to discipline wayward SOE directors. In both cases, drafters reinterpreted Western corporate governance rules to reflect the prevailing understanding that state authorities were responsible for the internal management of companies.
Drafters were concerned that, left unchecked, the neo-liberal economic principles codified in the French corporate law would enable private companies to nurture a new capitalist class. They learned from Chinese legislative experiments conducted in Shenzhen and Shanghai during the 1980s that instilling economic management powers in state officials gave them discretion to control the exploitation and social harm caused by private companies. In order to promote state economic management over companies, drafters gave government officials broad licensing powers to limit the scale of private business activities and economic sectors in which they could operate.
Drafters imposed operational restrictions on companies by broadly interpreting the doctrine of ultra vires. They understood legal personality in a highly state-centered context as an institution created and limited by law. Without traditions of natural rights theory and individualism (chủ nghĩa cá nhân), drafters did not consider that corporate rights could be equated to a natural or human legal capacity to conduct businesses.
The legal capacity of companies to conduct business was determined by the “rights and obligations” set out in company licenses. Operational objectives were prescribed with considerable precision by licensing authorities. General powers to pursue authorized objectives appeared in the CL, but companies were not permitted to expand their business capacity by adopting a “shopping list” of associated and tangential objectives. Local authorities (people’s committees) used capitalization, education, and health permits to guide private capital proactively into state-sanctioned areas. Administrative and criminal penalties applied to company officials who strayed beyond the authorized parameters.
In summary, during the early stages of doi moi reforms, the rights-based ideas underpinning corporate law conflicted with the state management principles that animated official thinking. Drafters of the CL belonged to an interpretive community that privileged state management and ownership over market allocation and private capital accumulation. Few drafters possessed the linguistic and epistemological knowledge required to converse meaningfully with the French and UNDP legal advisors assisting the drafting project. Adding to the drafters’ isolation from global legal discourse, the international legal advisors were only in-country to discuss the draft law for short periods. This left them insufficient opportunity to persuade the drafters that entrepreneurs could be trusted to make sound commercial decisions and to behave in a socially responsible fashion.
However, it is unclear whether better communication would have significantly changed the outcome. Although Vietnamese authorities requested Western technical assistance, it is likely that drafters were under strict political instructions to control private rights. The final draft placed private corporations firmly under a concessionary licensing system that gave state officials broad discretionary powers to limit the scale of private business activities and economic sectors in which they could operate.
The CL commenced operation in 1990, but within five years concessionary regulation was already beginning to constrain domestic investment. In 1995, the Eighth Plenum of the Party Central Committee instructed CIEM to draft a new company law to implement three main reforms: legal equality, market reforms, and legal harmonization. Le Dang Doanh, the market-reform minded director of CIEM, established a new drafting committee in 1998.
B. Drafting the Enterprise Law 1999
Much had changed in the cognitive landscape since the CL was drafted in the late 1980s. The 1992 Constitution not only recognized private business; it also introduced the “law-based state” (nhà nước pháp quyền) ideas that provided the ideological space to roll back state economic management and proactive business licensing. International economic integration was also gaining momentum in Vietnam during this period, especially after the Communist Party agreed in 1996 to enter negotiations to join the WTO. Perhaps more importantly, Party leaders reached a consensus in 1997 about an action plan to improve the environment for private sector development and combat the economic downturn precipitated by the Asian Economic Crisis.
The Party’s drafting instructions to CIEM, which eventually resulted in the Enterprise Law 1999 (EL), reflected an in-creased willingness to engage with Western regulatory ideas. Nevertheless, differences of opinion emerged within the drafting committee about the ongoing role of state economic management in regulating private companies. Drafters representing ministries that directly regulated the economy, such as the Ministries of Transport and Industry, vigorously opposed any relaxation of the state economic management controls over market entry. Drafters from the Ministry of Transport, for example, argued that licensing provisions were necessary to pre-vent private transport companies from exploiting the working class. Ministry representatives also advanced the political argument that market liberalizations compromised Party leader-ship. CIEM drafters believed these notions were raised as a pretext to preserve discretionary (and frequently corrupt) powers over market entry.
CIEM drafters, together with like-minded officials in the Vietnam Chamber of Commerce and Industry (VCCI), counter-argued that deregulating licensing provisions in the CL would unleash domestic capital investment. Companies, they believed, should be able to operate in any economic sec-tor without being constrained by business licenses. Their proposal to abolish licensing marked a radical shift from socialist proactive market management to neo-liberal facilitative regulation.
With the assistance of the VCCI, CIEM officials compiled case studies to show the economic costs produced by administrative barriers to market access. Licenses and permits governing education, health, and capital requirements, which were designed to exclude unwanted investment, were criticized for failing to distinguish good investments from poor ones. CIEM officials used empirical evidence to show that business licenses increased the time and cost of incorporation and deterred potential investors.
1. The Role of Interpretive Communities in Law-making
Policy changes by the Party and state only partly account for the shift from socialist concessionary to neo-liberal economic thinking within CIEM. The political economy undoubtedly also influenced elite thought, but it does not explain why CIEM drafters considered neo-liberal deregulation a solution to the economic slowdown, while drafters from other ministries did not. Institutional self-interest also fails as an explanation. Some ministries with a direct stake in preserving state economic management, such as the Ministry of Trade, tentatively supported deregulatory reforms.
Discourse analysis provides a fuller explanation, because it offers reasons why some drafters were more cognitively receptive to neo-liberal arguments than other drafters. It points out that preference convergence of the kind required to change regulatory perspectives is most likely to occur when drafters discuss ideas from similar epistemological perspectives in un-mediated environments. Discussions between CIEM drafters, who advocated neo-liberal economic solutions, and drafters from conservative ministries, who favored concessionary arguments, were generally unproductive because the epistemological assumptions underpinning these positions provided little common ground for consensus and compromise. CIEM and VCCI officials, on the other hand, shared similar neo-liberal deregulatory positions that facilitated a close working relation-ship.
In contrast to the long-distance legal assistance given to the CL drafting committee, the main international agencies assisting the EL drafting committee localized their support by maintaining long-term project offices and personnel in Viet-nam. In another change, the international agencies used locally-based international and domestic consultants and foreign and domestic law firms to bridge the cognitive gap be-tween global laws and principles and local precepts and conditions. A decade earlier, these professional services were unavailable to the agencies supporting the draft CL.
Further, conditions attached to loans advanced to the government during the 1990s by the Asian Development Bank (ADB), the IMF, Japan (through the Miyazawa initiative), and the World Bank sought to deregulate market access for private businesses. However, it is unlikely that the loans were instrumental in changing government attitudes. As a locally-based foreign consultant involved in drafting the EL observed:
Most national observers felt that while there had been substantive dialogue between government and donors on key policy issues that had helped in improving and developing the socio-economic development agenda in Viet Nam, formal policy-based lending had not played a pivotal role in securing reforms.
It is more likely that the international agencies supporting the EL played the decisive role in convincing drafters to use neo-liberal solutions to resolve Vietnam’s economic problems. They inculcated neo-liberalism through sustained relation-ships that brought foreign advisors, consultants, and lawyers into a close working relationship with state officials. Further cementing these relationships, some members of the drafting committee also worked as consultants for the international agencies. In addition to the numerous official work-shops convened by CIEM and VCCI to discuss EL drafts, small informal meetings and telephone conversations took place be-tween advisors and drafters on a daily basis.
Rather than the drafters converting to the neo-liberal agenda en masse, small but influential cliques sympathetic to this thinking developed within CIEM and other drafting agencies such as the VCCI and Ministry of Trade. Over time, this group formed a loosely constituted neo-liberal–oriented interpretive community. The term “community” in this case does not signify a spatial location or a specific place where particular interpretive positions were followed, but rather refers to a network of abstract social relationships that have the potential to generate cooperation and shared responses to regulatory problems.
Vietnamese members of this community were mostly foreign-educated, proficient in English, and well-acquainted with globalized neo-liberal regulatory principles. Through frequent international study tours, training courses, and conferences, they developed links with a network of international legal reformers. This interaction expanded their worldviews from parochial and local to cosmopolitan, while access to foreign consultancies, travel, and education provided an incentive to use neo-liberal ideas to resolve domestic problems.
In working closely with foreign advisors and locally-based foreign consultants, some drafters were constantly exposed to particular narratives about the correct approach to regulatory problems. The uniform language, style, and argumentation promoted by international agencies were not just a matter of form, as they also embodied concepts and worldviews. Members communicated in mutually comprehensible legal and economic modes of thought that assisted in the rapid transfer of complex corporate law doctrines. Common social interests and professional ideas encouraged an enclave-like and self-referential approach to policy alternatives. This in turn generated a propensity for members to exclude or minimize critical legal, economic, and political perspectives. For example, CIEM drafters and international agencies vigorously resisted suggestions from some local academic commentators that the EL should apply simplified corporate governance rules to small-scale private companies.
CIEM officials adopted a set of preferences and epistemological assumptions that set them apart from most domestic entrepreneurs. The principles of neo-liberal deliberation not only privileged certain regulatory ideas, but also arguments expressed in ordered, structured, and dispassionate language. By favoring particular modes of discourse, drafters defined away the sentimental, figurative, and highly contextual arguments (discussed below) that domestic entrepreneurs raised to oppose certain corporate governance reforms.
The boundaries delineating the interpretive community were difficult to identify. Not only were its members reluctant to openly identify with foreign legal agendas, they also be-longed to Party, state, business, and family-based interpretive communities with competing principles and practices. In or-der to function within multiple interpretive environments, members were obliged to deploy neo-liberal ideas strategically. Rather than passively following the advice given by foreign ad-visors, CIEM drafters applied neo-liberal prescriptions tactically so as not to offend the hierarchies and policies in their host institutions. For example, CIEM drafters rejected foreign legal advice to give companies the legal rights of natural per-sons because so doing would have questioned Party objections to market-individualism. They also used heterogeneous narratives that adjusted neo-liberal prescriptions to suit the audience. Yet, over time, the perceived success of the EL increased the drafters’ prestige and influence, allowing neo-liberal ideas to infiltrate further into the organizational hierarchy.
CIEM drafters lacked the political power to prevent state economic management views from entering law-making discussions. They speculated that forces supporting this thinking, such as the Party Economic Commission and Ministry of Public Security, would have undermined reforms if their opinions were ignored. Unable to exclude contrary views, they encouraged consultation that exposed other drafters to neo-liberal deregulatory ideas. CIEM drafters welcomed the contributions of experts from many legal systems, not only to dispel the impression that they were captured by any particular inter-national agency but also to give themselves ample opportunities to find regulatory solutions that satisfied competing interests. Without ever directly challenging state economic management, which remains a core Party doctrine, they used empirical evidence to show that deregulation would stimulate economic development and industrialization, an overarching Party policy. CIEM drafters and their allies used a well-rehearsed neo-liberal deregulatory script, backed by local re-search, to defeat political, moral, and sentimental objections to market deregulation.
2. Non-State Regulatory Discourse
Most domestic entrepreneurs viewed the draft enterprise law from a different perspective than CIEM and VCCI officials. Although entrepreneurs generally supported market-entry deregulation, most opposed other facets of the neo-liberal regulatory agenda such as complex corporate governance rules, more statutory reporting, and robust minority share-holder rights. They worried that complex rights-based rules would disrupt the organizational structures and processes underpinning family-based management hierarchies. They were also concerned that minority shareholder rights would dis-courage employers from offering their employees shares and that more rigorous disclosure requirements would reveal sensitive business information to competitors.
VCCI invited some entrepreneurs to make a case against business licensing, but discouraged them from expressing concerns about the internal management rules to the drafting committee. A few entrepreneurs later revealed that VCCI staff tightly managed these exchanges with the drafting committee. The meeting agendas gave entrepreneurs few opportunities to discuss internal management rules in the prolonged and unmediated exchanges that discourse analysis suggests are necessary to convey nuanced understandings. VCCI officials also vetted written comments prepared by entrepreneurs. As a consequence, entrepreneurs’ views about imported corporate principles were selectively represented to the drafting committee.
Interviews with Vietnamese business associations strongly suggest that domestic entrepreneurs considered the complicated internal management provisions in the draft law alien and unsuited to the familial and relational norms and practices that regulated most companies. Empirical studies about Vietnamese business structures also support this argument. As McMillan and Woodruff demonstrated, Vietnamese entrepreneurs rely on community norms, trade associations, and market intermediaries to secure business organizations and commercial transactions. More recently, the author studied sixty enterprises operating in five industries in North-ern Vietnam. The findings from this study confirm that relational structures have endured socialist and, more recently, market forces and continue to order private business organizations. Similar discrepancies between imported internal management rules and domestic business organization have been observed elsewhere in East Asia.
The entrepreneurs I interviewed used proverbs like “family first, others second” (gia đình là trên hết) to invoke a social ordering in which close family connections formed the bonds generating dependable and trustworthy management structures. When external skills were required, managers turned first to family and then friends from the same home village, or to those with longstanding personal ties developed in the workplace, universities, or military units. In each case, at-tempts were made to find sentimental attachments that replicated the loyalty (trung thành), “sentiment towards others” (tình cảm), and trust (tin) binding family members.
Management practices varied among the sectors surveyed. For example, wood-processing firms most closely resembled family hierarchies, while companies in the computer sales and service sector more closely resembled the Western professional corporate ideal. Respondents explained this difference in terms of labor specialization. There are few skilled workers in the information technology sector, and company owners are compelled to recruit non-family members to fill management positions. But, even in this sector, respondents said that they were training family members to replace non-family managers. They expressed little faith in abstract legal distinctions be-tween management and ownership to protect their assets from non-family managers.
Owners strove to develop a family-like atmosphere within their companies by celebrating birthdays and other significant occasions such as weddings and funerals. With few exceptions, staff members interviewed believed that sentiment, as much as profit, bound their firms together. They repeated similar narratives about their places of employment that stressed a com-mon history working together against unconscionable market competition, such as ruthless, irrational, and fraudulent competitors. Storylines emphasized the need for self-sacrifice (for example, wage restraint in tough economic times) and collaboration with the owners. They attributed their firm’s success to “good heart” (tâm), compassion (thông cảm), and sentiment among the owners and staff.
In these self-regulating communities, codified rules stipulating precise rights and duties were considered unnecessary because the staff knew and trusted each other to follow common ethical values. They preferred personal and tacit interaction, and they worried that professional codified rules might generate distrust and undermine the group’s sentimental foundations.
Although most owners interviewed had read about the Enterprise Law and were familiar with its internal management principles, few had detailed knowledge about the contents of their own company charters and even fewer sought legal advice to understand their legal obligations. Not only small companies were indifferent to internal management rules. Owners of companies with over 200 employees, who might have benefited most from codified rules, preferred the tacit understandings brokered by personal relationships. Only large textile companies with thousands of employees had established the legal bureaucracies needed to administer the internal management rules mandated by the Enterprise Law and company charters. But even within these companies, respondents intimated that the rules were promulgated at the insistence of foreign buyers to satisfy the labor, production, and management standards expected by Western purchasers.
Although my study found little current demand for codified internal management rules, the possibility of such demand arising cannot be ruled out. In order to grow, some company owners will eventually need to devolve significant management powers to non-family members and, as a consequence, secure legal protection for their assets and intellectual property rights. For the present, however, most domestic entrepreneurs seem content to use moral and sentimental dis-course to organize their companies. The rights-based categories underlying much of the Enterprise Law 1999 make little conceptual sense to owners and staff who construct their business organizations from familial, ethical, and sentimental building blocks.
C. Unified Enterprise Law 2005
In 2004, the Party once again instructed CIEM to draft a new company law. By this time, solid political support for international economic integration, coupled with pressure to comply with WTO conditions, had muted, though not totally silenced, opposition to neo-liberal deregulation. Public discourse had also changed since the EL was drafted. The press generally promoted the government line that market-entry deregulation had dramatically increased private investment and economic growth. On another front, press campaigns against bureaucratic corruption increased public support for deregulation as a means of reducing rent-seeking.
As with the EL reforms, a neo-liberal–oriented interpretive community including key officials in CIEM and other like-minded state bodies formed around the international agencies supporting the Unified Enterprise Law (UEL). This time, however, CIEM officials encountered less opposition to neo-liberal deregulatory ideas from other drafting agencies. The UEL advanced the deregulatory process begun by the CL and the EL by introducing measures to prevent ministries, and especially local governments, from introducing new business li-censes to re-regulate market-entry. It also removed distinctions between domestic and foreign companies—a reform that CIEM drafters were prevented from including in the EL.
D. Local Implementation of the Enterprise Laws
Although neo-liberal deregulation has gained the upper hand at the central level, it has not swept aside discretionary practices in local-level decision-making. Discourse analysis reveals a much more complex interaction between global and local ideas. As CIEM drafters discovered when the EL became operational, implementing deregulation was not simply a function of moving from a globalized to a domestic regulatory script. Ample opportunities existed for government regulators to renegotiate globalization on their home turf.
Since the neo-liberal deregulatory ideas underpinning the reforms seldom traveled beyond central-level interpretive com-munities, local officials steeped in a tradition of state economic management creatively sought opportunities to re-regulate corporations. Even the terminology officials used to de-scribe the regulatory processes was infused with contextual subjectivity. A popular term for regulation literally means “believe in oneself” (niềm tin nội tâm). However, the unfettered discretion implied by this idiom was mediated by local norms which insisted that decisions be made with “good heart,” com-passion, or sentiment toward others. In short, neo-liberal notions of legal rights and deregulation were reconceptualized by local-level officials struggling to remain relevant in a largely self-regulating private economy.
My study shows that businesses adopted various responses to the implementation of the UEL. For example, businesses in the construction industry formed close and frequently corrupt working relationships with state officials. More typically, how-ever, businesses formed regulatory networks that established common organizational and trading norms that now coexist with, and sometimes supplant, the UEL.
Take, for example, the networks established by traders in the copper wire and car battery industries in Northern Vietnam. Because network members lived significant parts of their lives together, they influenced each other to act for collective interests. Although they sometimes pursued their own economic objectives, in general they worked towards common goals. In order to explain why they came together, members repeated particular storylines that stressed the need to form a network to protect the group against outsiders, including local-level state officials. The storylines reflected an eclectic set of norms primarily based on traditional mutual assistance and sentimental practices, but in some cases also borrowed from management practices embedded in International Standards Organization protocols and international contracts. Norms originating from the UEL and company charters rarely sur-faced in these narratives.
Over time, particular storylines about appropriate forms of business organization and transactional behavior acquired the authority to order the traders’ cognitive understandings. The storylines created a set of epistemological assumptions that guided interactions among the traders and with outsiders such as state officials and other businesses. Eventually, the trading network began to function like an interpretative com-munity.
The study showed that although business networks rarely engaged with global laws and principles, they were compelled to deal with local officials on a regular basis. Network members used several strategies to moderate their interaction with local officials. The most important tactic was to cultivate “relationship friendships” (quan hệ) with state officials. Long-term stable relationships were much preferred to short-term bribes (đút lót). Businesses encouraged feelings of reciprocity and “mutual obligations” by infusing relationships with sentiment (tình cảm). Personal networks based on family and friends were used to provide “good introductions” (giới thiệu tốt) and cement relationships with state officials. Officials were then invited to karaoke parlors and plied with goodwill payments (khoản thiện chí) and gifts on special occasions such as weddings, birthdays, and Lunar New Year (Tết). The main objective of these exchanges was to supplement or replace inflexible legal obligations with highly mutable sentimental reciprocal obligations.
Another common strategy was to co-opt local officials into business networks. This practice took many forms but generally involved paying a percentage of profits to officials and bringing relatives of state officials into business networks. The latter tactic exposed officials to the storylines that bound the networks together. Officials were expected to bend rules to support family, friends, and local businesses. A morality of good neighborliness or “sentiment among neighbors” (tình cảm láng giềng) encouraged officials to balance community interests against legal interests. In this local interpretive community, officials and businesses assessed correct official behavior in terms of being “right and compassionate” (có lý có tình)— with sentimental obligations thus augmenting and sometimes displacing legal obligations.
Officials syncretically selected moral, sentimental, and legal sources to find contextually relevant solutions to specific local problems. Exogenous normative sources such as central laws were not considered absolute, universal, or immutable, but rather as alternate sources of guidance. Local businesses expected officials to personalize decisions to overcome rigidities in central laws, provide privileged information, enforce debts, and selectively enforce administrative and criminal sanctions. In the process, officials protected private property and profits that were accumulated in politically and socially responsible ways—a practice that informed localized network standards. In short, businesses used relationships with officials to back business networks with state power.
To summarize, drafters at the central level became over time more receptive to the neo-liberal deregulatory agenda. The preference convergence required to change regulatory beliefs occurred when drafters discussed the EL with international agencies and lawyers and domestic consultants in a mutually comprehensible language. The concentration of inter-national initiatives within Vietnam played a critical role in forming an interpretive community that shaped and sustained these regulatory conversations. Vietnamese members of the interpretive community played a strategic role in transposing neo-liberal ideas into domestic idioms and systems.
Discourse analysis also reveals differences between state-centered and truly local regulatory discourse. Local-level officials understood corporate reforms from a highly contextual perspective. Statutory rights predicated on binary legal/non-legal cleavages did not smoothly transpose into a local self-regulatory discourse based on moral principles and sentiment. Since recipients in Vietnam belong to many interpretive com-munities, new regulatory principles such as neo-liberalism must negotiate and accommodate many different types of pre-existing regulation. Above all else, this analysis shows that le-gal transfers behave like catalysts, stimulating new regulatory approaches and novel adaptations of existing systems.
Although this case study only considered one type of legal transfer into Vietnam, it is sufficiently representative to allow us to infer some general propositions:
- Recipients negotiate and contest legal transfers.
- Effective communication of legal transfers requires unmediated exchanges conducted in a mutually comprehensible mode of thought that is receptive to new ideas.
- Interpretive communities play a key role in the effective communication and conceptual reconfiguration of legal transfers.
- Members of interpretive communities use legal transfers strategically.
- Power relationships order the authority of different regulatory conversations.