Developing Fiduciary Culture in Vietnam

Abstract

This Article examines Vietnam’s efforts during the past two and a half decades to build up its legal infrastructure during its transition from a centrally planned to a market economy. In particular, this Article will focus on the development of legal and regulatory infrastructure to support the development of the corporate sector and fiduciary culture in Vietnam. Following the collapse of the Soviet Bloc and Soviet-styled central planning beginning in the late 1980s, transition countries like Vietnam faced immediate and critical challenges to transition to new market oriented models of organization. Currently, this transition from central planning to markets is a decades-long project that remains incomplete. Central to all these transition efforts has been a near-wholesale reworking of the legal structures undergirding economic and social relationships.

The shift from a restrictive regulatory environment to a more open, enabling one was, in part, hoped to create a fiduciary culture amongst managers and shareholders: a culture in which typical fiduciary norms of care and loyalty are respected and enforced by shareholders. However, now almost two decades later, transition of the corporate sector to a fiduciary culture remains a work in progress. Although formal legal structures to support the creation of a market-oriented private sector are now in place, such structures remain insufficient for norm creation, and the development of a robust fiduciary culture remains far afield.

A principal source of deficiencies in corporate governance in Vietnam lies with still nascent acceptance of fiduciary norms as a vital component of the corporate law. Rather than rely on a bottom-up development of fiduciary norms by way of shareholder enforcement, there is evidence that regulators remain committed to a public enforcement approach to corporate governance. Whether a top-down public enforcement approach to norm creation will be more efficacious than developing a shareholder-centric fiduciary culture remains an open question. Nevertheless, there are a number of other informal transmission vectors present in Vietnam, beyond the courts and formal legal structures, which make the development of a self-enforcing fiduciary culture possible, though not guaranteed.