Consultant report submitted to DANIDA (09/2007)
Institutional and Regulatory Context of Natural
Resource Management in Vietnam
By MA. Dinh Duc Truong
Faculty of Environmental and Natural Resource Economics
National Economics University (NEU)
207, Giai Phong Road
Hanoi, Vietnam
Email: dinhductruong@yahoo.com
September, 2007
1
CONTENTS
I. INTRODUCTION
4
II. LAND GOVERNANCE IN VIETNAM
4
1. Overview
4
2. Land institutional arrangement
5
3. Regulatory framework and land use right in Vietnam
6
4. Assessment of land reform process in Vietnam
9
III. WATER GOVERNANCE IN VIETNAM
12
1. Overview on water resource in Vietnam
12
2. Institution arrangement for water resource management in Vietnam
12
3. Overview of the process of formation and development of
14
Vietnam’s legal system on water resource protection
4. Assessment of Vietnam’s legislation on WRP
IV. MINERAL RESOURCE GOVERNANCE IN VIETNAM
15
20
1. Overview on mineral resources in Vietnam
20
2. Institution arrangement for mineral resource management in
20
Vietnam
3. Government regulatory and policy
21
4. Assessment of mineral regulatory implementation in Vietnam
23
V. CONCLUSION
25
REFERENCES
26
2
Acronyms
DFID
Department of International Development
DGMV
Departmentof Geology and Minerals of Vietnam
DONRE
Department of Natural Resource and Environment
GDLA
General Department of Land Administration
GDHM
General Department of Hydrology and Meteorology
LEP
Law on Environment Protection
LM
Law on Minerals
LL
Land Law
LWR
Law on Water Resources
NWRC
The National Water Resources Council
LUC
Land use certificate
LUR
Land use right
MARD
Ministry of Agriculture and Rural Development
MOC
Ministry of Construction
MONRE
Ministry of Natural Resources and Environment
MOI
Ministry of Industry
MOH
Ministry of Health
MOF
Ministry of Finance
MOT
Ministry of Transportation
MPI
Ministry of Planning and Investment
UNDP
United Nation Development Programme
WHO
World Health Organization
WRP
Water Resource Protection
3
I. INTRODUCTION
In 1986, the Government of Vietnam embarked on a renovation process named "Doi
moi" to guide the country from a centrally-planned toward a market economy. Vietnam
has since then opened up its economy and has entered the process of trade liberalization.
While has been successful in generating strong economic growth, it is necessary to take
measures to protect and use the country’s natural resources in a sustainable and efficient
way. After decades of wars and being under a central economy which considers all
natural resources as common property, the natural resources in Vietnam had depleted and
degraded quickly (Chung 2002). However, with the ongoing reform process, together
with globalization, Vietnam has a unique opportunity to learn from the experiences of
other countries for the development and implementation of creative regulatory
frameworks and policies for natural resource management (Son 2005).
For some recent years, Vietnam has implemented a number of policies and reforms to
comply with its commitment on sustainable development that emphasizes the importance
of sustainable use of natural resource. Several Government strategic documents about
sustainable development have been promulgated such as: The National Strategy on
Economic Growth, Hunger Alleviation and Poverty Reduction (2002), National
Sustainable Development Strategy (Agenda 21) (2004), National Strategy on
Environmental Protection to 2020 (2003), Law on Environmental Protection and the like.
Beside changes in regulatory system, there have also been significant reforms of
institutional structures to deal with natural resource issues. Accordingly, the roles and
responsibilities for implementing management policies in Vietnam have been more
decentralized than those of two decades ago (Nhu et.al 2006).
This paper aims at examining the institutional and regulatory aspects of natural resource
management in Vietnam. Focusing on land, water and mineral, it addresses the question
that how these resources are managed and how the policy-making process regarding
management has been made. For each resource, the paper will first highlight the
institutional context of its management, then to provide an overview on legal framework
and policies which are presently in active for managing these resources. Finally,
achievements and shortcomings when implementing these framework and policy are also
identified and analyzed.
II. LAND GOVERNANCE IN VIETNAM
1. Overview
According to Vietnam Constitution, land is the property of the entire people, which is
allocated or leased by the State to organizations, households or individuals for long-term
use. Depending on their status, land users are fully or partly granted the rights of land
exchange, transfer, inheritance, mortgage, lease and investment into joint-venture (Vo
2002). The land policies in Vietnam have been more centrally legalized in more than two
decades from early 1980s. Beginning with the 1980 Constitution, followed by the 1988
Land Law, then the 1993 Land Law and most recently the 2003 Land Law (Nhu 2006).
The last one has perfected further the land management mechanism in Vietnam on the
4
basis of supplementation and the amendment of a number of articles of the 1993 Land
Law. According to the new Land Law in 2003, land has initially been considered as a
commodity that will be openly traded in market. However, it is a special commodity and
special stipulations will be worked out for this market. Nevertheless, it is an especially
important step forward to help Vietnam develop a rational market mechanism, spurring a
healthy socio-economic development, especially in rural areas, and particularly in the
mountainous regions that abound in land potential, but the inhabitants are the poorest
(Ausaid 2001).
2. Land institutional arrangements
In 1986, the State of Vietnam decided to innovate its economic system under the market
economy model with state management. Since then, land administration has been
regarded significant to secure political stability, social justice and economic development.
In general, the land administration system of Vietnam is a nationwide four-level system
including the MONRE at the central level, DONRE at provincial level belonging to
provincial People Committee (provincial government), Division of Natural Resources
and Environment at district level belonging to District People Committee and one/two
Land Officers in each commune (MONRE 2007).
In early 1994 Vietnam Government decided to establish the General Department of Land
Administration (GDLA) by merging and reorganizing two state bodies; General
Department of Land Management and National Department of Surveying and Mapping
(Vo 2002). In 2002, the Ministry of Natural Resources and Environment (MONRE) was
established by merging the General Department of Land Administration, General
Department of Meteorology and Hydrology, National Environmental Agency (belonging
to MOSTE), General Department of Geology and Minerals (belonging to MOI) and
Department of Water Resource Management (belonging to MARD).
Within MONRE, Department of Land and Department of Land Registration and Statistics
have main functions to implement state management regarding land in Vietnam.
Specifically, Department of Land is responsible for state management of land policy and
regulatory while Department of Land Registration and Statistics is in charge of managing
land survey, assessment, valuation, classification; land use planning, land allocation,
lease and claimation; land inspection and mapping.
At other levels, land administration bodies are responsible for the following tasks
regarding land management:




Implementating of cadastral system including land register, cadastral, mapping,
cadastral documentation, land tenure certificate issuance, and land record
system update;
Carrying out land investigation and inventory for land classification, land
assessment, and land valuation;
Undertaking land statistics and current land use mapping;
Setting long term and annual land use planning;
5







Implementing land inspection;
Solving land disputes;
Making reference geodetic system definition, coordinates and leveling control
network construction;
Managing aerial-satellite imagery
Doing hydrographic survey;
Setting topographic map and base map systems for inland and seabed;
Managing geo-database and Land-database
Figure 1: Institutional Structure of land management in Vietnam
National level
government
MONRE
Department of Land
Department of Land
Registration and Statistics
Provincial level
Provincial People
Committee
District level
District People
Committee
Department of Natural
Resource and
Environment
Division of Natural
Resource and
Environment
Commune level
Commune People
Committee
government
Office of Natural
Resource and
Environment
Management line
Technical guidline
Data reported line
Source: Trung, T.N (2005)
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3. Regulatory framework and land use right in Vietnam
Legal framework of land management
Soon after the Democratic Republic of Vietnam (former name of the Socialist Republic
of Vietnam) was founded, Vietnam suffered from wars for 30 years between 1945 and
1975. Land administration was ignored in the following 1975 - 1986 period because of
the centrally planned economy model (Que 1999)l. In the first half of 80’s of the last
century, Vietnam’s economy had very low productivity in agriculture, which caused lack
of food for social needs. The economic solution to this problem was based on the
allocation of agriculture land to individuals and households.
In 1986, the State of Vietnam decided to innovate its economic system under the market
economy model managed by the State. Since then, land administration has been regarded
significant to secure political stability, social justice and economic development. The first
Land Law of Vietnam was approved by the National Assembly in 1988. After having
been implemented for 5 years, some articles proved to be not encouraging enough for
development of the market economy (Chung 2001). A revised land law was therefore
promulgated and approved by the National Assembly in 1993, called the 1993 Land Law.
Then the 1993 Land Law was replaced by the 1998 Land Law and most recently the 2003
Land Law. The last one has perfected further the land management mechanism in
Vietnam on the basis of supplementation and the amendment of a number of articles of
the 1993 Land Law. According to this new Land Law in 2003, land use right has initially
been considered as a commodity that will be openly traded in market (Ausaid 2001).
Implementing the Decree on the Land Law, Decree 181/2004/ND-CP ("Decree 181") was
issued by the Government on 29 October 2004. Decree 181 contains 186 articles and
covers a wide range of land issues. It repeals nine Decrees and partly repeals certain other
legal instruments. Decree 181, which had been expected to be issued prior to 1 July 2004
(which was the effective date of the Land Law), deals with the planning of land use,
allocation of land, lease of land, change of purposes of using land, land resumption and
land requisition, land use right certificates, the real estate market, rights and obligations
of land users, procedures for exchanges, transfers, leases, mortgages and inheritances of
land and regulations on the settlement of claims and disputes in respect to land. The
Decree came into effect on 16 November 2004 (Nhu 2006). Some impotantlly admended
points in this Decree is summarized as follow:
Real Estate Market
The Decree recognizes the ‘real estate market’ and describes land as a ‘special
commodity’. Permitted activities in the real estate market include conversion,
assignment, lease, sub-lease, mortgage, inheritance of or gifting land use rights, provision
of guarantees secured by land use rights, contribution of capital by way of land use rights
and investment in construction and development of residential property. However, not all
land users are entitled to carry out all these activities. The activities which are allowed
depend on the land users legal status, whether the land is allocated or leased by the State
7
and the land users residual financial obligations toward the State in respect to that land (if
any).
Land Use Right Certificates
A land use right certificate (LURC) is the form of registration of "ownership" of land
conferring various rights on the owner. However, most conferred rights fall short of the
freehold title to land recognized in many other jurisdictions. LURCs are to be issued in a
standard form for all types of land. Decree 181 also deals with the issuance of LURCs in
specific circumstances including to land users using land for construction of offices of
administrative agencies and to land users using land for construction of housing
developments and apartment buildings
Overseas Vietnamese and Foreigners
Under current land laws, with the exception of overseas Vietnamese who can be allocated
with land from the State, foreign organizations and individuals (including foreign
invested enterprises) are permitted to lease land from the State only, except where the
land is located in an industrial zone or in circumstances where the Vietnamese partner to
a joint venture contributes land as capital to the joint venture company. Decree 181 has
consolidated a number of legal instruments dealing with the use of land by foreign
invested enterprises as well as providing new provisions.
Procedures for Allocation or Lease of Land
After obtaining the agreement of the authority on the location of the project, the foreign
investor must submit an application file for allocation or lease of land to the Department
of Natural Resources and Environment ("DNRE"). The DNRE then will examine the
application and submit documents to the provincial people’s committee for issuance of a
land use right certificate. The timeframe for issuance of a land use right certificate is
stated to be 20 working days from the date of receipt of appropriate documents from the
investors
Rights and Obligations of Joint Ventures in Using Land
Joint ventures between foreign organizations, foreign individuals and overseas
Vietnamese with a domestic company in respect of which the Vietnamese partner
contributes land use rights to the joint venture shall not be required to convert the land
title to land lease in some circumstances. In such cases, joint venture companies will not
be required to convert the contributed land to a "leasehold title" and will have rights and
obligations similar to those of the Vietnamese company which contributed the value of
land use rights to the joint venture. These regulations also apply to joint ventures to
which an overseas Vietnamese who has been allocated land by the State contributes the
land use rights value and has paid the land use fees to the State. In particular, such joint
ventures are entitled to assign the land use rights and infrastructure attached to the land,
to lease the land use rights and infrastructure attached to the land or to contribute the land
8
use rights to form a joint venture with Vietnamese organizations, overseas Vietnamese,
foreign organizations or individuals.
Besides these two main legal documents, other important regulations promulgated for
land management in Vietnam include:

Prime Minister Decree No. 64/1993 on the enactment of regulations on the
allocation of land to households and individuals for stable and long term use for
the purpose of agricultural production

Prime Minister Decree No. 02/1994 on the enactment of regulations on the
allocation of forestry land to organizations, households and individuals for stable
and long term use for forestry purposes

Prime Minister Decree No. 61/1994 on buying, selling and trading in residential
houses

Government Resolution No. 01/CP 1995 on the allocation and contracting of land
to state enterprises for agriculture, forestry and aquaculture production;

Government Decree No. 163/1999/ND-CP concerning the allocation and lease of
forest land to organizations, households and individuals for long-term forestry
purposes;

Prime Minister Decision No. 178/2001/QD-TTg on the rights and obligations of
households/individuals who have been allocated forest land for benefit sharing.

MONRE Circular 24/2004/QD-BTNMT on the certificate of land use rights.

Prime Minister Decree No. 188/2004/ND-CP on the methods to valuing land
prices and price frame for land categories

MOF Circular No. 114/2004/TT- BTC provide guilines for the implementation of
the Prime Minister Decree No. 188/2004/ND-CP on the methods to valuing land
prices and price frame for land categories

Prime Minister Decree No. 198/2004/ND-CP on the collection of land use tax

MOF Circular No. 117/2004/TT- BTC provide guilines for the implementation of
the Prime Minister Decree No. 198/2004/ND-CP on the collection of land use tax

Prime Minister Decree No. 197/2004/ND-CP on the compensation and
resettlement support in case of State land reclaimation

MOF Circular No. 116/2004/TT- BTC provide guilines for the implementation of
the Prime Minister Decree No. 197/2004/ND-CP on the compensation and
resettlement support in case of State land reclaimation
9

Prime Minister Decree No. 17/2006/ND-CP on changes and admendments of
some articles in Decrees guiding the implemention of Land Law

MONRE Decision No. 08/2006/QD-BTNMT about regulations on land use
certificate

Prime Minister Decree No. 84/2007/ND-CP on admendments of the issue of land
use certificate, land reclaimation, the implementation of land use right, procedures
for land compenstation, resettlement and denunciation

MONRE Circular No. 06/2007/BTNMT on the guidelines of Prime Minister
Decree No. 84/2007/ND-CP on admendments of the issue of land use certificate,
land reclaimation, the implementation of land use right, procedures for land
compenstation, resettlement and denunciation

Prime Minister Decree No. 123/2007/ND-CP on complementing some articles of
Prime Minister Decree No. 188/2004/ND-CP on the methods to valuing land
prices and price frame for land categories
Land use right development
The 1980 Constitution vested all rights in land to the state. This principle appeared in the
1988 Land Law, but was changed to people’s ownership and state management in the
1992 Constitution and 1993 Land Law. Since the central and local governments exercise
the right of land ownership on behalf of the people, they also have rights to possess, use
and dispose the land. The 1993 Land Law (LL) set out six main principles governing
land: (1) land belongs to the entire people; (2) is uniformly administered by the state; (3)
which promotes effective and economical usage. Further, (4) the state protects
agricultural land; (5) encourages investment in land; and (6) stipulates the value of land
(LL 1993).
While retaining ultimate control over legislation and policy, the central state has
devolved land management to People’s Committees. City level People’s Committees, for
example, possess broad discretionary powers to allot land use rights in urban areas. Local
authorities are also responsible for promulgating zoning and land use regulations,
registration and settling certain types of land use disputes. As a concession to the
emerging mixed market economy, the Land Law recognized various private interests in
land, which can be transferred, leased and encumbered, without disturbing the underlying
principle of state ownership of land. These rights were extended and clarified by the 1998
amendment to the Land Law. Land use rights (quyen su dung dat) convey extensive
occupation, disposal (vat quyen) and encumbrance rights. Private ownership of
immovable other than land, such as building and trees is permitted under the Civil Code
(articles 172.205). Maintaining the socialist distinction between income and non-income
producing land, authorities allocate land for urban residential use on a .stable long-term
basis. Land used for income production, is in contrast, allotted or leased for short periods
determined by business production plans (Ausaid 2001).
10
There are three methods of gaining access to land namely, allotments, leasing and
transfers.
Allotment
City People’s Committees allot land in urban areas (LL, article 23). This discretionary
power is circumscribed by urban planning designs contained in city master plans,
business feasibility plans approved by state authorities and socioeconomic policies. Since
most urban land is currently being used, allotments only take place where large parcels of
state land are subdivided, compulsorily acquired land is reallotted and unofficial land is
converted to land use rights (Ausaid 2001).
Allotted and leased land use rights
Allotted land. (giao dat) is the highest form of land use rights. It is only available for
non-commercial organizations (unusually political organizations), family households and
individuals. Though falling short of full ownership, land allotted for residential use
conveys rights in perpetuity to transfer, bequeath, lease, and mortgage. After paying an
initial land allocation fee, no further state charges apply. In practice, if not legal theory,
allotted land differs little from Western freehold estates. Land is also allotted to
commercial organizations for infrastructure projects; however, the full range of rights is
only granted where fees are prepaid (LL 1998, article 78c).
Commercial organizations (including foreign investors) and households using land for
commercial purposes, other than for infrastructure development, are granted leases (LL
1998, article 78d). The rights conveyed by leases depend on the quantum of rent
repayment. For example, commercial organizations paying rent annually are granted
rights to mortgage and transfer the unexpired term of leaseholds. Where the entire rental
is prepaid, additional rights to sublease or contribute the leasehold as capital for a foreign
joint venture are granted. The duration of leases is determined according to business
plans that rarely extend beyond 20 years.
Land transfers
Private access to urban residential land in both official and unofficial land markets is
primarily gained through land transfers. Since land is owned by the people legislation
refers to land use rights transfers. (chuyen nhuong), rather than buying and selling.
Although, the Civil Code (article 694) requires the transfer of land use rights to be based
on price formula set by the Ministry of Finance. There are two methods of acquiring land
use right certificates: one, land use right certificates are issued when People Committees
allot and lease urban land; two, in some circumstances those occupying untitled
residential land can apply for the allotment of land use rights (Ausaid 2001).
4. Assessment of land reform process in Vietnam
4.1. Achievements
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Land policies that distribute land to individuals and assign LUR (i.e. some degree of
private property rights) allow the development of land markets that can bring about an
efficient allocation of resources, given certain conditions. Because well-defined and
enforceable private property rights are one of these necessary conditions, efficient
allocation of resources depends on the nature of prevailing property rights. Under the
Vietnamese Constitution (2003), land is the property of the people as a whole and the
State administers it on their behalf. The new 2003 Land Law states that the government is
the ‘representative of the people’s ownership’. Since land is ‘owned’ by the people as a
whole, it is not possible for individuals (or corporations) to own land. However,
individuals, households and organizations can hold and transfer rights to use land. This
also increases the motivation to use land in an efficient way by those with land use right
(Hung 2006) .
In Vietnam, following the land allocation according to Decree 64/1993 and Decree
02/1993, agricultural land use titles were issued to farm households. By 1998 land use
certificates (LUCs) had been issued to 71% of farm households, and by the end of 2000
this number was more than 90% (Do and Iyer 2003). For forestry land in upland and
mountainous areas, where many traditional and cultural issues complicated land
allocation, the certification process was slower (Ministry of Agriculture and Rural
Development 2002, Vy 2002). The process of issuing land use certificates is still
continuing. In 1998 two additional LUR were assigned to farmers, the right to re-lease
land and the right to use the value of LUR as joint venture capital for investment. In
2003 further revisions to the 1993 Land Law resulted in farmers being assigned the right
to gift their land to relatives, friends or others. The revisions also set out the
circumstances for allowing land related changes and procedures for registration of
changes.
Land policy changes in Vietnam since 1981 are recognized as contributing significantly
to production increases and development in the agricultural and rural sectors. Land
allocation and its subsequent step – land registration partly supports Vietnam to have
property reducing from 58% of population living under the poverty line in the year 1993
to 29% year 2002; GDP from VND132,000 billion in year the 1990 to VND 362,000
billion year 2004 and GDP grew up by about 7% per year, (GSO, 2000 - 2005). Total
agricultural output increased by 6.7% annually during the period 1994–99 and about
4.6% during the period 2000–03 (Hung 2006). Food security at the national level is no
longer an issue and poverty has continuously decreased. Forest covered area also rapidly
increased from 27.2 percent in 1993 to 37 percent in 2004 (Vietnam Government 2005).
4.2. Shortcomings
Firstly, problems with the grant of land use certificates (titling)
Wars, regime change and weak local administration have induced land-titling chaos in
Viet Nam urban centers. By 1999 only eleven percent of urban households in Hanoi had
received land use certificates. Low conversion (from untitled to titled land use rights) was
attributed by authorities to high land allotment fees (up to 20 per cent of the lands value).
However, substantial fee reductions introduced by the 1998 Land Law amendments have
12
only partially resolved this problem. Institutional attitudes to land-titling the central state
wants land-titling to extend the principle of land management over all urban areas. It is
currently difficult to control illegal construction and land transfers, because
approximately 90 per cent of land users are unregistered. Just as importantly, the state
sees land tax as a dependable (difficult to avoid) revenue source. (Ausaid 2001)
Secondly, problem of condominium ownership
Under the existing system there is no capacity to issue land use rights for airspace. a
prerequisite for titling condominiums and subdivided villas. This is especially important
for occupants of villas taken over, and redistributed to the needy by the state after
independence. Decree No. 61 CP 1994 outlines the Government policy of transferring
ownership of state-owned apartments to civil servants. Moreover, by the year 2020 the
Government plans to construct 20 million square meters of residential housing. In each
case the development of strata-title law and model common property protocols is
required.
Thirdly, issues of unequal access to land use rights
The 1998 amendments to the Law on Land 1993 entrenched the unequal distribution of
land use rights (quyen su dung dat). The classification of land use according to the legal
status of occupants produces some market anomalies. For example, it is comparatively
easy for entities registered under Decree 2 on Household Business 2000 (that is
household businesses with a low market capitalization) to mortgage hotels constructed on
residential (allotted) land use rights. In contrast, hotels owned by companies, but
constructed on short-term leasehold land are extremely difficult to mortgage. This means
that where the hotel industry is unprofitable, Decree 2 entities can unofficially use
buildings for any business permitted under applicable zoning provisions. Companies,
however, must strictly use leasehold land for licenced purposes, otherwise their land use
rights automatically revert to the state (Nhu 2006).
Fourthly, land transfers
The state manages land by controlling the transfer of land use rights. This power has been
devolved to peoples committees at the provincial and district levels. Provided transfer
taxes are paid, transfer approval for urban residential land transfers is routinely given.
Since commercial land use is treated as a special means of production, transfer approval
is based on state planning objectives. Official discretion is evidently frequently exercised
to frustrate the distribution of land use rights in bankruptcy. Unauthorized land transfers,
including subleasing, are punished by administrative sanctions.
Fifthly, land reclaimation and compensation
Although Decree 188/2004/ND-CP and Circular 114/2004/BTC stipulate a clear price
framework for land categories which is the basis for land reclaimation, the
implementation of these legal documents is of much challenge. First, the market prices of
land for all types of land are much higher than being regulated by the state. As a results,
people with LURs do not agree with the compesation prices in most of the cases. More
13
particularly, the state normally buy LURs with cheap prices and sell them for invesment
projects with higher ones. This situation, in some cases, results in severe conflicts
between local people and state reclaimation agencies and hence lengthening the duration
of projects. Secondly, the state’s delay in paying compensation and providing
resettlements is also a challenge for land reclaimation.
II. WATER GOVERNANCE IN VIETNAM
1. Overview on water resource in Vietnam
Vietnam is a naturally rich country of surface and ground water resources. Density of
river and spring is rather high with around 2360 rivers, which are longer than 10 km,
allocated all over of the country from the North to the South. All rivers in Vietnam
supply approximately a total surface water volume of 255 billion cubic meters per year
(Quang 1990). In addition, total potential exploitation of ground water is around 60
billions cubic meters per year. The country also has many natural lakes, of which Ba Be
has a capacity of 90 million cubic meters. However, over exploitation of water resources
causes increasingly degradation of water resources in particular and degradation of
environment and other related resources in general (Trang 2005).
First concerns of water resources management and sustainable use had been raised in
Vietnam in 80s. Then, it has been a burning issue in Vietnam since the end of last decade.
At present, it is still a fairly new, urgent and topical issue, which needs to draw more
attention to and investment in.
2. Institution arrangement for water resource management in Vietnam
Before establishment of MONRE (Ministry of Natural Resources and Environment) in
2002, MARD (Ministry of Agricultural and Rural Development) is a Government body,
which plays key role in the state function of water resources management in collaboration
with other related Government Agencies. After Government Decree No 91/2002/ND-CP
specifies the functions, responsibilities, authority and organizational structure of the
newly established MONRE, the function of state management of water resources has
been handed over from MARD to MONRE (Trang 2005). It is expected that the
establishment of MONRE will reduce the fragmentation of state management for water
resources in particular and natural resources in general. Also, it will create a clearer
separation between state management of water resources and service of water resources.
The following table shows the function of water resources management before and after
establishment of MONRE.
14
Figure 2: Function of water resources management in Vietnam
Activities
Responsibility before
establishment of MONRE
State management of
water resources
MARD
Responsibility after
establishment of
MONRE
MONRE
MARD
MARD
Urban water supply
and drainage
MOC
MOC
Water quality
MOSTE, MARD, MOH
MONRE, MOH, MARD
Hydropower, reservoir
operation
MOI, MARD
MOI, MARD
River transportation
MOT
MOT
Watershed
management
Irrigation
Drainage
Flood prevention
Rural water supply
Data collection of
hydrometeorology, surface
and groundwater, and
water quality
GDHM, MARD,
MOSTE, MOI
MONRE
Land Use Planning
GDLA
MONRE
Budget, planning,
coordination of
international technical
assistances
International
coordination of water
resources management
in Mekong river basin
MOF, MPI
MOF, MPI
VNMC under MARD
VNMC under MARD at
present , on going thinking
River basin
management and
coordination
MARD
MARD at present , on
going discussion
Source: Trang, T.T.Q (2005)
15
Along with establishment of MONRE, Department of Natural Resources and
Environment (DONRE) are formed in each province. These Departments and its lower
levels, District Divisions of Natural Resource and Environment, are responsible for state
managing water resource and relating issues at their authority levels.
3. Overview of the process of formation and development of Vietnam’s legal
system on water resource protection (WRP)
The formation and development of the legal system on WRP proceed together with the
formation and development of the human perception of the role of water. In the past,
people thought that water was an infinite natural resource and, therefore, paid more
attention to exploitation and use of water for domestic consumption and production than
to its protection. Hence, the then legislation seemed to only provide for the exploitation
and use of water sources (including groundwater and surface water). As the society
develops, human awareness about water resources has gradually changed. Water is not an
infinite but finite natural resource. Humans’ careless activities have been polluting water
sources, which, as a precious natural resource, will be exhausted unless people know how
to exploit and use as well as protect them. The shortage of clean water has become a
global concern. This constitutes one of the main conditions giving rise to the regulations
on WRP. Today, WRP legislation not only provides for the rational exploitation and use
of water sources but also attaches importance to protecting them against contamination
(Bennett and Lai 2005)).
In Vietnam, the WRP legislation had not strongly developed until the promulgation of the
1993 Environment Protection Law, which clearly stipulates, among other things, the
prevention, combat and overcoming of water pollution. Particularly, on May 20, 1998 the
Xth National Assembly, 3rd session, passed the Law on Water Resources, regulating the
unified and comprehensive management as well as rational exploitation and stringent
protection of water resources. Then, a series of legal documents on WRP have been
promulgated, including:

Decree No. 179/1999/ND-CP of December 30, 1999 providing for the
implementation of the Water Resources Law;

The 2000 Ordinance Amending and Supplementing a Number of Articles of the
Ordinance on Flood and Storm Prevention and Combat;

The 2000 Ordinance on Dikes;

The 2001 Ordinance on Exploitation and Protection of Irrigation Works;

Decree No. 91/2002/ND-CP of November 11, 2002 defining the functions, tasks,
powers and organizational structure of the Ministry of Natural Resources and
Environment (MONRE);
16

Decision No. 600/2003/QD-BTN&MT of May 8, 2003 defining the functions, tasks,
powers and organizational structure of the Water Resources Management Department
under the MONRE;

Decree No. 67/2003/ND-CP of June 13, 2003 on environment protection charges for
waste water;

Decision No. 05/2003/QD-BTN&MT of September 4, 2003 issuing the Regulation on
licensing groundwater exploration, exploitation and drilling practice;

Joint Circular No. 125/2003/TTLT-BTC-BTNMT of December 18, 2003 of the
Ministry of Finance (MoF) and the MONRE, guiding the implementation of Decree
No. 67/2003/ND-CP of June 13, 2003 on environment protection charges for waste
water;

Decree No. 149/2004/ND-CP of March, 17, 2004 regulating administrative fines on
water resources

Decree No. 149/2004/ND-CP of July 27, 2004 providing for the licensing of
exploration, exploitation and use of water resources and discharge of waste water into
water sources.

MONRE Circular No. 02/2005/BTNMT guiding the implementation of Decree No.
149/2004/ND-CP of July 27, 2004 providing for the licensing of exploration,
exploitation and use of water resources and discharge of waste water into water
sources

Prime Minister Decision No. 81/2006/QD-TTg approving the Vietnam National
Strategy on Water Resource to 2020.

MOF Circular 05/2006/TT-BTC guiding the natural resource tax for water used for
producing hydro power
Besides direct law and legislation on water resources, management of water resources is
linked to several related laws such as Law on Environment Protection (LEP)-1993 and
revised on 2001, Law on Land (LL)-revised 2003, Law on Minerals (LM)-1996. LEP
focus on state management on environmental protection, which aims to preserve a
healthy and beautiful environment, ensure balance of ecology, prevent impact of man and
nature on the environment, and ensure rational and economical exploitation and
utilization of natural resources. State management of water resources is a part of natural
resources management and needs to be coordinated with environmental protection
(Tuyen 2005).
LL was revised on 2003; stipulate principles of land ownership and state management of
land. LL includes the responsibility of different levels in land use planning and land
allocation, which have an important linkage to use and ownership of watershed and then,
water quality and quantity.
17
LM indicates the management, protection and investigation of mineral resources, which
includes regulations on exploitation of mineral water, natural hot water and processing of
hard minerals. LM and LWR have some similar objectives relating to water quality and
exploitation (MARD 2006).
4. Assessment of Vietnam’s legislation on WRP
4.1. Achievements
Over the past years, Vietnam’s legislation on WRP has been further improved, actively
contributing to mobilizing all social resources for WRP. The active role of the WRP
legislation can be seen in the following:
First, the promulgation of WRP legislation shows the Party’s and State’s concern about
the creation of a viable legal framework for the strict management of water resources.
The enforcement of the Water Resources Law has step by step put the water management
and use into order, raised the people’s awareness about the rational and thrifty use of
water and protection of water sources from pollution, contamination and exhaustion.
Second, the WRP legislation, together with other legal documents on land, forest, mineral
and aquatic resource protection…, has contributed to perfecting Vietnam’s legal system
on environment protection under the conditions of market economy. This has manifested
not only the Party’s and State’s concern about the acceleration of economic development
and improvement of people’s living standards but also their special attention to the
rational exploitation and sustainable protection of natural resources, assuring the people’s
right to live in a clean environment.
Third, Vietnam’s WRP legislation has approached and “localized” the integrated water
resource development and management viewpoint of the United Nations Conference on
Environment and Development (“Earth Summit”) in Rio de Janeiro in 1992. Chapter 18.8
of Agenda 21 on protection of the quality and supply of freshwater resources reads:
“Integrated water resource management is based on the perception of water as an integral
part of the ecosystem, a natural resource and social and economic goods, whose quantity
and quality determine the nature of its utilization. To this end, water resources have to be
protected, taking into account the functioning of aquatic ecosystems and the perenniality
of the resource, in order to satisfy and reconcile needs for water in human activities.”
This viewpoint emerged when mankind came to realize that water is a finite natural
resource while the demand for qualitative and quantitative water exploitation and use is
increasing. The integrated water resource management is enshrined in the Water
Resources Law’s provisions on:

The establishment of a system of agencies exercising uniform management over
water resources;

The contents and competence of state management over water resources;

The protection of water quality; prevention, combat and overcoming of consequences
and harms caused by water;
18

The licensing of water resource exploitation and use;

The adoption of financial policies on water resources.
Fourth, the viewpoint on water resource protection, exploitation and use has been deeply
embedded in the WRP legislation, which states that the prevention, combat and
overcoming of consequences and harms caused by water must comply with the
catchments basin planning, ensuring the systematic distribution of catchments areas, and
not splitting them by administrative territory.
Under the Water Resources Law, the catchment’s basin planning management is regarded
as a task of State management over water, covering: “(i) The elaboration, submission for
approval, and monitoring of the implementation of, catchment’s basin planning, ensuring
the uniform management of catchment’s basins according to such planning in association
with management based on administrative territories; (ii) Coordination between the
relevant agencies of ministries, branches and localities in conducting basic surveys,
inventorying and assessing water resources in the catchment areas as well as in
elaborating, submitting for approval, and monitoring the execution of, sub-basin
plannings; (iii) Proposals on the settlement of disputes over water resources in the
catchment basins.” (Clause 1 of Article 64).
Fifth, the WRP legislation has also provided for international relations on water
resources. This is an issue of paramount importance for Vietnam to make use of the
cooperation and assistance from non-governmental organizations and international
community in general and the coordination of the countries sharing the same water
sources in particular in the rational use and sustainable protection of water resources.
Under the current legislation, international cooperation on water resources will comply
with the following basic principles: “(i) Respect for the sovereignty, territorial integrity
and interests of the countries sharing the same water sources; (ii) Ensuring equity,
rationality, mutual benefits and sustainable development in the exploitation and use of
transboundary water sources; (iii) Causing no harms to the rights and interests of the
countries sharing the same water sources in accordance with international agreements
which Vietnam has signed or acceded to; (iv) Complying with Vietnamese laws and
implementing international agreements which Vietnam has signed or acceded to; and
respecting international law.” (Article 53 of the Water Resources Law).
The WRP legislation has also established a legal mechanism for the settlement of
disputes over transboundary water sources. Accordingly, all disputes over sovereignty in
protection, exploitation and use of such water sources; prevention, combat and
overcoming of consequences and harms caused by water sources between the countries
sharing the same water sources, including Vietnam, will be settled by the State of
Vietnam and related States through negotiations in accordance with international
agreements which Vietnam has signed or acceded to and with international practices
(Clause 1, Article 56 of the Water Resources Law) (Tuyen 2005).
4.2. Shortcomings
19
Besides its obvious benefits, Vietnam’s WRP legislation has also revealed shortcomings
and limitations, which should be redressed to satisfy the requirements of State
management over water resources in the period of accelerated industrialization and
modernization. These shortcomings and limitations can be seen in the following aspects:
First, the lack of legal documents guiding the Water Resources Law, which diminishes
the effectiveness of State management over water resources. The required documents and
regulations include:

Documents guiding the order and procedures for registration, declaration, and
licensing of the exploitation and use of groundwater and surface water as well as
discharge of waste water.

Regulations on application forms for registration, declaration and use of water
sources; forms of permit for exploitation and use of water sources; and criteria and
norms for discharge of waste water.

Documents on the establishment of a specialized system for inspection of water
resources as well as regulations on functions, tasks and powers of inspectors;

Regulations on administrative sanctions in the domain of water management and use;

Detailed guidance on basic surveys and assessment of water resource reserves, quality
and planning.

Regulations on protection of water quality; prevention of acts of exhausting water
sources;

Regulations on natural resources charges, fees and taxes applicable to organizations,
households and individuals exploiting and using water.
Second, the lack of specific regulations on functions, tasks and powers of the catchment
basin-management boards; on coordinative and cooperative relations between these
boards and State management bodies in charge of water resources at all levels (the
MONRE, the Water Resources Management Department and the local People’s
Committees) in water resource management and protection; and the lack of a transparent
mechanism for combination of water resource management based on catchment basin
planning with that based on administrative territories.
Third, the lack of a national long-term strategy and national plan of action for water
resource management and protection to meet the national socio-economic development
requirements. This is reflected in the absence of of:

A comprehensive assessment and survey of the reserve and scale of water sources
nationwide;

A complete and comprehensive assessment of the quantity and quality of water
sources;
20

A regular and thorough planning of water resources for orienting the management and
use of water in the country.

A system of archived dossiers, information and database on water resources, serving
as basis for State management over water. At present, data and information on water
resources are updated late and inconsistent. Their publicity and transparency have not
been ensured, causing difficulties to their exploitation, reference and access.
Fourth, the fragmented management over water resources. Currently, water resource
management is undertaken by two agencies under two different ministries: (i) the Water
Resource Management Department under the MONRE, which performs the State
management over natural resources and environment to ensure sustainable water
resources; and (ii) the Irrigation Works Management Department under the Ministry of
Agriculture and Rural Development- MARD, which exercises the State management over
water exploitation and use in service of agricultural and forestry irrigation as well as
prevention and mitigation of harms caused by water to human life and production.
However, so far the State has not yet promulgated any legal documents on coordination
and cooperation between these agencies in water resource management. In fact, the two
agencies independently perform their assigned tasks without close and regular
coordination in water resource management, which also attributes to the poor
effectiveness and efficiency of the State management over water resources.
Fifth, the unsuitability of a number of provisions of the 1998 Water Resources Law to the
current practical situation. Under this Law “the MARD shall take responsibility before
the Government for performing the function of State management over water resources
under the latter’s assignment” (Clause 2 of Article 58). This function, however, is
designated to the MONRE according to the XIth National Assembly’s Resolution No.
02/2002/QH11 of August 5, 2002 and the Government’s Decree No. 91/2002/ND-CP of
November 11, 2002. Hence, the Water Resources Law should be revised to suit the
practical requirements and create favorable conditions for the MONRE to better manage
water resources.
Sixth, the lack of regulations on water management, exploitation and use. Clause 1,
Article 2 of the Water Resources Law stipulates: “Water resources include surface water,
rainwater, groundwater and seawater sources in the territory of the Socialist Republic of
Vietnam. Seawater and groundwater in exclusive economic zones and continental shelves
are prescribed in other legal documents. Mineral water and natural hot water are
prescribed in the Law on Minerals.” The current WRP legislation, however, provides for
the management, exploitation and use of surface and underground water sources only, but
not seawater, mineral water and natural thermal water sources (Tuyen 2005).
-
Weak
Enforcement
of
legal
redulations
21
IV. MINERAL RESOURCE GOVERNANCE IN VIETNAM
1. Overview on mineral resources in Vietnam
According to the Vietnamese Government, the Geological Survey of Vietnam completed
regional geologic mapping of the country’s land area on 1994. On the basis of the
Government’s preliminary geologic surveys and detailed exploration of 500 mineral
occurrences and deposits, a wide variety of minerals were identified—antimony, bauxite,
carbonate rocks, clays, chromite, coal, copper, natural gas, gemstones, gold, graphite,
iron ore, lead, manganese, nickel, crude petroleum, phosphate rock (apatite),
pyrophyllite, rare earths, silica sand, tin, titanium, tungsten, zinc, and zirconium (DGMV
2007).
Except construction aggregates, coal, and petroleum, these mineral resources remained
largely unexploited (Le 1995). In 2000, Vietnam was the world’s fourth largest producer
of anthracite and the sixth largest producer of crude petroleum in the Asia and the Pacific
region (National Mining Association 2000). None of Vietnam’s mineral resources,
however, was of world significance.
The mining and quarrying sector, which played an important role in Vietnam’s economic
development, was an important sector of the Vietnamese economy. The output of the
mining and quarrying sector, which included the output of the oil and gas industry,
contributed about 7% to Vietnam’s gross domestic product (GDP), which was estimated
to be $31 billion in 2000. Exports of crude petroleum alone accounted for about 18% to
the total export earnings (Wu 2001).
2. Institution arrangement for mineral resource management in Vietnam
In 1996, the Department of Geology and Minerals of Vietnam was established under the
Ministry of Industry by merging the Geological Survey of Vietnam and the State
Department for Management of Mineral Resources. In 2002, after the establishment of
the Ministry of Natural Resources and Environment (MONRE) by Decree No
91/2002/ND-CP, the function of State management for geology and minerals was moved
from the Ministry of Industry to MONRE. Accordingly, in 2002 the Department of
Geology and Minerals of Vietnam was also moved from the Ministry of Industry to the
Ministry of Natural Resources and Environment (MONRE 2007).
According to the Government Directive 10/2005/CT-TTG, MONRE takes the lead and
coordinate with the Ministry of Public Security, Ministry of Finance (the General
Department of Customs) and the People Committees of provinces and cities directly
under the central authority to organize control over the mining and export of iron, leadzinc, titanium, chromite, manganese ores of the organizations and individuals holding
mining licences; revoke mining licences stop the export of minerals according to its
jurisdiction for the cases of violating the provisions stated in the licences issued,
especially those on the mining duration, acreage of the mining areas, mining
production, requirements concerning mineral processing, occupational safety and
environmental protection (Vietnam Government 2005).
22
The Department of Geology and Minerals of Vietnam is an organization directly under
the Ministry of Natural Resources and Environment, having the function to implement
State management of geology and mineral resources, comprising: basic geological
survey, basic mineral resources survey, mineral activities, protection of mineral resources
and to organise the implementation of basic geological survey, basic mineral resources
survey, assessment of mineral resources potential and the discovery of mineral deposits
throughout the country
Along with establishment of MONRE, Department of Natural Resources and
Environment (DONRE) are formed in each province. These Departments and its lower
levels, District Divisions of Natural Resource and Environment, are responsible for state
managing mineral resources and relating issues at their authority levels.
3. Government regulatory and policy
To attract foreign investment in the mining sector, the Government of Vietnam enacted
the Law on Foreign Investment in 1987 and the Ordinance on Mineral Resources in 1989.
In the past 20 years, several production-sharing contracts to explore for oil and natural
gas and numerous exploration licences to explore for coal, copper, gold, nickel,
manganese, rare earths, tin, titanium, tungsten, zinc, and zirconium in Vietnam had been
granted bythe Government to foreign companies from Australia, Belgium, Canada,
France, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Norway,
Singapore, Sweden, Thailand, the United Kingdom, the United States, and other countries
(Wu 2000, Imrich 2001).
To provide a more competitive and favorable environment for foreign investment in its
mining sector, Vietnam’s National Assembly passed a new Mining Law in March 1996 to
replace the 1989 Ordinance on Mineral Resources. To implement the new law, the
Government issued the Decree No. 68 CP in November 1996 on regulations and
guidelines for the frameworks for managing mineral resources and such activities as
geologic survey, prospecting, exploration, development, production, and processing of
minerals in the mining sector (Nguyen 1997).
The Government issued a new foreign investment Decree in 1998 that disallowed 100%
foreign ownership in oil and mineral exploration projects but eased licensing and export
rules for export-oriented companies (Far Eastern Economic Review, 1998). Since the
new Mining Law became effective in 1996, the exclusive right of a successful
exploration company to obtain mining licences, the sole right of an exploration company
to conduct exploration within its licence’s area, and the ability of a foreign mining
company to export unprocessed minerals had been the major concerns of foreign
investors (Wu 2000).
Vietnam’s 1996 Law on Minerals has been amended by a new law. The Law on
amendments and supplements to the law on minerals (the revised law), which came into
effect on 1 October 2005, was adopted swiftly as part of an expedited law -making
process to comply with World Trade Organization accession requirements. Perhaps due
to the rush, the revised law does not touch on most of the regulatory problems contained
23
in the previous law. A complete review of these problems has been deferred until the
2008 national assembly session (Foster 2006).
To guide the implementation of the new law, two important regulations were also issued
namely the Prime Minister Decree 160/2005/ND-CP on ‘Stipulating detailed provisions
on the implementation of the law on amendment and supplement of some articles of the
mineral law’ and the MONRE’s Circular 01/2006/TT-BTNMT providing guidance on the
implementation of Decree 160/2005/ND-CP. However, as the revised law which does not
contain any significant reform, neither the Decree nor the Circular contains many
substantive changes
Figure 3: Legal documents on mineral resource management in Vietnam
Issued Number
Issued
Date
Quote
01/2006/TTBTNMT
01/23/2006 Providing guidance on the implementation of Decree No.
160/2005/ND-CP dated 27 December 2005 of the Government
and the Mineral law.
160/2005/NĐ-CP
12/27/2005 Decree No. 160/2005/ND-CP dated 27 December 2005 of the
Government and the Mineral law.
46/2005/QH11
06/14/2005 Law on amendment and supplement of some articles of the
mineral law
10/2005/CT-TTG
04/05/2005 Directive of the prime minister on strengthening the state
management of mineral exploration, exploitation, processing
and export activities
14/2003/QDBTNMT
01/09/2003 Decision of the Minister of natural resources and environment
91/2002/ND-CP
11/11/2002 Decree of the Government Defining the Functions, Tasks,
Powers and Organization Structure of the Ministry of Natural
Resources and Enviroment
37/2002/QD-DCKS
09/13/2002 Decision of the Minister of Industry
46/2002/TTLTBTC-BCN
05/21/2002 Inter-Circular Guiding the Method of Determining the Value,
Mode and Procedures of Payment of Charges for the Use of the
State-owned Data and Information Converning Results of
Mineral Prospecting and Exploration
76/2000/ND-CP
12/15/2000 Decree of the Goverment on the Implementation of the Mineral
Law (Revised)
126/1999/TTLTBTC-BCNBKHCNMT
10/22/1999 Providing Guidance on Marking Escrows for Enviromental
Rehabilitation in Mineral Mining Actives
Source: Department of Geology and Minerals of Vietnam (2007)
24
4. Assessment of mineral regulatory implementation in Vietnam
4.1. Achievements
The revised Law, Decree 160 and Circular 1 contain the following amendments and
supplements:
It provides the basis for a ‘mineral master plan’, detail of which will be provided by the
government. In principle, any mining activities in violation of the mineral master plan
(when the plan is published) are prohibited. Decree 160 sets out some elements to be
included in master plans (e.g. socio-economic conditions) but they remain in general
terms. One such master plan for the coal industry was adopted by the government in
2003.
In addition, it clarifies the allocation of licensing authority for mineral-related projects
between the central government and the local government as follows.

The provincial people’s committees may issue individual mining licences;
licences to survey, explore, mine and process ordinary construction minerals;
and licences for mining and processing minerals in areas excluded from the
national master mineral plan or national mineral reserve areas.

The MONRE has the authority to issue licences to survey, explore, mine and
process minerals that are not under the authority of the provincial people’s
committees. The issuer of a licence has the power to approve the extension,
revocation, return and assignment of that licence.
The revised law exempts mining of ‘ordinary construction materials’ (as listed in decree
160) under a certain volume from the mining licence requirement. In reality, it has proven
impractical to require individuals and small companies to go through the process of
exploration, preparation of feasibility studies and application for mining licences for
small-scale mining of construction materials.
4.2. Shortcomings
Some issues of concern to investors contained in the previous law have not been
addressed in the revised law. The key outstanding issues are set out below.
Firstly, requirement to invest in upgrading infrastructure
Under the revised law, organizations permitted to conduct mineral activities may be
required to invest in upgrading infrastructure facilities in conformity with the approved
exploration proposal or feasibility study. There is no structure under the revised law or
tax laws to allow compensation (via a tax rebate, land rental reduction or similar
incentives) for such investment. Though the concept is understandable and may in many
circumstances be acceptable, this could discourage investment in mining operations in
areas where there is no or little infrastructure.
25
Secondly, exploration licence
Under the revised law, the holder of an exploration licence still does not have exclusive
rights to apply for a mining licence, merely a ‘special right to apply’. This right is valid
only if the holder of the exploration licence applies within six months after expiry of the
exploration licence. As exploration activities often involve great upfront costs and time, a
mining licence is an incentive for investors to carry out exploration work. Uncertainty
over whether a mining licence will be granted has been a major disincentive to
exploration activities in Vietnam. Decree 160 includes a change that could negatively
affect some investors. It revises downward the areas of land that can be licenced for
exploration to 50 per cent, or in some cases 10 per cent, of those regulated previously.
Thirdly, mining licence
The application process for the mining licence, or the assignment or transfer thereof,
remains essentially unchanged. The pro forma mining licence attached to circular 1 has
been amended only slightly to require that the responsibilities of a holder of a licence to
use mineral water resources or hot springs be expressly provided for in the licence.
Fourthly, processing licence
A processing licence is still required for processing minerals, except where processing
activities are already covered within the permitted mining activities. A processing licence
authorizes the holder to purchase minerals, import equipment, conduct processing
activities and sell processed minerals within and outside of Vietnam.
Fifthly, Incentives
Article 5 of the revised law provides that the state will create ‘favorable conditions’ for
state-owned enterprises to ‘take the leading role in mining and processing important
minerals’. It is not obvious in practice how this affects private sector investors. However,
the provision does raise concerns about investors’ ability to compete on a level playing
field with state-owned enterprises in industries involving important minerals.
Sixthly, prohibitions
The revised law allows the government to announce the lists of minerals that are banned
from export or restricted from import in any given period of time. There is no exception
for investors who have already invested in a mining project aimed at export markets.
Therefore, the law discourages investment in mining projects that tend to be long term
with heavy upfront capital investments. Similarly, article 14 of the revised law allows the
government to announce areas where mining activities are prohibited (or temporarily
prohibited for national defense, security, historical or cultural reasons or other reasons in
the public interest). In neither case does the revised law offer a mechanism to compensate
investors for the loss they may incur due to the prohibition on exports or mining,
exposing them to the risk that their mining operations will be shut down at the will of the
government. Foreigners with investment certificates may be protected to some extent by
the investment law.
26
Seventhly, land lease contracts
Mining companies must enter into land lease contracts with the relevant state authorities
(usually the local people’s committee) for the mining and processing of minerals. These
contracts must be amended if any part of the leased land is relinquished and they
terminate upon expiry of the mining or processing licence. Mining companies may be
concerned that land lease contracts may not be obtainable, while use of land is obviously
a key aspect of a mining operation. The requirement to enter into land lease contracts is
an added uncertainty in the administrative process of getting mining operations in place.
Eighthly, Investment licence
The revised law does not amend article 31(4) of the previous law, which provides that
‘the Mineral Mining Licence shall be issued at the same time as or subsequent to the
issuance of an investment licence in accordance with the Law on Foreign Investment in
Vietnam’. As investment in mining projects usually starts at the time of exploration, this
requirement may cause delays and the required licence may not be available in time. Both
outcomes affect the feasibility and bank ability of a mining project. A better mining law
would allow an investor to apply for an investment licence when appropriate, and require
an automatic issuance of the licence or certificate when the mining licence is issued,
subject only to certain funding or other requirements that do not depend on the discretion
of the licensing body.
V. CONCLUSION
To enhance the Renovation process, the Government will continue its institutional and
regulatory reform, improve effectiveness of its policy-making process, particularly for the
natural resource management to meet the requirements of globalization and sustainable
development. Currently, the Vietnamese economy is mixed one, having some elements of
both a free market and a centrally planned base. The rules and regulations are still
different from other countries in the region practising market economy. For this reason, a
clear governance system should be developed in the first stage. It should then be adjusted
and complemented by sound management policies.
One of the first priorities of the Government should be establishing a proper institutional
arrangement for resource management which clearly states the roles and functions of
actors in the management system. Currently, there is still several conficts in the
reponsibilities of state agencies which in turns lowers the management efficiency. In
addition, Vietnam should increase investment in human capital as it is crucial in
promoting efficiency of natural resource management. Last but not least, although
Vietnam has already launched a number of legal framework and improve its
administrative procedures for managing the natural resources, there is still a severe lack
of detailed guidlines for implemeting these regulatory documents. The Goverment
therefore will need to consult more closely with the private sector and other stakeholders
to change this situation.
27
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