Many new perspectives in the resolution, which address long-standing constraints on the private sector, are mentioned in this important document. One of these is the criminalization of economic relations.

This stance aligns with the spirit of Resolution 66 on reforming legislative development and enforcement to meet the country’s development needs in the new era, signed by General Secretary To Lam on April 30 which states “Do not criminalize economic, administrative, or civil relations; do not use administrative measures to intervene in resolving civil or economic disputes.”

Matters for discussion

Nearly a decade ago, when drafting amendments to the Criminal Code, there was a proposal to impose heavy fines on the behavior of stock market manipulation. Regrettably, this suggestion was only partially adopted.

As a result, the penalty for stock market manipulation in this crucial Criminal Code was capped at a maximum fine of 2 billion VND and imprisonment.

Lawyers argue that if an investor earns VND1 trillion with stock manipulation while paying a fine of only VND2 trillion and imprisonment, the total penalty is insignificant. If the fine is tens of times higher, they won’t dare commit such a violation. 

The corporate bond market performance offers a lesson. Following a series of arrests, the market froze, investor confidence plummeted, capital flows stalled, and the real estate, finance, and banking sectors struggled. The government had to intervene with numerous directives, decree amendments, and business dialogues to rescue the market.

By contrast, many people have proposed taking legal proceedings against the bid withdrawals in public asset auctions. 

At many land auctions, investors bid very high prices but later gave up the deals. Experts pointed out that by doing this, investors can push the prices up and create artificially abnormally high prices, a behavior considered as deliberately distorting the market.

It would be extremely dangerous if agencies amend current regulations just to address exceptional cases, rather than creating favorable conditions for the majority of investors in the market where there have been 40,000 auctions each year in the last five years.

High bidding followed by withdrawal, if driven by profiteering, should face penalties. However, criminalization is an extreme approach. Instead of proving fraud through civil proceedings or economic arbitration, which is the true nature of an economic relationship, criminal prosecution may have far-reaching consequences: businesses collapse, workers lose their jobs, the state loses revenue, and above all, it may paralyze the entrepreneurial spirit.

Globally, market-economy countries often use economic penalties - heavy fines and recovery of illicit gains, to regulate misconduct. They refrain from depriving personal freedom unless the violation is exceptionally severe with no alternative remedy.

In dealing with economic violations, priority should be given to remedying consequences. If the misappropriated assets are not recovered, if the damage to the people and the State is not compensated, imprisonment, whether for 10 years, 20 years, or life imprisonment, will not improve the economy.

In recent high-profile criminal cases, despite heavy-handed measures, lost assets could not be recovered. In some cases, economic measures such as requiring the return of all money and strong financial sanctions have brought direct and quick results for the victims.

Decriminalization: from policy to action

From Government Resolution 35 in 2016 to Politburo Resolution 41 in 2023, the message of “not criminalizing economic and civil relations” has been repeatedly affirmed. However, this concept remains undefined in law and inconsistently institutionalized in subordinate regulations.

Nguyen Dinh Cung, a co-author of the 1999 Enterprise Law, once suggested that all economic contract violations and disputes should be resolved in the courts or by economic arbitration, without criminal prosecution. This aligns with international norms and the nature of economic relations in a market economy.

No one denies the need for strict law enforcement. But strictness does not mean criminalization at all costs. In a market economy, the distinction between “business risks” and “economic crimes” must be clearly defined. Otherwise, fear will replace the entrepreneurial spirit, caution will supplant investment, and the economy won’t be able to grow.

Addressing economic violations with strong, deterrent economic tools is the right approach. To achieve this, Vietnam must urgently institutionalize Resolution 41’s principles, strengthen contract dispute resolution mechanisms, reform economic courts, and establish a clear, stable legal framework.

Tu Giang