Can Public Employees Establish Businesses in Vietnam? A Legal Analysis

The question of whether public employees can establish businesses in Vietnam raises significant legal and ethical concerns. This article analyzes the relevant Vietnamese legal framework and offers insights into the rationale behind restrictions imposed on public officials regarding business activities.

Can Public Employees Establish Businesses in Vietnam? A Legal Analysis

Who are Public Employees?

According to Article 2 of the Law on Public Employees 2010, they are Vietnamese citizens who fulfill the following criteria:

• Recruited according to established job positions.
• Work at public service units based on employment contracts.
• Receive salaries from the state budget or public service units.

Examples of public employees include university lecturers, hospital doctors, and government administrative staff.

Restrictions on Business Establishment

Vietnamese law prohibits public employees from establishing and managing businesses. This is stipulated in Point b, Clause 2, Article 17 of the Enterprise Law 2020, which states that “cadres, civil servants, and public employees” are not permitted to establish and manage enterprises in Vietnam.

Further restrictions are outlined in the Law on Anti-Corruption 2020, specifically Points b and d, Clause 2, Article 20. These provisions prohibit individuals with positions and powers in state agencies from:

• Establishing, participating in the management and operation of private enterprises, limited liability companies, joint stock companies, partnerships, and cooperatives.
• Holding positions, management positions, or operating private enterprises within a specific period of time after leaving their previous position with management responsibility.

These restrictions aim to prevent conflicts of interest, ensure the integrity and impartiality of public officials, and combat potential corruption and abuse of power.

Rationale for Restrictions:

The legal framework restricting public employee involvement in business activities is based on several key concerns:

• Preventing Conflicts of Interest: Engaging in business activities, especially in areas related to their official duties, can create situations where public employees face conflicting interests. This can lead to biased decision-making and unfair advantages for their businesses.
• Ensuring Integrity and Impartiality: Public service demands a high level of integrity and impartiality from officials. Engaging in business ventures can compromise their neutrality and objectivity, leading to public distrust and concerns about fairness.
• Combating Corruption and Abuse of Power: The potential for public officials to leverage their authority for personal gain through business ventures is a significant risk. Legal restrictions aim to prevent such scenarios and uphold ethical standards in public service.

Limited Exceptions to Restrictions:

While public employees are prohibited from establishing and managing businesses, certain exceptions exist for contributing capital to specific business entities:

• Joint Stock Companies: Public employees can contribute capital as shareholders, but they are not allowed to hold positions on the Board of Directors or the Control Board.
• Limited Liability Companies: Public employees cannot contribute capital to limited liability companies as membership implies a management role.
• Partnerships: Public employees can only participate as syndication members, a status that does not involve participation in business management.

It is important to note that even when permitted to contribute capital, they must comply with additional regulations outlined in relevant laws, such as the Law on Anti-Corruption 2020, to ensure ethical conduct and prevent potential conflicts of interest.

Conclusion:

The Vietnamese legal framework clearly restricts public employees from establishing and managing businesses. This serves to uphold ethical standards in public service and prevent conflicts of interest, potential corruption, and abuse of power. While limited exceptions exist for contributing capital to certain business entities, public employees must remain vigilant and adhere to strict regulations to ensure ethical conduct and avoid compromising their professional obligations.

Understanding these legal restrictions and the underlying rationale is essential for all public employees in Vietnam to uphold their responsibilities and maintain public trust in their service to the nation.

NT International Law Firm is Here to Help

NT International Law Firm has addressed the question of whether public employees can establish businesses. If you have any further questions or concerns regarding corporate and civil law, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in:

• The 2015 Civil Code in English
• The 2020 Law On Enterprises in English
• The 2008 Law On Cadres and Civil Servants in English
• The 2010 Law On Public Employees in English