According to the Bertelsmann Foundation 2008, private sector activity is largely concentrated in the south, with approximately two-thirds of GDP and 80% of total tax revenues being generated in the Mekong Delta and the industrial parks around Ho Chi Minh City. On top of this asymmetric industrial pattern, the performance of market economic institutions continues to be limited nationwide by a large informal economy and ubiquitous corruption. The Bertelsmann Foundation 2010 reports that superfluous intermediary administrative levels, a lack of transparency in the decision-making process, administrative rules, regulations and procedures that frequently change without notice, and close formal and informal ties with politicians and patronage systems, all resort in wasted resources. These problems perpetuate corruption and the widespread use of facilitation payments by companies when dealing with frontline civil servants. This is illustrated in the World Bank & IFC Enterprise Surveys 2009, where 52% of the surveyed companies expect to pay informal payment to public officials in order to ‘get things done’ and 53% of the surveyed companies expect to give gifts in order to secure the government contract, where the average value of the gift is 2.7% of the value of the contract.

According to Grant Thornton’s Vietnam's Investment Outlook Survey 2009, 77% of the participants (all members of the investment community) see corruption as a substantial problem, which is in line with the Heritage Foundation 2011’s statement that corruption impedes investment. In contrast, according to the World Bank & IFC Enterprise Surveys 2009, only 5% of the surveyed companies cite corruption as a major constraint for doing business in Vietnam, which is considered very low compared to the regional and the OECD average. Similar findings regarding the relatively low importance attached by companies to corruption were highlighted by the World Economic Forum Global Competitiveness Report 2011-2012, in which only 10.4% of business executives surveyed rank corruption as the most problematic factor to doing business in Vietnam. According to the USAID's Vietnam Provincial Competitiveness Index 2010, while there has been no statistically important improvement from 2006 to 2010 in regards to the number of companies that report having to pay informal charges in order to conduct business, fewer companies in 2008 viewed informal charges as an obstacle to their business operations than in 2006. Of the surveyed companies, nearly 79% believe that relationships with provincial authorities are very important in order to gain access to necessary business documents. According to the same report, these relationships might potentially lead to favouritism and abuse of power. 

According to the Bertelsmann Foundation 2010, state monopolies are still common in the Vietnamese economy. There are reports of corrupt relationships and kickbacks between government officials and state-owned companies. Some sectors are more vulnerable to corruption than others. Private providers should be particularly aware of continuing corruption related to public procurement and contracting procedures (see this country profile's special page on corruption in relation to public procurement and contracting in Vietnam, 'Public Procurement and Contracting' in the Corruption Levels section, and 'Public Procurement' under 'Public Anti-Corruption Initiatives' in the Initiatives section for more information). In order to best reduce corruption risks in the procurement process, companies considering bidding on public tenders are generally advised to use a specialised due diligence tool on public procurement. Companies should also be aware that bribes are often solicited by the traffic police, construction regulators, and land registration officials, customs, and tax administration officials, as reported by Freedom House Countries at the Crossroads 2010. In general, companies are highly recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence when working with agents, contractors and other companies in Vietnam.

The USAID’s Vietnam Provincial Competitiveness Index 2009 states that economic governance for private companies is improving throughout Vietnam with an increasingly stable and coherent regulatory framework. However, while Grant Thornton Vietnam's Investment Outlook Survey 2009 points out that the country has become an increasingly attractive destination for foreign investors, it also confirms that red tape, an uncertain legal system and underdeveloped infrastructure continue to constitute difficulties for investors. In order to address the problem of burdensome regulation, the government has abolished almost 200 ‘unnecessary’ permits for operating, as reported by the US Commercial Service 2007. The World Bank & IFC Doing Business 2012 also points out that the Vietnamese government has undertaken some reforms making it easier to conduct businesses in the country. These reforms include the establishment of a one-stop shop which combines the process for obtaining business licence and tax licence, and abolishing the need for a seal for company licensing. Nevertheless, business executives surveyed in the World Economic Forum Global Competitiveness Report 2011-2012 give complying with administrative requirements (permits, regulations, reporting) issued by the government a score of 2.7 on a 7-point scale (1 'burdensome' and 7 'not burdensome'). Foreign companies operating in specific sectors are also subject to a range of performance and local-sourcing requirements that increase the regulatory burden on some companies. Companies may consult the useful Ministry of Planning and Investment that functions as the main contact point for investors. The ministry administers the SME Development BusinessPortal (in Vietnamese) that lists required licences and general information and contacts for SMEs. Another relevant unit under the ministry is the Foreign Investment Agency, which provides information on business legislation, investment opportunities and policies targeting foreign investors. Companies should also access this profile's special page on regional differences in Vietnam's regulatory environment for further information, as economic governance varies between provinces.

The Enterprise Law 2005 has reportedly simplified the process of starting a company by easing application procedures. According to the World Bank & IFC Doing Business 2012, starting a company requires a company to go through 9 procedures, taking 44 days at a cost of 10.6% of the GNI per capita. The Enterprise Law 2005 and Law on Investment 2005 provided for diversified ownership structures of investments and companies. Foreign companies can now follow registration procedures rather than approval processes for investments that are under VND 300 billion. Larger investments or projects in critical areas must undergo an evaluation process. Foreign companies wanting to buy into sectors not in the WTO services schedule are limited to a 30% ownership cap for unlisted Vietnamese companies and a 49% cap on companies listed on the stock market. However, a foreign partner can own up to 100% of the share or 100% of the capital in a greenfield start-up. All land is owned by the state, however, under the Law on Land 2003, foreign investors are entitled to lease (renewable) land for 50 years, and up to 70 years in some poor areas. According to KPMG & the Economist Intelligence Unit 2007, for most multinationals in manufacturing, setting up business in an industrial zone circumvents all the problems associated with the real estate market.

According to the US Department of Sate 2011, investors have to deal with an underdeveloped legal system and inefficient dispute and claims settlement mechanisms. Despite both international and domestic arbitration being legally enforceable in Vietnam, and Vietnam having a system of independent arbitration centres which can grant enforceable arbitral awards, negotiation is often a common and preferred mean for dispute resolution between concerned parties. The Heritage Foundation 2011 also states that contracts are weakly enforced in Vietnam, and therefore it can take years to reach a resolution of a dispute. The Vietnam International Arbitration Centre (VIAC) operates under the Vietnam Chamber of Commerce and Industry (VCCI) and has the authority to settle disputes arising from international economic transactions, such as foreign trade contracts, investment and international trade. Through sponsorship by the Danish government via Danida, the VIAC has reportedly increased awareness and legal knowledge in the Vietnamese business community. However, no track record of impartiality or competence exists for this institution, and companies should be aware that no international standard arbitration rules can be used instead of the VIAC's own set of arbitration rules. Vietnam is a member of the New York Convention 1958. In April 2007, the Pacific International Arbitration Centre (PIAC) opened for business in Ho Chi Minh City, aiming to offer impartial, transparent mediation and arbitration services that meet the requirements of international users. Vietnam has not yet acceded to the Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID), however, the Ministry of Planning and Investment (MPI) has submitted a proposal to the Government of Vietnam in this regard. Visit the website of the Lexadin World Law Guide or access a collection of laws in Vietnam.