By Francesco Guarascio and Khanh Vu
HANOI (Reuters) -Investors in Vietnam in energy, telecommunications, construction and other sectors, will need police approval for projects, under a major reform meant to boost security and ensure the “absolute leadership” of the ruling Communist Party, a draft decree says.
The proposed text from the public security ministry, which is still subject to changes, could increase compliance costs for business in the Southeast Asian nation while significantly expanding the powers of the security apparatus.
“In socio-economic development, security must be ensured, without sacrificing national interests for economic benefits,” said the proposal published on the security ministry’s website, which other ministries can comment on until September 22.
It could then be signed into law by the prime minister provided no major changes are requested.
Export-reliant Vietnam is highly dependent on foreign investors and currently conducts limited security checks on most development projects, giving the police largely a consulting role. It is unclear how extensively the new rules would be applied, if approved, and whether they would concern only future projects.
In a separate explanatory document, the ministry said the new provisions were necessary to deal with a more complex international situation dominated by strategic competition meant “to increase the sphere of influence of strong countries,” without specifying which nations.
The ministry did not reply to a request for comment.
In Communist-run Vietnam, police already play a crucial role beyond security, encompassing a major influence on legislation and growing interests in the economy. The party leader and Vietnam’s most powerful man, To Lam, headed the security ministry before moving to the top job. Separately, the army oversees a wide array of businesses, including banks and the largest telecom operator Viettel.
The planned reform would give the security ministry the power to vet development projects on security grounds for a broad variety of critical infrastructures like nuclear power plants, telecommunication and satellite services with foreign involvement, ports and oilfields.
U.S. companies SpaceX and Amazon are planning to launch their satellite communication services in Vietnam.
GOLF PROJECTS TO BE VETTED BY POLICE
Seemingly less critical operations would also need the ministry’s approval, including industrial parks and golf courses, according to the draft document.
Vietnam plans to expand its golf industry from nearly 100 courses at present, according to Vietnam Golf Association. The family business of U.S. President Donald Trump is partnering with a local developer on a large golf resort to be built close to Hanoi.
The country is also home to huge industrial operations of multiple multinationals, including South Korea’s Samsung Electronics, Japan’s Honda and U.S. chipmaker Intel, which are attracted by low labour costs but have at times voiced concerns over slow project approvals.
The ministry, supported by national and local police forces, will establish whether yet-to-be-defined security conditions are met for projects to go ahead, including those involving foreign investors, according to the draft proposal.
A Vietnam-based legal consultant, who declined to be named to speak more freely, said the decree would effectively give the police the power to veto projects, and noted some companies had expressed concerns about the draft document, fearing it could increase compliance costs and delay projects.
Other corporate, diplomatic and legal representatives contacted by Reuters about the draft decree did not comment, with some declining to discuss the matter because of the sensitive nature of the issue or due to lack of clarity around the proposed rule.
Under the proposal, the security ministry will also develop a mechanism to supervise and inspect foreign aid projects and will “comprehensively appraise the impacts on security, social order and safety on foreign-invested projects, implemented in many key localities and areas, where many labourers and workers live,” the document says.
A similar decree was implemented in 2019 to guarantee defence priorities were taken into account for economic projects, but gave the army less explicit powers and was more limited in its scope.
(Reporting by Francesco Guarascio and Khanh VuEditing by Shri Navaratnam)
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