Navigating Vietnam’s New Procurement Law 2023
Vietnam’s Procurement Law 2023, set to be enacted from January 1, 2024, marks a significant milestone in the nation’s commitment to fostering a competitive, transparent, and ethical commercial environment for public procurement. In its New Bidding Law, Vietnam introduces new criteria that serve as incentives in the contractor selection process. In summary, these are:
- Vietnamese-origin goods;
- Eco-friendly products and services per environmental law;
- Domestic producers matching bid requirements;
- Micro or small enterprises as defined by law;
- Legal innovative startups;
- Employers of 25% or more women, war invalids, disabled, or ethnic minorities.
These preferences manifest in forms such as higher ranking, additional points in evaluation, or reserved construction packages, especially favouring micro or small enterprises, innovative startups, and socially responsible enterprises. These upcoming changes necessitate a fundamental rethinking of procurement strategies, requiring businesses to adapt their operations to meet these new socially-conscious criteria. The law aims to foster a more inclusive and innovative business environment, compelling companies to adopt a holistic approach to procurement, potentially transforming the competitive market dynamics. By incentivizing a focus on innovation and social equity, the legislation is strategically positioned to build a robust, forward-looking economy, addressing significant global challenges like social inequality and fostering a culture of innovation that aligns with Vietnam’s vision for a progressive and affluent society.
From Đổi Mới to Digital: The Evolution of Vietnam’s Business Culture
Economic liberalization policies, particularly the Đổi Mới (Renovation) reforms introduced in 1986, marked the beginning of Vietnam’s transition from a centrally planned economy to a market-oriented one. This shift led to the opening of Vietnam’s markets to foreign investment and trade, bringing in not only capital but also new business practices, management styles, and expectations of transparency and corporate governance. The entry of multinational companies brought in new standards of professionalism and corporate culture. These companies introduced modern management practices, technological advancements, and a focus on innovation and efficiency. Vietnamese companies, in response, began to adopt these practices to remain competitive, leading to a gradual shift in the business culture. Education and exposure to global business practices have also played a crucial role. As more Vietnamese professionals pursued higher education abroad and returned, they brought with them a global perspective and new skills. The rise of the internet and digital technologies provided unprecedented access to information and new ways of doing business, fostering a culture of innovation and adaptability.
Legal Framework as a Catalyst for Change: A Shift Towards Sustainability and Inclusivity
By enhancing the legal framework around procurement, Vietnam aims to combat corruption and ensure the judicious use of public resources. Companies are now incentivized to not only prioritize environmental sustainability and innovation but also to actively contribute to social equity by integrating marginalized groups into their workforce and business strategies. This regulatory shift encourages a more conscientious, transparent work culture where corporate success is increasingly measured by contributions to societal well-being and sustainable development. Young professionals and startups are injecting a vibrant, forward-thinking mindset, fostering a culture of innovation, risk-taking, and adaptability. This shift is further propelled by increasing foreign investment and cross-cultural exchanges, leading to a more open, competitive, and outward-looking business environment. Companies are increasingly prioritizing sustainability, corporate responsibility, and digital transformation, reflecting a broader global trend towards more socially conscious and technologically driven business practices. Vingroup, Vietnam’s largest conglomerate, has recently adjusted its procurement strategies to align with the new law. The company has begun sourcing from local startups that employ underrepresented groups, thus boosting the local economy and fostering a more inclusive business community.
The introduction of this law is expected to drive a substantial cultural shift within the Vietnamese business landscape. It echoes the values and demands of the younger generation, who are increasingly vocal about social equity, environmental conservation, and corporate responsibility. Enterprises are likely to witness a shift in ethics, with a renewed focus on fostering diverse and inclusive workplaces and embedding social responsibility into their operational DNA.
