Multinational Corporations and International Law in Vietnam

The economy in developing countries is growing quickly in today‘s world, partly because of multinational corporations (MNCs), these corporations usually have headquarters in a developed country i.e. the Netherlands, U.S., United Kingdom, etc. As their power grows, they reach out and invest in countries that have the potential to thrive quickly like Vietnam, therefore boosting the economy by creating plenty of wealth and jobs and utilizing resources efficiently, However, human rights violations have definitely become a concern, with news of labor unrest and poor working conditions consistently coming up in the media.

In some countries, the governments are inefficient in preventing the domination of foreign companies in fear of driving away business. Some are even influenced by those companies, with policies passed not for the benefits of the people, but for the benefit of the corporations As a developing country on the rise, due to a sizable amount of foreign investment during the last 20 years, Vietnam recognizes and appreciates the role MNCs have played in improving the economy of its country ever since the 19805.

The presence of these corporations have brought about a more modernized management, along with a better-trained and more skilled workforce. Moreover, the ratio of product export to import has gradually increased over the years, since what Vietnam had to import 10 or 20 years ago can now be produced locally Vietnam’s status in world trading has reached new heights, evidenced by the joining of the World Trade Organization in 2007. However, Vietnam is against the presence of some MNCs in other developing countries.

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Current laws are ineffective in preventing monopolies of multinational companies. These companies are gradually driving out local and small business firms, killing off the diversity needed for competition. A prime example of a multinational corporation is Royal Dutch Shell, currently topping the 2013 Fortune Global 500 list of the world’s largest companies, with profits of up to 20 billion dollars a year.

Shell takes advantage of its importance to the host states, and ends up violating several environmental standards and human rights without fear of being held accountable or fined heavily. Several reports revealed Shell’s pipelines in the Niger Delta were outdated, resulting in multiple oil spills, it was also revealed in 2010 that Shell infiltrated the government and military, in order to continue its dominance regardless of how many times the environment was polluted or how people protested and rioted against their presence. The global community needs to alter the host state‘s jurisdiction over these corporations, allowing governments to more deeply investigate whether MNCs adhere to international laws on the environment and human rights. Vietnam believes the resolution to these problems is to put more attention onto Corporate Social Responsibility.

Subsidiaries of MNCs in developing countries are currently not much concerned with workers’ conditions and the environmental consequences, coupled with the government’s inability to resolve the problem by themselves because of limited resources and fear of the withdrawal of MNCs from their countries. Therefore, Vietnam suggests the UN to encourage the parent companies’ countries (usually with more powerful positions) to aid the host states in regulating what the subsidiaries are doing in developing countries and whether or not they are complying with international law. Another proposed solution is to demand these companies to invest some of their excess profits to improve facilities, technology and working conditions, an action apparently very few have done.