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| An overview of the working session __Photo: MOJ |
The Department of Registration of Secured Transactions and State Compensation under the Ministry of Justice on June 15 held a working session with Dr. Le Quang Canh, Director of the Institute for Sustainable Development under the National Economics University, to exchange views and consultancy on major orientations for study and improvement of policies and legal frameworks on secured transactions to meet sustainable development requirements.
At the working session, the department’s Deputy Director General Nguyen Thi Thu Hang stated that research on improving policies and legal frameworks on secured transactions needs to be approached from multiple perspectives beyond the legal angle, particularly from the economic perspective, operational market practices, and the requirements of mitigating risks, lowering transaction costs, and facilitating capital access for citizens and businesses.
Speaking at the session, Dr. Canh maintained that secured transactions involve many specific characteristics, directly linked to credit, investment, capital mobilisation, risk management, and resource allocation within the economy. Therefore, it is necessary to study and formulate a specialised law separate from the Civil Code to regulate the specific issues on collateral, transactions with a security function, and the registration of security interests more deeply and flexibly.
From an economic perspective, he emphasised that the core objective of the law on secured transactions is to reduce transaction costs and lower credit risks, thereby expanding access to resources and promoting growth. An effective secured transactions system will help lenders better control risks and help borrowers have more opportunities to use assets and property rights and access capital.
Regarding the new approach to collateral, he suggested that in the modern economy, the value of an enterprise lies not only in real estate or tangible assets, but also in movable assets, intangible assets, intellectual property rights, brands, data, digital platforms, future assets, and projected cash flows. Particularly for small- and medium-sized enterprises, start-ups, and innovative businesses, the legal recognition of a wider range of assets and property rights with economic value and transferability will contribute to expanding access to capital and reducing dependence on traditional collateral.
As for the digital economy, Dr. Canh noted that the current legislation still has gaps in identifying, valuing and handling collateral. Therefore, it is a need to further clarify the legal mechanism for determining, valuing and handling new forms of assets such as digital data, digital assets, encrypted assets, digital securities, stablecoins, and assets arising from technology platforms or artificial intelligence when these assets are used to secure obligation performance.
With respect to the green economy and circular economy, he suggested studying assets associated with green credit such as carbon credits, renewable energy use certificates, emission rights, and resource exploitation or usage rights within the circular economy model. According to him, these are forms of assets that play an increasingly important role in mobilising capital for environmentally friendly production and business activities.
Another notable content is the necessity of shifting to a new approach to secured transactions based on their economic function but not based on form, meaning whether the transaction has the function of securing the performance of an obligation. This approach is more consistent with international practices, allowing the law to cover transactions with security functions such as financial leasing, the transfer of receivables, or other agreements aimed at securing obligation performance. In addition, it is also required to study the cash flow-based lending model, especially for start-ups and innovative businesses. According to him, with an appropriate legal mechanism, the recognition and evaluation of cash flows in secured transactions can help businesses access capital more conveniently.
As per the registration of security interests, he suggested studying a registration model based on a digital platform that is centralised, public, transparent and accessible. An efficient registration system will contribute to reducing appraisal costs, information verification costs, transaction risks, and supporting businesses in accessing credit. In the context of building a digital government, registration activities should aim towards end-to-end online processes capable of connecting, sharing, and exploiting data with related information systems.
Speaking at the event, Deputy Director General Hang acknowledged and appreciated the opinions and suggestions of Dr Canh, particularly the economic perspective for the process of researching and improving institutions on secured transactions.
This serves as an important reference basis for the Department of Registration of Secured Transactions and State Compensation to continue improving institutions on secured transactions in the coming period, she said.- (VLLF)
