Circular No. 03/2014/TT-BLDTBXH on foreign labours
– When employing a foreign worker that is exempt from licensing, the employer must send a written request for certification (form No. 10 enclosed with the Circular) to the Service of Labor, War Invalids and Social Affairs.
In addition, this Circular also provides instructions on the applications for issuance, reissuance of work permits, and forms in Appendices.
The Circular takes effect on March 10, 2014 and replaces Circular No. 31/2011/TT-BLĐTBXH
Slow approval hinders conversion of commercial homes
There are no signs of recovery seen in the housing market due to the slow approval process for conversion of commercial apartments into low-cost ones and division of condos into smaller units, heard a seminar in HCMC last Friday.
At the seminar organized by the HCMC Real Estate Association (Horea), most participating companies expressed disappointment with the slow process of considering their proposals for splitting up condos and changing commercial apartments into budget ones.
In addition to the difficulties caused for companies concerned, homebuyers have felt the pinch of the slow process as they have been unable to find small apartment units with affordable prices before they could borrow from the VND30 trillion home credit package funded by the Government.
Numerous enterprises in HCMC are seeking permission to split up their apartments, including Dat Lanh Real Estate Company with Thai An project in District 12, An Phu Joint Stock Company with An Phu scheme in District 6 and Quoc Cuong Gia Lai Joint Stock Company with a project in Binh Chanh. Meanwhile, multiple housing developers in the city have yet to get a nod to change their commercial housing projects into low-cost ones, Horea said.
The problem is that even these companies have had no idea about why their applications are not yet to be approved, Horea noted. These applications should be taken into consideration as soon as possible because many are struggling with business difficulties, the association insisted.
Speaking at the seminar, Do Thi Loan, vice chairwoman of Horea, described the Government’s home credit program as a stalled property development project as money is ready for lending but there are no borrowers.
Only three commercial housing projects in the city have been allowed to convert into low-cost home schemes. They are Thu Thiem Investment Joint Stock Company’s Thao Dien resettlement project in District 2, Hoang Quan’s CC1 apartment scheme in Binh Chanh and Hoang Hiep’s apartment scheme in Tan Binh.
Environmental remediation in mineral extraction
According to Prime Minister Nguyen Tan Dung’s Decision No. 18/2013/QD-TTg dated March 29, 2013, environmental improvement and remediation are required in mineral extraction.
All organizations and individuals involved in mineral extraction have to make and submit environmental improvement and remediation plans to competent authorities for consideration and approval.
Besides, the subjects shall make supplementary environmental remediation projects including: organizations and individuals requesting the adjustment of the Licenses for mineral extraction; organizations and individuals applying for extension of Licenses for mineral extraction; Organizations and individuals applying for changes in environmental remediation projects./.
Marriage involving foreign elements
On March 28, 2013, the Government issued Decree No. 24/2013/ND-CP to guide the Marriage and Family Law on marriage and family relations involving foreign elements.
Under the law, marriage registration will be refused in the following cases:
– One or both parties fail to reach the marriage ages according to Vietnamese laws;
– The foreign party fails to be eligible for the marriage according to the laws of the country which he/she is citizen of or where he/she permanently resides (for stateless persons);
– The marriage is not voluntarily decided by the male and/or the female;
– There is deception, coercion in the marriage;
– One or both parties are having wife or husband;
– One or both parties lose the civil act capacity;
– The marriage parties are in the direct lines of descent or relatives within three generations;
– The marriage parties are or were once the adoptive father, adoptive mother and the adopted daughter, son; the father-in-law and daughter-in-law; the mother-in-law and son-in-law; the step father and his step- daughter; the step-mother and her step-son;
– The marriage parties are of the same sex (marriage between men, marriage between women).
Marriage registration will also be rejected if the interview, inspection and verification results show that the marriage is conducted through illegal brokerage or is sham, not for the purpose of building a prosperous, equitable, progressive, happy and sustainable family; or aims at human trafficking, labor exploitation, sexually abusing women or other self-seeking purposes.
Sumary on new obligations of employers uner the labor code 2012
SUMMARY ON NEW OBLIGATIONS OF EMPLOYERS
UNDER THE LABOUR CODE 2012
|No.||Contents||Employer must/must not||Regulations of the Labour Code 2012||Comments (if any)|
||Making the labour administration book, wage book and present them where required by competent authorities
|MUST||Article 6.2.c||No regulation has issued for detailed guiding this provision yet.|
||Discrimination of gender, skin colour, social class, marriage status, relief, religion, HIV, disability or because of the establishment, joining and activities in trade union.
|MUST NOT||Article 8.1|
||Sexual harassment at workplace||MUST NOT||Article 8.2||Wording “Sexual harassment” is not clearly defined under the Labour Code 2012, so we do not know it’s scope of application|
||Providing information in prior to entering into labour contract:
The employer must provide the employee with information about job, workplace, working condition, working hours, rest breaks, labour safety, labour hygiene, wages, form of payment, social insurance, health insurance, regulation on the protection of trade secrets, confidential technology and other issues directly related to the entering into labour contract that the employee requests.
||Time of entering into labour contract is prior to the recruitment of the employee to work.
||Entering into labour contract with employees from 15 year old to under 18 year old must obtain the consent from their legal representatives||MUST||Article 18.1|
||Acts that the employer must not execute when entering into and implementing the labour contract:
– Keep the original of personal papers, degrees and certificates of the employees.
– Request the employees to guarantee the entering into labour contract with cash or other property.
|MUST NOT||Article 20|
||Probation: Only one probation is given for a job
||Probationary salary maybe agreed by both parties but at least 85% of the official salary for the relevant rank of the job
||Transferring employees to do other works than in the labour contract:
|Employer must notice at least prior to 3 working days to employess regarding transferring employees to do other works than in the labour contract.||Article 31.2|
|If salary of new job is less than the former job, the former salary will be maintained for 30 working days. The salary of new job is at least 85% of the former job but not less than regional minimum salary of Government||Article 31.3|
||Termination notice labour contract shall be made 15 days prior to the expiry date of the definite labour contract.||MUST||Article 47||Please be noted that although the expiry date of the definite labour contract is considered as termination with no cause but by Labour Code 2012 the employer is also required to notice regarding such termination before 15 days|
||Obligations of the employer in case the labour contract is terminated due to changes in the mechanism, technology or economic reasons:
– To prepare an employment plan.
– To re-train for employment in case only new job is available.
– To obtain an agreement with the trade union of the enterprise is required if terminating employment with multiple employees at the same time.
– To send notice in writing to the provincial labour managing authority before 30 days
|MUST||Article 44 and Article 46|
||In case of illegal unilateral termination of the labour contract, the employer must:
– pay wage for days the employee is banned from working
– pay 02 month salary according to the labour contract
– pay severance allowance (in case the employee does not want to return to work); and
– pay the agreed amount of money in case the employer does not want the employee to return and the employee agrees (at least 02 month salary according to the labour contract).
– pay compensation amount to the employers in a sum equal to the wages which would otherwise have been paid to the employee for those days not notified in case of violation of giving advance notice
|MUST||Article 42||Of note that the illegal unilateral termination of the labour contract is the labour contract termination not in compliance with provisions of Article 37, Article 38 and Article 39 of the Labour Code 2012|
||Obligations of the employer in case of merger and acquisition, divide, separation of enterprise, collective incorporation, the next employer must continually employ the current employees and amend the labour contract accordingly (if any)
If all the current employees cannot be employed, the next employer must made and implement the employment plan as prescribed in Article 46 of the Labour Code 2012
In case of stopping employment with the current employees, the next employer must pay the unemployment severance to the employees in according to Article 49 of the Labour Code 2012
– Outsourcing service providers must pay a deposit and obtain the license to provide outsourcing services.
– The maximum outsourcing duration is 12 months
|– The outsourcing contract must not include the agreements on the rights and interests of the employee that are inferior to that in the labour contract signed by the outsourcing service provider and the employee.||MUST NOT|
||Obligations of the employers on vocational learning and training. The employer must:
– Prepare the annual plan and fund for training and training organization
– Train the employee before transfer them to other job than the labour contract
– Report results of training in the annual report on employment to the provincial labour management authority
|MUST||Article 60 and Article 61|
|The employer shall not need to register vocational business line and must not collect tuition fees from the employees in case of recruitment for vocation and training of itself.
The employer and employees must enter the vocational traning contract in writing.
||Dialogue at the workplace:
Dialogue at the workplace is conducted once every 03 months periodically or at the request of one party.
The employer is obliged to arrange the venue and other material conditions to ensure the dialogue at the workplace.
The employer must not refuse request of collective negotiation from the employees. Within 07 working days from receiving request of collective negotiation, both parties must arrange time for negotiation meeting.
||Collective labour agreement:
If the contents of the enterprise collective labour agreement or the employer’s regulations on the rights, obligations and legal interests of the employee in the enterprise are lower than the contents of the corresponding provisions of the sector collective labour agreement, the enterprise collective labour agreement must be amended and supplemented within a period of 03 months from the day the sector collective labour agreement takes effect.
|There is no registration for scale of wages, wage tables, but required for submitting to the competent labour authority.||MUST||Article 93.2|
|Regarding form of wage payment, wage is paid through bank account or in cash. In case of payment through bank, the employer must reach agreement with the employees in relation to the fee for opening and maintaining bank account.
The change in form of wage payment should be informed to employees by employers at least 10 days in advance.
|Further to wage payment principle: In case wage is not paid in time and shall not be late exceed 01 month, the employer must pay the additional amount at least equal to interest of deposit mobilization which the State Bank Vietnam published on time of wage payment.||MUST||Article 96|
|Wage for overtime working at night:
The employee working overtime at night, in addition to the wage paid for overtime working as 150%, 200%, 300% of wage unit for each case, is paid additional 50% of wage applicable for day working.
|Stop of working wages in case of economic reasons, the salary for the working cease shall be agreed on by the two parties but shall not be less than the regional minimum wage as prescribed by the Government.||MUST||Article 98.3|
||Working hours and break hours:||MUST||The amendments of the Labour Code 2012 regarding working hours and break hours should be updated on the internal labour regulations (the “ILRs”) of your company for further application.
|8 hours/day and 48 hours/week (Old provision: 8 hours/day or 48 hours/week.||MUST||Article 104.1||The current provision: 8 hours/day or 48 hours/week.|
|Not exceed 10 hours/1 day (in case of working on week basis)
Working hours at night: 22 PM – 6 AM
|MUST||Article 104.2 and Article 105||
The current provision divided into 02 region: 22 PM – 6 AM (Hue Province to the North) and 21 PM-5AM (Quang Nam-Da Nang Province to the South).
– Not exceed 50% of the normal working hours in 01 day or not exceed 12 hours per day (in case of application of working regulation on weekly basis).
– 30 hours in 1 month; and
– 200 hours in 1 year.
|Holiday leave: 5 days for Lunar New Year hodiday||MUST||Article 111||The current Labour Code is 4 days;|
||Labour discipline and material responsibility|
|(i). Duration for the ILRs registration: Within 10 days from the date of promulgation of labour regulation||MUST||Article 120.2||Under the current Labour Code is 5 days.|
|(ii). Effective date of the ILRs: after 15 days from the date the state management agency on labour at provincial level receives the dossier||MUST||Article 122||10 days as in the prevailing Labour Code|
|(iii). Dossier for registration of the labour regulation includes:
|(iv). Prescription of labour discipline handling:
The current provision is up to 3 months
The current provision is up to 6 months
|(v). Decision on handling the labour discipline must be issued within the valid limitation of labour discipline handling||MUST||Article 124.3|
Supplementing new acts of violation subject to apply the discipline of dismissal:
Such violation is not easy to recognize as gambling, intentionally make injures, using drugs in workplace. So, the detailed provisions for this violation is essential for applicable the ILRs to handle labour discipline
|(vii). Deletion of labour discipline:
||Labor safety and hygiene:|
|(i). Responsibilities of the employer for the person suffering occupational accident and disease:
– Making the payment of the co-payment costs and the costs not included under the list paid by the health insurance for the employee participating in health insurance and making full payment of all medical expenses from the first aid, emergency to the stable treatment for the employees not participating in health insurance.
– Making full payment of salary under the labor contract to the employee suffering the occupational accident and disease and having to take leave during treatment.
– Making compensation to the employee suffering the occupational accident and disease in case of without fault of the employee
|(ii). The employee with occupational accidents and disease not due to the fault of employee and reduced working capacity from 5% or more shall be compensated by the employer at the following rate:
– At least equal to 1.5 months’ salary under the labor contract if the employee is reduced from 5.0% to 10% of his working capacity and then every 1.0% increase, an addition of 0.4 months of salary under the labor contract if reduced working capacity from 11% to 80%;
At least 30 months’ salary under labor contract for the employee reduced his working capacity from 81% or more or for the death of the employee’s relative from the occupational accidents.
|(iii). Where due to the fault of the employee, he/she also receives an allowance of an amount at least equal to 40% of the rate prescribed in Article 145.3
|(iv). Prohibited acts in the labor safety and hygiene:
– Making payment in cash in stead of allowance in kind
– Concealing, declaring or reporting falsely the truth about the occupational accident and diseases.
|MUST NOT||Article 146|
for female employee
|(i). Maternity leave:
– 06 months before and after birth;
– Female employee can go back to work before the expiry of maternity leave but at least after 4 months (with the certification of the competent medical facility concerning the early work )
Maternity leave prior to giving birth is not exceed 02 months
|(ii). Employer must ensure the former job upon returning to work of the female employee after the end of maternity leave or arrange another job for her with the salary rate not lower than that before maternity.||MUST||Article 158|
|(iii). The employer is not entitled to dismiss or unilaterally terminate the labour contract with the female employee for the reason of marriage, pregnancy, maternity leave, fostering child under 12 months old||MUST NOT||Article 155.3|
||The foreign employee|
|(i). Time limit of work permit: 02 years only||MUST||Article 173|
|(ii). Coming to Vietnam with a period of less than 03 months to handle the problem, technical situation and complex technology arising that affect or threaten to affect the production and business that the Vietnamese and foreign experts currently in Vietnam cannot be handled or offer service is not required to grant work permit. New other cases for employee working under 3 months is required to grant work permit||MUST||Article 172.4 and Article 172.5|
|(iii). The foreign enterprises, agencies, organizations, individuals and contractors before recruiting employees who are foreign citizens to work in the territory of Vietnam must explain the demand for labour employment and be approved in writing from the competent state agency.||MUST||Article 170.2|
|(i). Prohibited acts for the employer related to the establishment, joining and operation of trade union
– Hindering or causing difficulties for the establishment, joining and operation of the trade union of the employee.
– Coercing the employee to establish, join and operate the trade union.
– Requiring the employees not to participate in or leave the trade union organization.
– Discriminating on salry, working hours and the rights and obligations in the labor relationship to prevent the establishment, joining and operation of trade union of the employee.
|MUST NOT||Article 190|
|(ii). When the employer unilaterally terminates the labor contract and transfer another job, disciplines and dismisses employee who is the non-specialized trade union official, the employer must agree in writing with the grassroots trade union executive committee or the direct superior grassroots trade union executive committee.
In case failing to reach an agreement, both parties must report to the competent agency and organization. After 30 days from the date of giving notice to the local State management agencies, the employer has the right to make a decision and to take responsibility for his decisions.
|MUST||Article 192.7||Please be carefully noted this provision before unilaterally terminating the labor contract and transfer another job, disciplines and dismisses employee who is the non-specialized trade union official|
||Settlement of labour disputes
(i). New provisions on temporary closure of the workplace
At least 03 working days before the temporary closure of the workplace, the employer shall publicly posted the decision on temporary closure of the workplace and announce to the following agencies and organization:
|(ii). Cases of prohibiting the temporary closure at the workplace:
||MUST NOT||Article 217|
Draft circular to make foreign drug importers sick
The Ministry of Health (MoH) has just introduced the latest draft circular (Draft 13) providing guidelines for foreign direct investment (FDI) pharmaceutical enterprises to implement import-export rights in the pharmaceutical field in Vietnam. Although it reflects some suggestions by FDI enterprises in relation to the expansion of businesses’ rights, this latest draft circular has some shortcomings that need to be addressed before promulgation.
The category of “FDI enterprises in the pharmaceutical field” that are permitted to carry out drug import-export activities is defined by Article 3.11 of Draft 13.
According to this provision, in order to implement the drug import and export rights, FDI enterprises must invest in one of the following activities – drug manufacturing, drug storage services and drug testing services. This provision expanded the range of enterprises permitted to have the drug import-export rights defined under Decree No79/2006.
However, enterprises with drug import rights stipulated in their investment certificates still cannot directly import from overseas, even if pursuant to the Pharmaceutical Law, drug import and export are drug business activities that are independent from these aforementioned activities.
In addition to the aforementioned business lines, in accordance with Article 5 of Draft 13 “Conditions for implementing the drug import rights”, FDI pharmaceutical enterprises must meet other conditions for being considered a grant of a Certificate of Satisfaction of Conditions (CSC) for drug import activities. These include(1) being licenced with drug import rights in its investment certificate, (2) holding the respective CSC for implementing drug manufacturing, drug storage services and drug testing services and (3) having drug storage warehouses with GSP standards.
Upon satisfaction of all these conditions, FDI enterprises operating in the pharmaceutical field seeking to implement drug import and export rights need to undertake the following steps, (1) complete the registration for issuance of the investment certificate with the investment management authorities, (2) have a drug preserving warehouse of GSP standard and (3) request for issuance of the CSC in the pharmaceutical field (Article 6 of Draft 13).
As a direct consequence of the above restrictions, FDI pharmaceutical enterprises are not permitted to conduct drug import activities independently. In order to implement the drug import rights, they are required to engage other drug trading businesses (such as drug manufacturing or drug storage services) together with drug import activities in their investment licences, obtain the relevant CSC and build a warehouse of GSP standard for drug preservation.
These requirements not only increase the investment capital of FDI pharmaceutical enterprises, but also consume a lot of time. In addition, as mentioned above, these restrictions conflict with Vietnam’s WTO commitments and Article 11 of the Pharmaceutical Law. Hence, their legitimacy is in dispute.
Notwithstanding being restricted on conditions for drug import, FDI pharmaceutical enterprises are also limited to choices of business partners in Vietnam. According to Article 7.3 of Draft 13, FDI enterprises are only permitted to carry out trading activities with and selling imported drugs to certain Vietnamese pharmaceutical entrepreneurs who meet distribution conditions regulated by the MoH, namely the enterprises that either (1) engage a chain of GPP pharmacies, (2) have distribution centers as regulated by the MoH or (3) have warehouses of GSP standard, and a drug distribution system of GSP standard and a computer software system to manage goods.
As such, this regulation if passed, will directly limit FDI enterprises’ right to choose business partners, thereby centralising the imported drug distribution rights to a few domestic enterprises that meet the above standards. As a matter of law, since the Pharmaceutical Law and its promulgating documents regulate the conditions for granting the CSC for drug distribution activities, these limitations are not necessary and lack convincing foundations.
In relation to distribution activities, FDI enterprises are still not allowed to implement drug distribution activities in Vietnam, except for distributing drugs that are manufactured by themselves in Vietnam (Articles 9.1 and 9.2 of Draft 13). Also, FDI enterprises are not allowed to conduct some activities relating to the implementation of distribution rights as specified in Article 9.3, which includes contributing charter capital to Vietnamese distribution enterprises.
This limitation conflicts with Vietnam’s WTO Commitments in which foreign investors are allowed to do their business by way of establishing new companies, contributing capital or purchasing shares in enterprises in Vietnam.
Moreover, when the circular is promulgated remains a valid question. It appears that FDI enterprises that seek to be licenced with a CSC must wait until this proposal is officially promulgated.
It is not difficult to recognise that these limited regulations of adjusting the FDI enterprises’ activities relating to drug import-export activities regulated by the MoH decrease the competitiveness of FDI enterprises in the Vietnamese pharmaceutical market. Hence, FDI enterprises face many difficulties in expanding their business in order to meet their patients’ needs and to serve the public’s health system.
For the time being, pharmaceutical products may only be imported into Vietnam through domestic pharmaceutical companies possessing import licences. FDI pharmaceutical enterprises that have been granted drug import rights in their investment licences can only import drugs through consignment due to an absence of a CSC for drug import activities.
The inconsistency in the regulations and the MoH’s postponement of promulgating documents instructing the import-export activities of FDI pharmaceutical enterprises has inadvertently created policy barriers against FDI pharmaceutical enterprises in penetrating drug import and distribution fileds in Vietnam.
Although it was expected to remove these barriers to create free and fair competition between FDI and local enterprises in pharmaceutical markets, unfortunately Draft 13 has not yet met this expectation and requires further revisions to meet this goal.
HSBC optimistic about Vietnam’s economy
From| VIR/VNA |
The Hong Kong and Shanghai Banking Corporation (HSBC) has espressed its optimism about the country’s economic prospects.
“With patience and strong reform momentum, when the dust settles, Vietnam should find its self in a trimmer shape and more ready compete when the global economy recovers,” it said in a report on September 5.
According to the report, even with higher domestic oil prices, inflation dropped to 5 percent year on year in August from 5.5 percent in July.
Exports, though lower than in previous years, have remained resilient in double digits. Foreign reserves have increased and the Vietnamese dong has stabilised, strengthening the State Bank of Vietnam’s credibility.
These positive developments could not have happened without the political will to control the overheated economic growth, the report emphasised.
Business conditions are still weak but not free-falling, it commented, adding that demand for Vietnamese goods is rising despite the impact of the global crisis.
HSBC Vietnam economists said they expect domestic consumption to recover slightly towards year-end, especially with credit arrangements expanding.
On a year on year basis, export growth in August climbed to 13 percent from 1.6 percent in July.
While domestic demand remains weak, external demand for Vietnamese goods seems to be picking up.
The report also noted that Vietnam continues to attract tourists, boosting sales in the service and tourism sector.
Policy makers have proven in the years that they are able to address challenges as a patient approach to reform, will solve bad debts and create a healthy economic system, the report concluded.
Pledge to win back investors’ trust
Ngoc Linh | vir.com.vn |
The first thing we should do now is stabilise the economy as soon as possible. Then we need a strong commitment and real actions to improve infrastructure, workforce and legal frameworks.
On the eve of the Vietnam Business Forum (VBF), which will take place on May 29 in Hanoi prior to the Consultative Group (CG) Meeting of Donors, Minister of Planning and Investment Bui Quang Vinh offers VIR’s Ngoc Linh a candid snapshot of the economy’s current situation and how the government will regain foreign investors’ confidence
The MPI is determined to win-over investors with a range of concrete measures,
including putting the nation on the road to better infrastructure
Since early this year, Vietnam has tamed high inflation and reduced the trade deficit. However, there are signs of economic stagnancy in the country. How can Vietnam reach its 6 per cent growth target this year?
Economic growth in 2012’s first quarter rose only 4 per cent. This is a very low level in comparison with the same period during the past two years. However, we have been successful in taming inflation, which was only 2.78 per cent in the first five months and trade deficit was $700 million. However, there are now signs of economic stagnancy. If you look at the reduction of import values, the trade deficit is under control. But if we look at the structure of Vietnam’s manufacturing sector, this is abnormal because local manufacturers cut or slowed their production and stopped importing materials and components. This resulted in a slowdown in the production industrial index which rose only 4.2 per cent in the last five months. Furthermore, state budget collections also reduced over the past months.
There are many reasons for this stagnancy, but the main reason is that the government has implemented tightened monetary and fiscal policies to tame inflation and stabilise the macroeconomy. Many enterprises could not access bank loans and lending interest rates were too high. Based on these difficulties, we forecast that the economic growth in the first half this year will be around 4.4 per cent. This means that the growth should be from 7.2-7.5 per cent in the second half to reach the target of 6 per cent for the whole year. This is very hard to achieve.
To boost economic growth, Vietnam also aims to attract more foreign direct investment (FDI). However, while the FDI is recovering in the world, FDI commitments to Vietnam keep on declining. Why is this?
It is true that FDI commitments to Vietnam have declined during the past three years. But FDI just declined in terms of new commitments. The disbursement of capital remains at a level of around $11 billion per year for three years. And from January to May 2012, FDI disbursement slightly declined 0.02 per cent year-on-year. This indicates foreign investors are still pumping money to develop projects in Vietnam. We all know the disbursement is the most important.
In addition, foreign companies are doing very well in Vietnam. The export turnover of foreign-invested companies, excluding crude oil, from January to May rose 43.7 per cent year-on-year.
On the other hand, I can say that the decline in new commitments showed FDI attraction improvements. Several years ago, we granted investment certificates to many investors for building multi-billion-dollar projects, mostly in the property sector. However, many of them have done nothing so licences were revoked.
Thus, in general, I don’t think the decline in FDI commitments is a big issue at present. But we agreed that Vietnam has its own weaknesses in attracting new projects. These are economic uncertainties, dong devaluation, complicated administrative procedures, insufficient supporting industries and underdeveloped infrastructure system. All of those factors badly affect FDI attraction to the country. In recent years, the region has emerged as a good destination for investment. Malaysia, Indonesia, Thailand and even Myanmar are challenging Vietnam. If Vietnam doesn’t rise up at this time, we will continue lagged behind
Last September, Prime Minister Nguyen Tan Dung issued an instruction asking the MPI, in collaboration with other ministerial bodies and provinces, to take measures to improve the investment climate and FDI quality. How is the instruction proceeding?
The prime minister’s instruction is being positively implemented. According to the instruction, we found weaknesses preventing FDI from entering Vietnam. As I mentioned above, those include the economic turmoil, poor infrastructure and a poorly-skilled workforce. Furthermore, we are undertaking 20 projects to remove obstacles for foreign investors and improve the quality of FDI. In the future, FDI attraction will be appropriate to the government’s economic restructuring plan.
In which, we will give incentives to projects in some encouraged sectors and areas. The Ministry of Planning and Investment has finished a project for preventing transfer pricing and a project for developing infrastructure. Other projects are under preparation and will be finished on time.
Many investors are complaining that the current legal framework for managing FDI is not appropriate to economic development. Do you agree?
Yes, we have to create a stable and attractive legal environment for foreign investors. In the coming time, all the obstacles will be removed. The National Assembly will discuss and amend the Investment Law and Enterprise Law. The legal framework on land usage and labour will be also reviewed to make them be in line with reality. As I understand, land is a very important issue that many foreign investors are now interested in. Although many foreign-invested projects are in industrial parks, many others are invested outside industrial parks, where investors are facing site clearance issues and high compensation costs.
In your opinion, what should be done to improve foreign investors’ confidence amid current economic woes?
We have advantage of political stability, this is very important to attract FDI. However, we have many things which are discouraging foreign investors. To improve investors’ confidence, the first thing we should do now is stabilise the economy as soon as possible.
Then we need a strong commitment and real actions to improve infrastructure, workforce and legal frameworks. If we do not do that, Vietnam will lag behind regional countries like Indonesia, Malaysia and Cambodia in terms of FDI attraction.
Lawyers urged lawyers to contribute to law-governed state building
VGP – PM Nguyen Tan Dung urged the Vietnamese lawyers to strengthen capacity in order to join hands to build a law-governed state
The Government chief made the point during a meeting with leaders of the Vietnam Lawyers Federation in Hanoi on May 24.
He also asked the VLF to focus on protecting national sovereignty and legitimate interests of citizens; taking part in complaint and denunciation settlement, particularly cases of protracted and mass complaints; and counter-firing wrong arguments of hostile forces.
The VLF was also tasked to pay more attention to the popularization of legal documents and international cooperation.
VLF Chairman Le Thuc Anh reported that the Federation has undertaken the role to gather Vietnamese lawyers and served as a bridge to connect the Party, State and the lawyer circle over the last three years following its establishment in 2009.
Especially, the Federation has made active contributions to judiciary reform, building of law-governed state, administrative reform among others.
At present, Vietnam has more than 10,000 lawyers, 2,200 law offices, 800 law firms. Besides, the country has allowed over 200 foreign lawyers to work here.
Most visitors to Việt Nam need a visa to enter the country. Visas are exempted for the citizens of the countries, which have signed a bilateral or unilateral visa exemption agreement with Việt Nam, tourist visa may be valid for 15 to 30 days.
Tourist visa can only be obtained in Vietnamese embassies, consulates abroad. Otherwise, you can get a visa at the border gates if you are invitees of some Vietnamese competent organs or you are travelling on a package tour organized by Vietnamese travel companies. To apply for a visa, the requirements are as follows:
- Entry permit form (which can vary from one Vietnamese embassies or consulate abroad to another) – There are two categories of this form: for foreigners and for Vietnamese overseas.
- Two photos (4cmx6cm or 3cmx4cm)
- Original passport
- Visa fee.
You should send your application and photos to a Vietnamese embassy or consulate abroad, which is most convenient to you. On your requirement, the reply will be returned by post (you must provide stamped envelopes with your name and address).
It is easier to get your visa from a Vietnamese travel agency. The nehossary information to the travel agency include:
- Full name
- Birthday and place of birth
- Number of your passport
- Entry and exit dates
- Country you plan to receive your entry visa from the Vietnamese embassies or consulates
Vietnamese overseas are required to provide more information:
- Year and reason to leave Việt Nam
- Leave Việt Nam by means
- Full names and addresses of relations in Việt Nam
– Up to February 06, 2009, Việt Nam inked 56 visa exemption agreements and treaties with 55 countries, 54 of them have come into effect. The following is the List of visa exemption agreements between Việt Nam and other countries.
Date of entry into force
Categories of passports covered
|1||Argentina||13/11/1999||Diplomatic passports, official passports|
|2||Albania||1/10/1956||Diplomatic Passports, Official passports, Group Passports for official mission|
|3||Algeria||02/01/1995||Diplomatic Passports, Official passports|
|4||Afghanistan||26/2/1988||Diplomatic Passports, Official passports|
|5||Bangladesh||10/7/1999||Diplomatic Passports, Official passports for Vietnamese citizens
Diplomatic Passports, International Passports with “official” seal for Bangladesh citizens
|6||Belarus||24/11/1993||Diplomatic Passports, Official passports|
|8||Brunei||1/11/1997||Diplomatic Passports, Official passports|
|9||Bulgaria||1/6/1966||Diplomatic Passports, Official passports; Group Passports or Ordinary Passports for official mission|
|10||Cambodia||30/11/1979||Diplomatic and Official passports; Diplomatic and Official Lassez-passezs|
|11||Chile||25/6/2005||Diplomatic Passports, Official passports|
|12||China||15/3/1992||Diplomatic Passports, Official passports, Ordinary Passports for official mission|
|13||Cuba||Currently in force||Diplomatic Passports, Official passports, Ordinary Passports for official mission, Seaman’s Passports for Vietnamese citizens
Diplomatic Passports, Official passports, Service Passports or Maritime Passports for Cuban citizens
|14||Czech||13/2/2000||Diplomatic passports, Official passports|
|15||Dominica||29/9/2007||Diplomatic passports, Official passports|
|16||Ecuador||29/9/2007||Diplomatic passports, Official passports|
|18||Hungary||1/8/1993||Diplomatic Passports, Official passports|
|19||India||23/3/1995||Diplomatic Passports, Official passports|
|Diplomatic Passports, Official passports
Ordinary Passports with valid periods of at least 6 months
|22||Iraq||1/12/2001||Diplomatic Passports, Official passports|
|23||Japan||1/5/2005||Diplomatic passports, Official passports|
|24||Kyrgyzstan||Currently in force||Diplomatic passports, Official passports, Ordinary Passports for official mission|
|Diplomatic Passports, Official passports, Ordinary Passports for official mission,
Ordinary Passports with valid periods of at least 6 months
|26||Malaysia||25/11/2001||Diplomatic passports, Official passports, Ordinary Passports|
|27||Mexico||4/2/2002||Diplomatic passports, Official passports|
|28||Moldova||23/5/2003||Diplomatic passports, Official passports|
|29||Mongolia||6/2/2000||Diplomatic passports, Official passports|
|30||Montenegro||1/9/2000||Diplomatic passports, Official passports, Special passports|
|31||Morocco||19/12/2004||Diplomatic passports, Official passports, Special passports|
|32||Mozambique||9/2/2009||Diplomatic passports, Official passports|
|33||Myanmar||11/8/1998||Diplomatic passports, Official passports|
|34||Nicaragua||Currently in force||Diplomatic passports, Official or Service passports|
|35||Pakistan||2/3/2007||Diplomatic passports, Official passports|
|36||Panama||4/11/2002||Diplomatic passports, Official passports for Vietnamese citizens
Diplomatic passports, Official passports, Special Passports, Consular passports
Republic of Korea
|Diplomatic Passports, Official passports; Group Passports for official mission
Ordinary Passports for official mission
|38||Peru||2/6/2006||Diplomatic passports, Official passports for Việt Namese citizens
Diplomatic passports, Special passports for Peruvian citizens
Official Passports, Holders of Ordinary Passports having an invitation to join ASEAN activities organized by ASEAN Secretariat or Governmental agencies
Ordinary Passports with valid periods of at least 6 months, together with return air tickets or air tickets for leaving the country
|40||Paraguay||26/10/2008||Diplomatic Passports, Official passports|
|41||Romania||1/12/1956||Diplomatic Passports, Official passports; Group Passports or Ordinary Passports for official mission|
|42||Russia||20/2/1994||Diplomatic passports, Official passports|
|43||Serbia||1/9/2000||Diplomatic passports, Official passports|
|Diplomatic Passports, Official passports
Ordinary Passports with valid periods of at least 6 months, together with return air tickets or air tickets for leaving the country
|45||Slovakia||10/8/1992||Diplomatic Passports, Official passports|
|46||South Africa||23/6/2007||Diplomatic Passports, Official passports|
|47||Republic of Korea||13/1/1999||Diplomatic Passports, Official passports|
|48||Sri Lanka||19/9/2003||Diplomatic passports, Official passports|
|Diplomatic Passports, Official passports
|50||Tunisia||20/1/2009||Diplomatic Passports, Special passports|
|52||Ukraine||6/12/1993||Diplomatic Passports, Official passports|
|53||Uruguay||15/6/2008||Diplomatic Passports, Official passports|
|54||Venezuela||17/11/2006||Diplomatic Passports, Official passports|
Customs procedures in Việt Nam are quick and simple. To enter and exit Việt Nam, visitors are required to fulfill the arrival – departure declaration.
1.- Passengers are given duty free allowance for not more than 1.5 liters of liquor with above 22 degrees of concentration of alcohol and two liters of liquor below 22 degrees of concentration of alcohol; 400 cigarettes; 100 cigars; 500 gram of raw tobacco.
– Other items which are allowed in accompanying baggage are duty free with value not over VND 5,000,000.
– Passengers bringing goods exceeding the amount as above stated are required to fill in the declaration form No. HQ/2002-PMD and pay duty(ies) according to Việt Namese laws.
2. Passengers whose goods are not subject to customs declaration on page 4, 5 (For customs declaration) do not have to declare.
Vietnamese đồng (VND) is the official currency in Việt Nam.
– Paper notes include: VND 500,000; 200,000; 100,000; 50,000; 20,000; 10,000; 5,000; 2,000; 1,000; 500; 200 and 100. Coins include VND 5,000; 2,000; 1,000; 500 and 200.
Cheques with value as Vietnamese đồng include: VND 1,000,000 and 500,000.
– Foreign currencies and tourist cheques can be exchanged into Vietnamese đồng at banks or foreign exchange agencies.
– Credit cards are popularly used, especially in cities and big tourist centers.
Vietnamese đồng can be changed into foreign currencies at the airport
Vn’s retail market shows positive points
VGP – Việt Nam has become one of five most lucrative retail markets in the world, according to the newest report released by the Research and Markets website.
In its ” Việt Nam Retail Market Forecast to 2014″, Research and Markets revealed that retail networks will make crucial contribution to the country’s consumption market in the future.
According to the report released on April 5 by Savills Việt Nam, at the end of the first quarter of 2012, the total area reserved for retail sale activities in Hà Nội reached nearly 660,000 sq. m square, up 50% compared to the same period last year.
In the next three years, the capital will have around 1.6 million sq. m for retail activities from 90 projects.
The growth rate of Việt Nam’s consumption market is higher than other countries in the region, as stated in the Taylor Nelson Sofres research. From now to 2014, Việt Nam’s retail revenue will increase 23% per year.
Professionals estimated that the country’s retail market can attain US $113 billion in 2012.
According to the Ministry of Industry and Trade (MIT), the total retail revenue in 2011 reached nearly VND 2 trillion or approximately US $90 billion, an increase of 29.3% in comparison with the previous years, contributing 15-16% of the Gross Domestic Products (GDP).
By Thùy Dung
CAR IMPORTS UNLIKELY TO SLOW DOWN
The country will have to spend up to $12 billion yearly on importing cars until 2025 if there is a slow growth in the automobile industry, according to the Vietnam Business Annual Report 2011.
The report, released by the Vietnam Chamber of Commerce and Industry (VCCI) recently, looked at how the domestic automobile manufacturers could compete against foreign rivals when the country’s automobile import tax for ASEAN (AFTA) would be reduced to 50 per cent by 2014 and zero per cent by 2018.
According to the report, the country’s automobile industry is currently less developed as 80 per cent of assembly components needing to be imported. The automobile market has roughly 150,000 vehicles per year.
The country had 314 automobile assemblers by the end of 2010, of which 52 per cent were domestic and private, 42 per cent were foreign invested and only 6 per cent were State-owned. The assemblers’ total design capacity was roughly 458,000 vehicles per year, but the assemblers ran only at half of this capacity.
Le Thi Hai Van from the Ministry of Planning and Investment’s Foreign Investment Agency (FIA) said in the report that in general, technology and equipment of the country’s automotive industry progressed at a medium or even backward level.
The current so-called technology of the industry was only welding, painting, assembling and product testing, Van said.
Meanwhile, supporting industries were small and incomprehensive. The country currently has roughly 210 enterprises involved in manufacturing automobile components and parts, creating jobs for roughly 26,163 workers. But the enterprises could produce only simple components such as chassis, container vehicles, tires, radiators, wires, springs, exhausts, gearboxes, and steering wheels.
Van reported that investment in automotive component manufacturing was poor and the products were small in both volume and variety. Every year, the automotive industry still has to import about $2 billion of parts.
According to statistics of the Ministry of Public Security, the country’s total number of cars in circulation was 1.63 million units by the end of 2010. Thus, the nation’s automobile market has great potential. However, the country has not so far got any large-sized producers whose products could be exported and competes against that of other rivals in the region.
As planned, Vietnam has set a target to increase Vietnamese automobiles of less than nine seats to at least 50 per cent. However, the localization rate currently reaches less than 15 per cent-too low of a rate to be able to develop the automotive industry. The localization rates for other vehicles, such as cars with more than 10 seats, are also only 30-40 per cent against the target of 60 per cent.
The report attributed the shortcomings of the automobile industry to domestic automobile producers not being dynamic or sharp in their approach to customers. They are not also confident nor familiar with the concept of building a “mutually beneficial” relationship with customers. Supporting enterprises that produce components for the industry could churn out only poor-quality products at high prices due to outdated technology.
Therefore, there is always a big gap between the requirements of products quality, price and delivery deadlines for foreign companies and the ability to meet the requirements by Vietnam’s suppliers.
A loose linkage and inconsistency between FDI and Vietnamese enterprises in the automotive industry is also a cause hindering the industry’s growth. A survey of 23 FDI manufacturers in the automobile industry in 2010 by the FIA, the General Statistics Office and the VCCI showed that six out of 23 of the manufacturers did not buy components from Vietnamese suppliers. Only about 15 per cent of the inputs used by the FDI manufacturers were from Vietnamese suppliers.
Therefore, the report said, the localization rate of Vietnam’s automotive vehicles was very modest, causing the industry to depend mainly on foreign investors and the domestic car market be flooded with imported cars from Japan, South Korea and Germany.
TIME TO CUT INTEREST RATES
VGP – The State Bank of Việt Nam has announced to cut interest rates by one percentage point, reflecting the Government’s confidence in combating inflation and desire to ease difficulties against banking sector and businesses.
Accordingly, the refinancing rate will be lowered from 15% to 14%, while the cap on deposit interest will be cut from 14% to 13%.
The overnight loan and discounting interest rates stand at 15% and 12%, respectively, 1% lower than before.
It is the right time to reduce interest rate in order to meet the needs of economic growth while also achieving the Government’s target of single-digit inflation for this year, said SBV Governor Nguyễn Văn Bình at a recent press conference.
Governor Bình said since August last year, inflation began a downward trend but it was not enough to lower interest rates because of the banks’ liquidity problem caused by hot credit growth.
However, experts have warned that if Việt Nam hurries to loosen the monetary policies, it would suffer another inflation cycle.
In 2012, the banking sector continues prioritizing capital for four areas, namely agriculture and rural development, exports, supporting industries, and small and medium-sized enterprises, he said, adding that banks are also in favored of these areas.
INVESTOR’ BENEFITS GUARANTEED
VGP – The Government shall make specific provisions on guarantee for interests of investors in a case where a change in laws or policies affects adversely the interests of the investors.
Question: (a foreign investor). I am running a firm in Việt Nam. Whether the State will guarantee my benefits in case of a newly promulgated law or policy?
Under Article 11 of the Investment Law,
1. If a newly promulgated law or policy contains higher benefits and incentives than those to which the investor was previously entitled, then the investor shall be entitled to the benefits and incentives in accordance with the new law as from the date the new law or policy takes effect.
2. If a newly promulgated law or policy adversely affects the lawful benefits enjoyed by an investor prior to the date of effectiveness of such law or policy, the investor shall be guaranteed to enjoy incentives the same as the investment certificate or there shall be resolution by one, a number or all of the following methods:
(a) Continuation of enjoyment of benefits and incentives;
(b) There shall be a deduction of the loss from taxable income;
(c) There shall be a change of the operational objective of the project;
(d) Consideration shall be given to paying compensation in necessary circumstances.
3. Based on the provisions of the laws and commitments in international treaties of which the Socialist Republic of Vietnam is a member, the Government shall make specific provisions on guarantee for interests of investors in the case where a change in laws or policies affects adversely the interests of the investors.
CONDITIONAL INVESTMENT SECTORS
Question: (a foreign investor) How many conditional investment sectors in Vietnamese law?
Under article 29 of the Investment Law, sectors in which investment is subject to conditions shall comprise:
(a) Sectors impacting on national defense and security, social order and safety;
(b) Banking and finance sector;
(c) Sectors impacting on public health;
(d) Culture, information, the press and publishing;
(dd) Entertainment services;
(e) Real estate business;
(g) Survey, prospecting, exploration and mining of natural resources; the ecological environment;
(h) Development of education and training;
(i) A number of other sectors in accordance with law.
Applicable to foreign investors, in addition to the sectors stipulated in clause 1 of this article, the sectors in which investment is subject to conditions shall comprise investment sectors in accordance with the schedule for implementation of international undertakings in international treaties of which the Socialist Republic of Việt Nam is a member.
Where an enterprise with foreign owned capital invested in a sector in which investment was unconditional but during the course of the investment activity the list of sectors in which investment is conditional was amended with the result that the relevant sector was included, the investor shall be permitted to continue its investment activity in that sector.
The same investment conditions which are applicable to domestic investors shall be applied to foreign investors where Vietnamese investors hold more than 51% of the charter capital of an enterprise.
Based on the requirements for socio-economic development in each period and consistent with the undertakings in international treaties of which the Socialist Republic of Việt Nam is a member, the Government shall regulate the list of investments subject to conditions, the conditions applicable to the establishment of economic organizations, the forms of investment, and opening the market in a number of sectors as applicable to foreign investors./.
CONVERTING DRIVING LECENSES IN VN
Question: (A foreigner) I intends to stay in Việt Nam for one month. What should I do to drive a vehicle in Việt Nam?
Answer: Under Item 5, Article 40, Circular 07/2009/TT-BGTVT, dated June 19, 2009, specifying the training, testing and grant of road motor vehicle driver licenses, foreigners or overseas Vietnamese shall have to convert their foreign driving licenses or international driving permits into Vietnamese driving licenses.
Circular No. 15/2011/TT-BGTVT, dated March 31, 2011, on amending and supplementing a number of articles of the Minister of Transport’s Circular No. 07/2009/TT-BGTVT of June 19, 2009, stipulates that the conversion of driving licenses has to comply with the following provisions:
– A Vietnamese citizen can convert his/her driving license at the Việt Nam Road Department or Transport Departments at their temporary residence.
– Non-Vietnamese citizen residing over three months in Việt Nam would be allowed to convert their driving license.
In your case, if you intends to stay in Việt Nam for one month, you are not eligible for converting your driving license./.
NEW RULES ON REMITTANCES OF PROFITS OVERSEAS
Regulations restricting remittances of profit overseas are of considerable concern to foreign investors. Which makes it surprising that no new regulations have been issued to govern this topic since the approval of the Law on Investment back in 2005 – leading to a situation of “new law, old guidance”.
Until now, the Ministry of Finance issued Circular No 186/2010/TT-BTC on November 18 providing guidelines on remittance of profit overseas by foreign organisations and individuals deriving profit from direct investment in Viet Nam. It finally replaces Circular No. 124/2004/TT-BTC issued under the old Law on Foreign Investment back in 2004.
The new circular governs remittances of profits from different forms of direct investment, namely investment in an enterprise, under a contract, to develop a business, or make a capital contribution to an enterprise.
Profits are defined in the circular as lawful profits derived from direct investments under the Law on Investment after fulfilling tax and other financial obligations to the State of Viet Nam in accordance with regulations (Article 2.1). Profits can be annual profits or profits realised upon termination of direct investments in Viet Nam.
Annual profits are defined as profits distributed to or received for the fiscal year based on audited financial statements and income tax declarations, plus or minus other profits and expenses. This distribution is conducted at the end of fiscal year after the enterprise has fully discharged its financial obligations to the State, lodged audited financial statements, and made a corporate income tax declaration for the fiscal year to the tax office with jurisdiction over the enterprise (Articles 3.1 and 4.1).
The total amount of profit received by the foreign investor during the process of its direct investment in Viet Nam, less profits used for re-investment, profits already remitted overseas and profits used to pay other disbursements in Viet Nam, is used to determine the amount of profits to be remitted overseas at the termination of investments in Viet Nam (Article 3.2). The investor must also have fully discharged its obligations under the Law on Tax Management.
In cases in which, based on financial statements of an enterprise in which the foreign investor has invested, accumulated losses remain after carrying forward losses in accordance with the Law on Corporate Income Tax, the foreign investor shall not be allowed to remit profits overseas. This is new point of the circular aimed at restricting some foreign investors from preparing a fraudulent report on losses when remitting profits to a parent company.
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