Vietnam - Labour moves spooking investors

The Vietnam-based foreign business community is against more foreign worker restrictions.

The French Chamber of Commerce and Industry, Canadian Chamber of Commerce, German Business Association, Swiss Business Association, Hong Kong Business Association, British Business Group and Nordic Chamber of Commerce have voiced their displeasure at a new decree set to be rolled out. 

The groups have petitioned Prime Minister Nguyen Tan Dung and ministries against the implementation of Decree 46/2011/ND-CP dated June 17, 2011. It makes a number of major changes to Decree 34/2008/ND-CP dated March 25, 2008 on recruitment and management of foreigners working in Vietnam.

Matthias Dühn, executive director of European Chamber of Commerce in Vietnam, told VIR that these business associations and chambers believed Decree 46 might discourage investment in Vietnam.

“If Vietnam wants to attract high-quality investment in the added-value industries, laws to hire foreign experts should be relaxed rather than made tougher. Decree 46 puts more burdens on foreign investors to hire qualified foreign staff and imposes training requirements for Vietnamese expat replacements that are unreasonable,” Dühn said.

According to the petition, Decree 46, which will come into force on August 1, 2011, imposed irrational conditions for recruitment and work permit extension of foreigners working in Vietnam, especially with regard to foreign managers, executives and specialists.

“These regulations do not only contradict to the Labour Code of Vietnam, but also constitute violations of Vietnam’s international commitments, particularly the World Trade Organization Agreements,” the petition reads.

For example, Article 1.3 of Decree 46 provides that at least 30 days prior to any recruitment of foreigners, Vietnam-based companies must publicly announce recruitment demands to Vietnamese about positions that they expect to employ foreigners in at least one national newspaper and one regional newspaper. Article 1.9 requires companies to present documents evidencing that they have advertised recruitment demands for Vietnamese to these positions to apply for work permits of foreign employees.

Also under the decree’s Article 1.13, to extend work permits for a foreign employee, a company must now enter into an apprenticeship contract with a Vietnamese employee expected to substitute that relevant foreign employee.

The above regulations have been met with a large outcry.

The foreign business associations and chambers said the first rule would prolong companies’ recruitment process because it applied to recruitment of all foreign employees, including top managerial positions.

“It will increase administrative burdens for foreign companies doing business in Vietnam,” said Winnie Lam, chairwoman of Canadian Chamber of Commerce in Vietnam.

They were also of the opinion that the second rule was “in fact a prohibition of hiring experienced and capable foreign employees where a company does not sign apprenticeship contracts with Vietnamese employees.”

Dühn said some expat positions might be specialised positions that might not need replacements for. Secondly, even if there was a replacement, it was unreasonable to train a Vietnamese national in a potentially short space of time.

“Decree 34 was sufficient and Decree 46 is not necessary. We think that Decree 46 should not be implemented by August 1 and further consultations should be held with the business community,” he said.

“We would like to seek a solution that satisfies both Vietnam’s need to control the labour market as well as foreigners’ freedom to hire their preferred staff without additional administrative burdens,” said Patrick Regis, chairman of British Business Group in Vietnam.

According to the Ministry of Labour, Invalids and Social Affairs (MoLISA), Decree 46 came as Vietnam was home to many illegal foreign workers.

Its Employment Department’s vice head Le Quang Trung said the decree would help “close” loopholes in the management of foreign workers in Vietnam.

The decree states that Vietnamese workers must be given high priority by foreign employers where the work is within their capacity.

If a project needs foreign workers with professional knowledge suitable to the project, the investors’ bidding documents must include a detailed plan on foreigners to be employed. This plan must include information on the positions involved, how many foreigners will be employed and details of their qualifications, as well as their experience and the length of their contract in Vietnam.

The decree also states that for projects needing 500 labourers or more, foreign employers have 60 days to recruit local workers.

For projects requiring less than 500 labourers, foreign employers have 30 days for this recruitment.

If they cannot recruit enough Vietnamese workers in the given timeframe, provincial and municipal people’s committee’s chairmen can allow them to recruit foreign labourers for those positions they could not fill with Vietnamese employees.

Foreign labourers in Vietnam come from 65 countries, with the majority coming from China, South Korea, Thailand and Indonesia. Up to May 2011, there were over 74,000 foreign workers in Vietnam.

Thanh Tung | vir.com.vn

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