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Experts: Foreign employment rule also impacts on local firms   2011-08-28 - SGT

Experts representing companies and foreign business groups in Vietnam on Wednesday repeated their concerns over a Government decree which they said would make life hard for both foreign and local employers when it came to hiring foreign employees.

Effective on August 1, Decree 46/2011/ND-CP on recruitment and management of foreign employees also affected local firms employing foreigners, as Nguyen Hong Ha, deputy general director of the Vietnam Chamber of Commerce and Industry (VCCI) in HCMC, said at a business luncheon in the city on Wednesday.

Ha was one of the two speakers at the event entitled “Update on Decree 46 - The Future of Work Permits for Foreigners”, which was co-hosted by the European Chamber of Commerce in Vietnam (EuroCham) and VCCI for nearly 100 representatives of foreign business groups as well as foreign and local companies.

“I talked to some representatives here (at the luncheon) and they also mentioned that this (Decree 46) is for not only foreign companies but also local companies. You know that local companies have started to hire talents from other countries,” Ha said.

The second speaker was Oliver Massmann, partner of Duane Morris Vietnam LLC, who also mentioned the impact of Decree 46 on Vietnamese wanting to have foreign employees. “Vietnamese companies can hire foreign experts on a very limited basis. The attractiveness for foreign experts to start at Vietnamese companies will decrease much, and it does not help Vietnam grow its economy,” Massmann told the Daily after the business luncheon.

The international attorney at law said the biggest challenges posed by Decree 46 were for foreign companies to attract high-level foreign experts to work in Vietnam for a long term in the future. “They will not come or less foreign experts will come and that means less foreign expertise will be available in Vietnam.”

In his presentation, Massmann highlighted a broader scope of work permit exemption as the good side of Decree 46. Work permits are exempt for chiefs of representative offices, project offices and representatives of foreign non-governmental organizations in Vietnam; intra-corporate transferees in 11 sectors in Vietnam’s WTO specific commitments; technical and professional specialists of an ODA-funded project.

However, Massmann noted, the intra-corporate transferees working for pure manufacturing companies or service suppliers are not covered by such commitments for the aforesaid sectors of business services; communications services; construction and related engineering services; distribution services; educational services; environmental services; financial services; health related and social services; tourism and travel related services; recreation, cultural and sporting services; and transport services.

Concerns also revolved around the other point that visa is only issued for a foreigner after issuance, extension or renewal of work permits. Recruitment process should be with Vietnamese first before offering the same positions to foreigners.

Massmann explained Article 1.3 and 1.9 stated that 30 days prior to hiring foreigners, employers were required to publicly announce recruitment demands to Vietnamese about positions that they expected to hire foreigners in national and regional newspapers.

“Companies must present documents evidencing that they have advertised recruitment demands for Vietnamese about these positions in their applications for work permits for foreign employees,” he said.

The new recruitment process was time- and money-consuming as agreed by participants at the business luncheon. On his part, Massmann said the process could be prolonged as it applied to all foreign employees, including top executive and technical experts.

On top of that, foreign companies can be sued by Vietnamese applicants if they do not conduct further time-consuming recruitment processes, Massmann said.

Ha of VCCI stressed Decree 46 was aimed at solving the problems arising during the implementation of the decree as well as protecting the interests of local workforce and creating jobs for locals.

However, Ha acknowledged that it was important to have a proper policy to generate jobs for locals but strategically important to have a right policy to attract professionals and highly-skilled employees from other parts of the world.

She told the event that the reality was many foreign investors at meetings with VCCI did not ask about tax incentives but the availability of skilled workers.

“Some companies state clearly that they do not need tax incentives… but ask whether they can find the right people for them,” Ha said. She added training skilled employees would not be done overnight but take a lot of time.

Ha said it was expected that a guidance circular for implementation of Decree 46 would come out next week. Meanwhile, EuroCham executive director Matthias Dühn said EuroCham and other foreign business chambers planned to meet local labor authorities next week.

Dühn told the Daily after the event that EuroCham and other foreign business groups would continue expressing concerns about the new decree as they had not received any feedback though they had sought a reversal of new provisions in the decree.

The petitions were submitted to the Prime Minister, relevant agencies and diplomats in July by EuroCham, the Canadian Chamber of Commerce, the French Chamber of Commerce, and the German Business Association, the Nordic Chamber of Commerce and other foreign business chambers and associations.

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