Vietnam's new rules on foreign workers likely to make things messy for employers

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Country's universities ill-equipped to churn out the high-caliber local workers required to take over from foreigners

A construction worker takes a break after work in downtown Ho Chi Minh City. The recent tightening of regulations on foreign workers, which might be targeted at the construction sector, involves even more red tape and is likely to exacerbate the already dire human-resource situation facing the corporate sector, experts warn. PHOTO: BLOOMBERG

The recent tightening of regulations on foreign workers, which involves even more red tape, is likely to exacerbate the already dire human-resource situation facing the corporate sector, experts warn.

A decree to take effect on November 1 superseding an earlier one will continue to make it incumbent on employers to prove that they require foreign workers and that Vietnamese cannot replace them.

But employers now have to get approval from the provincial chief to hire foreign workers.

Foreigners found working without permits will be deported within 15 days.

The decree reduces the validity of work permits for a broad category of foreign workers from three to two years, a provision that could aggravate the shortage of skilled workers already felt acutely by both foreign and local companies, the experts point out.

"Will two years be enough for local workers and their employers to learn the needed skills from their foreign counterparts and replace them?" Le Thanh Kinh, who runs Le Nguyen law office in Ho Chi Minh City, asked.

Multinationals say they invest in Vietnam due to the large labor market, low costs, and access to local and foreign markets, and some of their investments need specially trained staff and require a level of skill not immediately available in Vietnam.

In hindsight, what the authorities should have done while drafting the new rules was "establish clear regulations that cater to each and every category of foreign workers, especially in distinguishing between "˜workers', "˜technicians', "˜managers' and "˜professionals'," David Koh, associate professor of Southeast Asian studies at the National University of Singapore, said.           

Experts also say if the government wants to keep more jobs for locals, what it also needs to do is improve training to produce more workers relevant to the investments that are going to be made.

But nearly four decades after the Vietnam War ended in 1975 the country remains bogged down in an education quagmire.

Foreign companies have warned in the past that the poor quality of universities will hinder Vietnam's economic growth and said it makes it difficult for them to find enough graduates in finance, management, and information technology.

The European Chamber of Commerce (EuroCham) in Vietnam said in a white book it released last December that Vietnam's education system faces "a major crisis which is affecting the current workforce and talent being produced."

It said due to the lack of satisfaction with general and vocational training, nearly 40 percent of foreign companies feel the need to invest in onsite training, which is a massive burden on those seeking to invest in Vietnam.

It quoted a recent education ministry survey as saying that around 60 percent of recent graduates need retraining to meet the requirements of future employers.

"Employers in Vietnam, both domestic and foreign, face very similar problems in terms of human resources," Nicola Connolly, vice chairwoman of EuroCham, said.

"There is an abundance of working age people available in the market plus an additional one million entering the workforce but the issue is that you have to train in all aspects of the job, not only hard skills to do the job but also soft skills, like acceptable behavior in the workplace."

Who does it target?

Lawmakers, local authorities, and experts have lamented that unlicensed and unskilled foreign workers, particularly Chinese, have stolen jobs, stayed on illegally, and harassed locals.

Media stories of medical clinics in HCMC and Hanoi being fined for various violations, including the employment of unlicensed Chinese doctors or selling expired drugs have also continued to surface.

There are thousands of illegal foreign workers at construction sites across Vietnam, according to a recent government report to the National Assembly, Vietnam's legislature. The report did not dwell on the nationalities of the "foreign workers" but pointed out that many of the construction works are by Chinese contractors.

An increasing number of African nationals have also been caught overstaying their 15-day visa to find jobs in Vietnam or committing crimes like robberies and drug trading, it said.

Analysts say on the one hand that the amended decree could help authorities temporarily deal with the long-festering problem of unskilled foreign workers usurping locals' jobs, but on the other warn that those not targeted could suffer collateral damage.

"These companies are getting squeezed hard by the government along with the companies that are importing cheap unskilled labor from over the border," Marc Townsend, managing director of CBRE Vietnam (the local outpost of the multinational commercial real estate services firm), said referring to the new rules on foreign labor management.

One bizarre provision in the decree is that it enlarges the category of foreign workers exempt from obtaining a work permit, but then requires them to apply for a certificate saying they do not have to obtain one.

The analysts say they expect expatriates to cry "more red tape" and more opportunities for "negotiation."

"Adding steps to the approval process"¦ which actually should be more than enough, will indeed complicate and delay things and not increase efficiency," George Adam, general manager of HCMC-based tourism company Exotissimo Vietnam, said.

"Those want to do all as required by law will be penalized."


A decree on managing foreign labor to take effect on November 1 supplanting an earlier one scraps a provision allowing foreign manual laborers to work for up to three months without a work permit. This privilege will henceforth be extended only to those who come to handle complicated technical or technological issues that are beyond foreign experts based in Vietnam.

It also enlarges the category of foreign workers exempt from obtaining a work permit. Those added to the category are teachers at foreign institutions sent to work in international schools in Vietnam managed by foreign agencies, volunteers, those with master's degrees and advising, teaching, or researching at Vietnamese tertiary or vocational institutions for a maximum of one month, and foreign workers who come here under international agreements to which state agencies are a signatory.

Earlier the exemption had only applied to members or owners of limited liability companies, service promoters and lawyers registered with the Ministry of Justice, those dispatched by foreign companies to work in their offices in Vietnam (in 11 designated sectors), heads of foreign representative offices, and project managers and individuals authorized by NGOs to work in Vietnam.

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