A Move in the Right Direction? Vietnam to Streamline its Work Permit Process

In December 2013, the Vietnamese government introduced additional requirements to further tighten the already complex and lengthy work permit process, prompting outcries of disappointment from multinational corporations, associations and the foreign business community alike. Such a move was regarded by many as a backward step for Vietnam’s booming economy, claiming it contradicted the government’s commitment to attract foreign investment into the country. As a result, the past 18 months have been a challenging time for foreign corporations with large expatriate populations as they tried to navigate the changing Vietnamese immigration system. Costly delays and difficulties in meeting assignment start dates and project timelines are the most common complaints from some of the world’s largest multinational corporations.

In the background of these developments, the foreign business community, chambers of commerce and various business associations have gathered together to conduct a number of forums and dialogues with the implementing authorities in order to voice their concerns and give feedback. Due to popular demand from affected companies, a conference on the Vietnam Labor Code and work permit process was held in April this year. The event attracted approximately 200 representatives from foreign companies, associations, legal firms and service providers, all of whom have considerable presence in Vietnam.

One of the forum’s key speakers was a Director from the Foreign Department of Labor (part of the Ministry of Labor, War Invalids and Social Affairs, known as MOLISA) who was invited to outline the government’s commitment to streamlining the current work permit process. The Director stated that his Department has been tasked by the government to draft the proposed changes, which are expected to be released in the third quarter of 2015.

After months of anticipation, the Draft Decree, amending and supplementing the current law on the hiring and recruitment of foreigners in Vietnam, was circulated internally and to a smaller group of stakeholders in late June.

Key changes

Proposed Amendment 1: Change to work permit category definitions

Under current law, a foreigner must fall under one of the following categories to be eligible for a work permit:

• Managers;

• Executive officers;

• Experts; or

• Technicians.

“Experts” are currently defined as foreigners who hold an engineering, bachelor degree or higher qualification and have at least five years experience in their field.

The proposed amendment will relax the eligibility requirements to the following:

• They must hold an engineering, bachelor degree or higher qualification and have at least three years’ work experience in their field; or

• They must have five years’ work experience in job areas associated with complex technical processes or technology in which Vietnam workers are not yet proficient, or in traditionally foreign industries.

If implemented, this would be a welcome change for many companies operating in Vietnam. Under current law, in order to be considered an expert, the home employer must issue a work reference to certify that the foreigner has at least five years relevant work experience. This can be onerous for foreigners who have not worked for their current employer for five consecutive years and who would require references from previous employers who may be unwilling to assist. The proposed amendment is intended to reduce this administrative burden by cutting the required period from five to three years.

Proposed Amendment 2: Additional category for work permit exemptions

Under the current law, foreigners are exempt from work permit requirements only in very limited circumstances, including those licensed to practice journalism in Vietnam by the Ministry of Foreign Affairs, teachers of foreign organizations, or those working in a voluntary capacity.

The proposed amendment will allow work permit exemptions for all foreigners coming to Vietnam to work for less than 30 consecutive days, regardless of the activities to be conducted.

If implemented, this will be another welcome change, especially for companies with a business need requiring employees to travel to Vietnam on short notice for short term assignments. Currently, a business visa is not sufficient for most ad-hoc mobilization and short term assignments and the lengthy end-to-end processing time of the work permit is not a practical or feasible solution for businesses with such needs.

The proposed amendment represents not only cost savings, but will also allow more companies to meet their short term assignment deadlines and project timelines.

Proposed Amendment 3: Changes to the police clearance requirement

Under current law, a police clearance certificate from the employee’s home country is required. A police clearance certificate is also required from Vietnam if the employee has entered Vietnam prior to the approval of the work permit.

The proposed amendment can be interpreted as requiring only a police clearance certificate from the employee’s home country or Vietnam, regardless of the employee’s prior travel patterns to the country.

In our experience, one of the most lengthy and delay-prone steps in the current work permit process is the obtaining of the Vietnam police clearance certificate, which requires the foreigner to be in Vietnam for a period of time to complete the procedures.

This proposed change will remove another administrative burden and streamline the work permit process as a whole.

 

Proposed Amendment 4: Inclusion of specific requirements for common scenarios requiring the re-issue of a work permit

This amendment formalizes the requirements for common scenarios where a new work permit needs to be re-issued. The scenarios most applicable to companies include:

• Foreigners who currently hold a valid work permit who need to change employers but will keep the same job position; and

• Foreigners who currently hold a valid work permit under the same employer but will need to change their job position.

Currently, the procedures relating to these scenarios are not formalized in law. Rather, they are left to the discretion of the implementing authorities, which often results in complex and inconsistent requirements being implemented by the individual Labor offices.

This amendment would be seen as a very positive change as it will lead to greater clarity and uniformity in implementing requirements.

 

Proposed Amendment 5: Changes to government processing time of work permit applications

Current law states that the work permit approval will be issued within ten working days from the date of filing. The proposed amendment will reduce this to seven working days.

Whilst this reduction is not substantial, it reflects a commitment from the local authorities to streamline and process work permit applications in a more timely and efficient manner.

When will the new laws be in effect?

The government has yet to confirm how many of the proposed changes will be approved and when they may come into effect. However, industry sources and experts have predicted it will be by the end of 2015. When such favorable change does happen, there is no doubt that it will bring a higher degree of confidence back to the foreign business community in Vietnam.

Fragomen will continue to monitor the ongoing situation, informing our clients of developments and their potential impact on companies accordingly.