Storm Clouds Ahead
| Kenneth Lau

Storm Clouds Ahead

Increased protectionism at the center of Vietnam’s Decree 152

Read Kenneth Lau's latest blog to learn more about Vietnam’s Decree 152 and its impact on the work permit system

In the months that have passed since Vietnam’s Ministry of Labour, Invalids and Social Affairs (MOLISA) issued its Decree 152, some things have come into focus while several other key items have yet to be clarified. What is clear is that Decree 152 represents a wide-ranging overhaul of the work permit system in Vietnam, with crucial consequences for companies seeking to send their employees into the country.

Decree 152 in context

It seems that around every five years or so, a new Labour Decree is issued by MOLISA, which usually bring important changes to the work permit system. The last Labour Decree that was issued to manage foreign workers in Vietnam was Decree 11, implemented in February 2016 (five years prior to Decree 152). At the time, Decree 11 was considered to be a positive step forward (on the whole) in terms of welcoming foreign talent and investment. For example, it introduced measures to streamline the processes (including reduced processing times) and a work permit-exempt category for foreigners entering Vietnam to perform services for less than 30 days at a time (for a total aggregate period of no more than 90 days in a calendar year). 

While some of these provisions remain, and while the overall work permit process remains largely the same from Decree 11, it has become increasingly clear that Decree 152 was introduced to scale back on Decree 11. In fact, during the rollout of Decree 152, the authorities have been stressing their goal of protecting the local workforce and how Decree 152 represents a tightening of the rules to achieve that goal.

Labour Decrees have typically been accompanied by guiding Circulars, which help to provide further clarity and details on the implementation of the Decree’s provisions. However, MOLISA has been surprisingly silent on whether any guiding Circulars will be issued for Decree 152 and the local Departments of Labour (DOLISA) have so far been interpreting the decree very strictly.

Stricter qualification requirements

Decree 152 has made it more difficult for foreign nationals to qualify for a work permit in Vietnam. Aside from stricter educational and/or work experience requirements, what we have so far seen on the ground is that the adjudicating officers have been quite selective regarding an increasing number of issues:

  • If, in their view, the foreign national’s educational degree is not relevant to their proposed job title in Vietnam, they will reject the application. This is especially pertinent for cases involving experts, specialists and technical workers.
  • If the individual does not hold a university degree at all, it can be increasingly difficult to apply for a work permit for the foreign national, regardless of how many years of work experience he/she has.
  • A “Certificate of Completion” or a “Certificate of Graduation” is no longer being accepted as a replacement of a university degree, even from countries that do not typically issue university degree certificates. 
 
As such, applications that may have previously gone through (and gone through quite easily) under Decree 11 are now being rejected outright under Decree 152. 
 

Impact on renewals

While, in some ways, the stricter review of applications for new work permits is understandable, Decree 152 has had the perhaps unintended consequence of also impacting renewal applications (i.e., for those foreign nationals who already hold valid work permits issued under Decree 11). In discussing with the local DOLISAs, it is clear that most have taken a strict view and are requiring that all new applications (whether for new work permits or for renewals) must now be filed as new work permit applications under Decree 152. This means that, under Decree 152, a work permit that was previously issued under Decree 11, even if it was the applicant’s first application, will no longer be valid after its current expiration date, and a new work permit must be obtained. 

While the foreign national may not necessarily have to depart the country, he/she will now need to show that he/she continues to qualify for a work permit under the more stringent rules and requirements of Decree 152. The fact that the individual previously qualified for and obtained a work permit under Decree 11 will not be taken into consideration in the adjudication of his/her new work permit application under Decree 152. This means that such applications are subject to the same rate of rejection as new work permit applicants. If the work permit application under Decree 152 is rejected, then the foreign national may no longer be work-authorized and will need to re-strategize on obtaining new work authorization in the meantime.

Intra-company transfers and documentation requirements

Intra-company transfers (ICTs) require an assignment letter to be issued by the parent company of the Vietnamese registered company in Vietnam (i.e., the work permit sponsor). This is not a new requirement, as it was also included under Decree 11. However, the local DOLISAs were more lenient on this requirement under Decree 11 and there were workarounds for this requirement. That appears to no longer be the case and Decree 152 (and the pronouncements from the local DOLISAs) are very clear that this will be required moving forward. In many cases, the parent company is not even aware of the assignment and so this can be an additional burden on multinational corporations. 

Furthermore, any supporting documents that have been issued from abroad and which are not in Vietnamese need to be notarized and legalized in their country of origin. While this is also not a new requirement in terms of the format of such documents, the home country assignment letter now must also undergo this lengthy process. 

Conclusion

While Decree 152 is understandable from the Vietnamese government’s perspective of protecting its local workforce, companies now must be prepared for lengthier processing times (that may exceed official processing times listed), less transparent processing of applications, as well as outright rejections of their applications resulting in resubmissions. Indeed, since the implementation of Decree 152, we have seen the rate of rejection increase significantly (whereas, in the past under Decree 11, a rejection was very rare). Companies should therefore expect a more protracted process and even potential “stop work” periods for their existing foreign national population in Vietnam.

Need to know more? 

For further information and advice on navigating the Vietnam immigration landscape and impacts of COVID-19, please contact Kenneth Lau at [email protected] or your Fragomen immigration professional. This blog was published on 29 April 2021, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please visit our dedicated COVID-19 site, subscribe to our alerts and follow us on LinkedInTwitterFacebook and Instagram