ICHAM Annual General Meeting (P.13) 45° anniversary of Italy Vietnam Diplomatic Relations (P.14)
Meeting between HCMC leaders and FDI enterprises 2018 (P.12)
HOMI Lifestyle Fair (P.4) Payroll Obligations in Vietnam (P.25)
HOMI Lifestyle Fair (P.4)
ICHAM AGM (P.13)
45° Anniversary of Diplomatic Relations Italy - Vietnam (P.14)
Area Meeting Italian Chambers of Commerce Asia and South-Africa (P. 18)
IN THIS ISSUE News 4
HOMI - Lifestyle Fair
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ICHAM President at Hau Giang presentation roundtable discussion
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ICHAM Interview on VTV1
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Lunar New Year Celebration at HCMC People's Commitee
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Eurocham Annual General Meeting 2018
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ICHAM supports EVBN’s Food & Beverage Trade Mission 2018 Meetings with Italian partners
12 Meeting between HCMC leaders and FDI enterprises 2018 13 ICHAM Annual General Meeting 2018 14 45° anniversary of Italy - Vietnam diplomatic relations 15 High Level Dialogue on ASEAN Italy economic relations 16 Focus Vietnam
18 Area Meeting Italian Chambers of Commerce abroad in Asia and South Africa 19 New solution for human resources development in light of CPTPP
Market Info 25 Payroll Obligations in Vietnam 28 FDI opportunities in Vietnam in 2018
Upcoming Events 22 Workshop: “Introducing a New Paradigm in Non Invasive Ventilation: The Helmet” 23 B2B event: Lifestyle Made in Italy
Member Discounts
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HOMI Lifestyle Fair - January 2018
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aking place from 26th to 29th January 2018, the latest edition of lifestyle Trade Fair HOMI JANUARY 2018 came back with a highlight of the world of dining & cuisine which revealed the most interesting items for the coming season, and fashion & jewels with the most fascinating products and creations. This edition was packed with novelties thanks to the creations and products presented by exhibiting companies. Many were international firms but others, much more frequently, were small entities with great creative potential and an ability to create unique and exclusive items. Whether from Italy or abroad, these fascinating exhibitors perceived the Lifestyle Trade Fair
The delegaton of Vietnamese companies at HOMI
as the key opportunity to present their products thanks to show's many themed areas which were conceived to enhance the many productive specialisations of Italian and international design. Held twice a year at RHO Fiera Milano, HOMI is a trade fair dedicated to lifestyle and new trends for the home, with a focus on the latest trends and habits: from tableware to decorations, from furniture to fabrics, environmental fragrances, jewelry, accessories as well as products and ideas designed to improve the lifestyle of the youngsters. Additionally, there are numerous workshops, conferences, research labs and talk shows which are either a highly informative moment for the industry players and visitors, or an opportunity to meet up and exchange views and ideas. HOMI Hosted Buyers is one of the projects for which ICHAM has been working as a local coordinator of Fiera Milano. Five Vietnamese companies were chosen to join this edition of HOMI: Halo mart, GKD, Modernlife, Modernform and PHL. This is a huge opportunity for Vietnamese companies to develop their business, finding new product lines and looking for potential partners through B2B meetings with Italian and international representatives.
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ICHAM President at Hau Giang Presentation Round-table discussions
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articipating at Hau Giang Presentation Round-table Discussions on January 26th, at Huong Sen hotel (HCMC), ICHAM’s Chairman Mr Michele D'Ercole presented investment potentials of Italian enterprises in some sectors for the Province, especially in green energy, wastewater treatment and food processing.
and transportation systems, developing industrial zones, hi-tech applied agricultural zones and various incentive policies of the Province for investors.
Currently, the industrial zones and groups of Hau Giang have attracted 50 investment projects including 46 domestic and 4 overseas, Situated in the Mekong Delta, Hau Giang has with a total value of 67.083 billion VND and 744 many favorable conditions for domestic and million USD respectively. The preferred sectors foreign investment such as good infrastructure for investments are: logistics, processing aquatic products, pulp and paper production, cement production, footwear, building petroleum depots, food and beverage, water plants, pharmaceutical... The event was organized by the Department of Foreign Affairs for Provinces (DFAP) - Ministry of Foreign Affairs of Vietnam, together with the People’s Committee of Hau Giang Province with the purpose of calling for FDI from foreign enterprises.
ICHAM interview on VTV1
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n January 24th, vietnamese channel VTV1 interviewed ICHAM's President Mr. Michele D'Ercole and Executive Director Mr. Pham Hoang Hai at Casa Italia, the Hanoi office of the Italian Chamber of Commerce in Vietnam. The interview emphasized the important anniversary of 45 years of diplomatic relations between Italy and Vietnam, and the role of ICHAM as a bridge between the two economies, but also as an advisor for Italian enterprises which are interested in expanding their business in Vietnam.
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Lunar New Year Celebration at HCMC People's Commitee
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n the occasion of the Lunar New Year festival, Ho Chi Minh City People’s Committee held a cordial meeting with foreign representative agencies to inform on the City’s socio-economic achievements over the past year and the development orientation in 2018. 2017 was a very remarkable year for Vietnam and HCMC with outstanding achievements in many fields, especially in the field of foreign affairs. On behalf of the city leaders, Mr. Nguyen Thanh Phong - Chairman of the municipal People’s Committee, thanked the representatives of consulates, international organisations and foreign business communities for making contributions to HCMC’s development. The meeting took place on February 8th at HCMC People's Committee and did its part to
strengthen the friendship and cooperation between HCMC and international friends.
ICHAM Chairman Michele D'Ercole with Chairman of HCMC People’s Committee Nguyen Thanh Phong
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n March 22nd, the Annual General Meeting of Eurocham took place simultaneously in Hanoi and Ho Chi Minh City. Members approved the budget for 2018 and voted the new members of the Executive Committee. Congratulations to Mr. Tomaso Andreatta, appointed by ICHAM Vietnam, and to Mr. Stefano Pellegrino, elected by Eurocham members.
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ICHAM supports EVBN’s Food & Beverage Trade Mission 2018
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his year, the Italian Chamber of Commerce in Vietnam (ICHAM) continued to support the fourth edition of FOOD AND BEVERAGE TRADE MISSION TO VIETNAM, organized by EUVietnam Business Network (EVBN). 19 European companies operating in Food and Beverage sector participated in the event in Hanoi and HCMC, having B2B meetings with potential Vietnamese partners and visiting points of sale to have a better insight of the Vietnamese market.
As a consortium partner of EVBN, during this Trade Mission ICHAM supported 5 European companies: Acetaia Leonardi, Casa Agricola, Monte Vibiano, Monte das Louzeiras, Porto RĂŠccua Vinhos. The event took place from January 29th to February 3rd, 2018, at Pullman Saigon Center (HCMC) and Melia Hanoi (HN).
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Meetings with Italian partners
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n two business trips to Italy from February 5th to February 8th, and from March 20th to March 28th, ICHAM’s Secretary General Mr. Pham Hoang Hai had meetings with many Italian partners in order to give advice and support them or their clients in getting access to the Vietnamese market.
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With Fiera Milano
On February 5th, Mr. Pham Hoang Hai was with Fiera Milano Spa to kick off his business mission in Italy.
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With Tropical Food Machinery
On February 6th, Mr. Pham Hoang Hai paid a Machinery in Fidenza. Since taking part in the visit to the headquarter of Tropical Food 2016 trade mission “Destination Vietnam II: Food factory” organized by ICHAM & Unioncamere Emilia-Romagna, Tropical Food Machinery has succeeded to establish some plants in Vietnam, and it is now looking forward to expanding its business in the country. He also went to Parma to meet with the Chairwoman of International Trade Consultants Order of Parma Mrs. Tarasconi, paving the way for new partnerships in the area.
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With Trentino Sviluppo S.p.a & Casa Vinicola Sartori di Verona On February 7th, Mr. Pham Hoang Hai was present in Rovereto for a meeting with our partners from Trentino Sviluppo S.p.A., a regional agency striving to sustain entrepreneurship growth and company cooperation in the area. The meeting was followed by a B2B event where local companies were equipped with a first insight of the Vietnamese market as well as tailor-made consultancy. On the same day, he also met with Mr Andrea Sartori, President of the Consorzio Tutela Vini Valpolicella and owner of Casa vinicola Sartori, a centuries-old wine company with a turnover of over 50 million euros (2017). Sartori is now focusing on emerging markets, and ICHAM, along with BPER bank, a solid banking institution with over 4 million customers in Italy, is ready to develop the best strategy for entering the Vietnam's F&B sector.
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With Garden Frutta & Banco BPM
On February 8th, Mr. Pham Hoang Hai met representatives of GARDEN FRUTTA S.R.L, a 40 million turnover company (2017), continuing its consolidated partnership with Italian banks and financial institutions like BPER Banca to support its clients towards Vietnamese market. After that, He had a meeting with Banco BPM, the third largest bank of the country, and its client Mezzacorona Wine. Mezzacorona, a wine-producers association founded in 1904, has a 185 million euro turnover (2017) and is currently exporting in 60 countries. With ICHAM's support, Vietnam will be soon added to the list .
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With OMR
On March 20th, Mr. Pham Hoang Hai met with Marcello Maffeis, Director of OMR Group. With a 730 million EUR turnover (2017) and 3250 employees in 11 factories worldwide, OMR Group is one of the main global suppliers of automotive components and assemblies. Partners of OMR include Ferrari, FCA Fiat Chrysler Automobiles, Volkswagen AG, Mitsubishi Motors, AUDI AG, Piaggio Group and Ducati Motor Holding, among many other. In Vietnam the group is looking for collaborating with VinFast Vingroup JSC, Hyundai Mobis, Ford Motor Company and Toyota Motor Corporation.
21/3 | With IC&Partners & Ýtasia On March 21st, Mr. Pham Hoang Hai had a or development in foreign markets. ICHAM is meeting in Milan with the consulting agencies going to cooperate with IC and Ytasia to identify the best business opportunities in Vietnam and IC&Partners and Ytasia. design the most suitable strategies. Both firms have a solid experience in supporting their clients in the process of entry
23/3 | ASEAN day in Sondrio in the branches of the bank in Bergamo, Brescia, Como, Genoa, Milan, Monza, Pavia, Rome, Turin, Varese and Verona with the participation of a group of speakers included Mr. Pham Hoang Hai, To foster investments in Southeast Asia, on 23 Federico Vasoli from de Masi Taddei Vasoli law March the bank held a seminar named “ASEAN firm and Roberto Zoppi from the Italian DAY”. The event was available in live streaming Chamber of Commerce of Southeast Asia. ICHAM is proud to partner with Banca Popolare di Sondrio, a popular bank with almost 150 years of history and a solid future vision. BP Sondrio is in fact a trailblazer in the Italian credit system when it comes to digital development, and it is now focusing on the internationalization of its corporate customers.
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11 With PROMOS On March 27th, Mr. Pham Hoang Hai met representatives of PROMOS (strategic agency for export and economic development of Milan, Brianza Monza, Lodi), continuing their focus on supporting Lombardy enterprises to export and to invest into Vietnamese market. Area of Milan, Brianza Monza, Lodi is the richest area in Italy with 650.000 enterprises and PROMOS is the asset of this area for exportation and internationalization. From left to right: Mr. Federico Maria Bega, Promos Chief Strategy Officer, Mr. Pham Hoang Hai and Manlio Illumi - Promos Strategic Business Development Manager.
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With ESTEL
Revolution 4.0 is hitting developing countries as a super typhoon, and Vietnam is no exception. The country’s major centers are investing billions to soon acquire the smart city status, and local businesses are striving to keep up with global standards. In this highly volatile landscape, ICHAM is determined in bringing to Vietnam Italian smart technologies. From this the meeting of Mr. Pham Hoang Hai and the CEO and the Chairman of ESTEL Group, was held on 28 March in the historical town of Thiene, nearby Vicenza. Founded in 1937, ESTEL is a company specialized in office furniture and home interiors with a 100 million EUR turnover (2017) and branches in multiple countries worldwide. The group is interested into bringing to Vietnam its unique Italian Smart Office, a working space concept developed by its R&D office as a response to the 4.0 revolution in
the field of interior design. The meeting was possible thanks to ICHAM’s cooperation with BPER Banca.
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n April 21st, Ho Chi Minh City leaders met the representatives of FDI enterprises in the City Conference Hall to assess the improvements and the successes of the city, and to highlight the contribution of FDI to a stable and progressive development of the city. Important personalities intervened during the event, such as Politburo member and Secretary of the HCMC Party Committee Nguyen Thien Nhan, Chairman of the municipal People’s Committee Nguyen Thanh Phong, Deputy Standing Chairman of HCMC People’s Committee Le Thanh Liem, and 300 leaders of ministries, international organizations, associations and businesses. One of the crucial topic of the day was the project “Developing HCMC into a smart city in the period 2017-2020, with a vision to 2025”, as stated by the City leader. ICHAM President Mr. Michele D’Ercole and Mr. Nguyen Thien Nhan, Segretario del comitato Centrale del Partito di HCMC
ICHAM’s Chairman Michele D’Ercole, during his speech, focused on the smart city project for HCMC, and introduced Trento Smart City Week 2018, an annual event taking place in Italy where HCMC could better understand and be informed on the challenges that could occur while building a smart city. In conclusion, the City leaders set the goals for 2018, committing to implement the smart city project, create a favourable business environment, as well as a stable socioeconomic development, together with all the foreign representatives at the event.
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ICHAM Annual General Meeting 2018
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n Tuesday February 28th 2018, the ICHAM Annual General Meeting (ICHAM AGM) was held successfully in Ho Chi Minh City (Hotel Nikko Saigon) and in Hanoi (Casa Italia). This year, ICHAM AGM welcomed the participation of its members and the honorable presence of 1st Secretary and Head of the Commercial Office of the Embassy of Italy Mr. Antonio Tedesco and Deputy Consul General of Italy in HCMC Mr. Roberto Cajati. After giving a brief report of ICHAM’s activities in 2017, ICHAM Chairman Michele D’Ercole proposed the new budget for ICHAM’s activities
and events to be organized in 2018 for approval of ICHAM’s members. Last year, ICHAM provided a large number of business services for many companies and implemented with success various trade missions. In 2018, The Chamber will continue to carry out more projects and events to support the commercial activities between Italy and Vietnam, putting more priority on its members. During the meeting, the new members of the Board of Directors were elected. Congratulations to Chairman Mr. Michele D'Ercole, Vice Chairman Mr. Riccardo Papa, Treasurer Mr. Francesco Dominici and Councilors Mr. Mario Archidiacono, Mr. Federico Caliri, Mr. Daniele Landini and Ms. Elena Orru for their new term (2018-2020) at ICHAM.
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45° anniversary of Italy - Vietnam diplomatic relations IBLA VIETNAM AWARDS 2018 2018 is the year of the 45th anniversary celebration of diplomatic relations between Italy and Vietnam, relations that were established in 1973 and further strengthened in 2013 with the signature of a strategic partnership. The Italian Embassy in Hanoi, with the Italian Ambassador in Vietnam Cecilia Piccioni, has arranged an extensive program of events to celebrate this meaningful anniversary. ICHAM President Mr. Michele D’Ercole, attended the opening event “IBLA Vietnam Awards 2018”, held at Theatre Vietnam Youth.
This concert featured performances by 12 young talented musicians coming from all over the world and chosen by the IBLA Foundation, which displayed compositions of Italian and European classical music.
The talented musicians of IBLA Vietnam 2018
VIETNAM ITALY FASHION WEEK ICHAM’s President also had the pleasure of taking part in a special edition of Vietnam Fashion Week dedicated to the cultural meeting between Italian and Vietnam, “Fashion Week Vietnam-Italy 2018”. This event focused on the theme of sustainability and saw the participation of 18 Vietnamese and Italian designers; the show took place in Hoan Kiem District, in Hanoi. In the framework of this fashion exhibition, an interesting display of silk techniques by local artisans was held in Casa Italia. Michele D’Ercole with Italian Ambassador in Vietnam Cecilia Piccioni and the Chairman of Hanoi’s People Committee Nguyen Duc Chung
ICHAM is proud to contribute to improve economic relations between Italy and Vietnam, to represent a
15 support for Italian end Vietnamese companies, and a reliable source of information for entrepreneurs who want to do business between the two countries. The activities organized by the Italian Embassy to celebrate
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n 11th and 12th April, ICHAM’s Chairman Michele D’Ercole attended the event “High Level Dialogue on ASEAN Italy economic relations” which was held at the Shangri-La Hotel in Singapore. Among the speakers there were Mr Enrico Letta (President of the ASEAN Italian Association, Italy; Dean, International School of International Affairs, Sciences Po), Mr Benedetto Della Vedova (Deputy Minister of Foreign Affairs and International Cooperation, Italy) and Ms Sim Ann (Minister of Enterprise and Industry of Singapore).
the 45th anniversary of diplomatic relations will continue throughout the next months and will address gastronomy, music, literature, cinema and much more.
House - Ambrosetti and the Italia-ASEAN Association, demonstrating once more the will of establishing closer and productive ties between ASEAN and Italy.
The conference focused on the role of the ASEAN region, and the potential value of cooperation between Italy and ASEAN countries. ASEAN represents the 6th largest market in the world and the 3rd in Asia, Italy has the high-tech capabilities and specific know -how to match the needs of growing consuming ASEAN market. The event was organized by The European
Michele D’Ercole with Enrico Letta, President of Italy-Asean Association
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FOCUS VIETNAM: ICHAM attends a seminar on investment opportunities for Marche’s SME
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wo days of productive meetings with SMEs from Marche within the framework of Focus Vietnam project were promoted by the Chamber of Commerce of Pesaro and Urbino, and of Ascoli Piceno, discovering trade opportunities in the Vietnamese market. On 28th March, the Chamber of Commerce of Pesaro and Urbino hosted a valuable seminar, focusing on hightech industrial and agricultural machinery, and deluxe furniture. On the next day, Focus Vietnam took place in Ascoli Piceno with the central topic of food-processing machinery, and food & beverage industry. The delegation of ICHAM Vietnam consisted of ICHAM President Mr Michele D’Ercole and Executive
Director Mr Pham Hoang Hai, which participated in this event as guest speakers. The representatives of ICHAM Vietnam first attended the opening day of Focus Vietnam in Pesaro. The seminar dealt with the potential benefits of investments in the fields of technology applied to food chain and luxury furniture. The President of the Chamber of Commerce of Pesaro and Urbino Mr Alberto Drudi manifested the will to work even harder to bring local SMEs closer to Asian market, continuing the expansion beyond countries such as China and India, and reaching Vietnam as well. In order to achieve this goal, Mr Drudi
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announced an additional initiative to reduce the distance between SME of Marche and Vietnam, therefore a delegation of Marche’s entrepreneurs will visit Hanoi and Ho Chi Minh city within the year.
focused on the topics of the seminars, providing the attendees with an overview of opportunities from which Marche’s enterprises could benefit, because of their competitive and high-quality products.
The second day of Focus Vietnam was hosted by the Chamber of Commerce of Ascoli Piceno, whose President Gino Sabatini highlighted how export rates towards Vietnam are growing not only in machinery for the transformation of raw materials, in the cold chain but also in exporting local first-class products, such as olives and dairy products, enhancing and affirming once more the excellence of a production Made in Italy. 35 companies participated in this seminar, driven by their interest on expanding in foreign markets.
In conclusion of the 2-day event, the organizers described to the press the objective and the importance of these informative meetings, as well as the opportunities from Vietnamese market. Furthermore, B2B sessions were scheduled with every single company. Vietnam represents one of the strongest developing market, with a population exceeding 90 million people whose purchase power is constantly improving, and a GDP growing by 6.4% in 2017. Also, this country represents a window on Asia and an opportunity for SMEs to spread their unique regional excellences. Ultimately, the Vietnam – EU free trade agreement is expected to be concluded in the second half of 2018, guaranteeing an easiest access to Vietnamese market by creating extremely favourable conditions for Italian companies.
Focus Vietnam included interventions by ICHAM President Mr. Michele D’Ercole, who provided knowledge on the economic situation of Vietnam regarding trade and free trade agreements signed by Vietnam with different countries. During his speech he also emphasised the agreement between Vietnam and the European Union which should enter into force before the end of 2018. In the same way, Executive Director Pham Hoang Hai
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AREA MEETING ITALIAN CHAMBERS OF COMMERCE ASIA AND SOUTH-AFRICA
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r. Michele D’Ercole, Chairman of ICHAM Vietnam and area responsible, participated in the annual meeting of the Italian Chambers of Commerce Abroad, area Asia and South-Africa, held in Doha on April 30th, and May 1st. On the first day, the guests attended the meeting that reunited representatives from the Chamber of Qatar, organizer of the event, and from Vietnam, China, India, Singapore, Philippines, Japan, Thailand, Hong Kong, South-Africa and United Arab Emirates. The program of the second day revolved around the conference, “Qatar Asia Business Insights”, organized by the Qatari Business Association, in which participants discussed investment possibilities in the region, mostly in food and beverage and infrastructure.
Amongst the speakers, Sheikh Mohamed bin Faisal bin Qassim al-Thani, President of the Italian Chamber of Commerce in Qatar, who underlined the importance of keep expanding contacts in Asia, and Mrs. Carlotta Colli, Deputy Head of Mission and First Commercial Secretary of the Italian Embassy in Doha, who highlighted the increasing Italian presence in the country market. In fact, trade between Italy and Qatar has increased by 8.7% in 2017 and is now worth 2.35 million euros. This meeting represented a networking opportunity for enterprises from the two countries, and the participation of the Chambers of Commerce of the Region offered a chance to enlarge contact networks and strengthen crucial ties for future business.
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New solution for human resources development in light of CPTPP
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n the 5th of April, the Italian Chamber of Commerce in Vietnam (ICHAM) took part in the conference â&#x20AC;&#x153;New solution for human resources development in light of CPTPPâ&#x20AC;? aimed at highlighting the urgent need of a radical change in the quality of Vietnamese human resources, in light of CPTPP. The CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) will eventually guarantee to Vietnam a series of economic benefits, especially for what concerns FDI, export and import. However, labour force and institutions need to be improved and reformed in order to enable the country to fully benefit from the trade agreement. Once into force, the agreement signed by 11 countries from the Pacific area (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) will be one of the largest trade agreements in the world and will provide enhanced access to
key Asian markets. Moreover, it will imply both the creation of an efficient institutional system and the implementation of reforms in order to satisfy CPTPP requirements. The main areas of reform will cover financial services, telecommunication, e-commerce, intellectual property, rules of origin, labour standards and workers and managers training. This will lead to both an increase in transparency, with a subsequently increase in the FDI, and liberalization which will boost competitivity between local firms. Even the SME sector will benefit from it, as the CPTTP will create for them the opportunity to integrate into global value chains. The revolution in the Vietnamese labour force and management, currently under skilled and trained, is necessary to enhance productivity and attract more investments. Therefore, this change needs to be embraced before the trade agreement gets into force, guaranteeing in this way broader benefits for Vietnam's economy.
20 In order to achieve this, the debate enlightened agreement, leading to an increase in FDI and some possible solutions to get over the lack of productivity. Moreover, all income groups will highly skilled workers and managers. take an advantage from this, especially the This includes expanding universal primary and highly skilled ones. secondary education, promoting the enrolment in STEM, strengthening apprenticeships and work-based learning and creating feedback loops between private sector, training providers and public sector.
The program attracted the leaders from the Vietnam Chamber of Commerce and Industry, the Ministry of Labor, Invalids and Social Affairs, the Ministry of Science and Technology, the International Labor Organization (ILO), Labour intensive industries such as textile, human resources professionals and domestic clothing, footwear, food and beverage and and foreign business associations. chemicals will benefit the most from the
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Workshop: â&#x20AC;&#x153;Introducing a New Paradigm in Non Invasive Ventilation: The Helmetâ&#x20AC;? Ho Chi Minh City - 18 June 2018, Park Hyatt Saigon Hanoi - 20 June 2018, Sofitel Legend Metropole Hanoi
Dear Members & Friends,
B2B event: Lifestyle Made in Italy
We are pleased to inform you of the following upcoming events co-hosted or supported by ICHAM.
Hanoi - 10&11 July 2018, Hilton Hanoi Opera
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Payroll Obligations in Vietnam
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By: Dezan Shira & Associates. Editor: Koushan Das
fter setting up a business in Vietnam, the next big hurdle is hiring the staff that you will need to help grow your operation. The initial hiring process and, ultimately, payroll administration can quickly become a complex and confusing process. Labor intensive sectors, such as manufacturing, are almost certain to face a significant degree of exposure to these challenges, while all companies setting up within Vietnam â&#x20AC;&#x201C; from representative offices to fully foreign-owned enterprises â&#x20AC;&#x201C; will face some liability. As a first step towards meeting the challenges presented by payroll, companies should be aware of the basic statutory requirements imposed under Vietnamese law. With this in mind, the following are the most significant payroll related obligations for employers: - Minimum wages;
- Overtime wages; - Individual income tax withholding requirements; - Social insurance withholding requirements. Minimum wages Vietnamâ&#x20AC;&#x2122;s minimum wage rates play a significant role in payroll compliance. Currently, there are two kinds of minimum wages. Common minimum wage The first type is the common minimum wage, which is used to calculate salaries for employees in state-owned organizations and enterprises and, from a payroll compliance perspective, the social insurance contributions for all enterprises (the maximum social insurance contribution is 20 times the common minimum wage). The common minimum wage
26 is VND 1,300,000 (US$57) since July 1, 2017. With effect from 1 July 2018, the common minimum wage applied will be VND 1,390,000 per month (US$ 60.95). Regional private sector minimums The second type of minimum wage is used for employees in all non-state enterprises and is based on regions as defined by the government. From January 2017, these regions have set baseline compensation rates between VND 2.58 million (US$113) and VND 3.75 million (US$165). Unlike the common minimum wage, the private sector minimum wage rate depends on the location where the worker is employed. Currently, Vietnamese cities are split into a four -tiered regional system to reflect the socioeconomic conditions within cities across the country.
working times must be paid extra for those hours based on their current wages as follows: regular working days – 150 percent; weekends – 200 percent; and holidays and paid leave days – 300 percent. A ceiling for total working hours, inclusive of overtime, is imposed at no more than 12 hours in one day, while overtime is capped at 30 hours in one month and 200 hours annually. Individual income tax withholdings In Vietnam, personal income tax (PIT) declaration and payment is carried out on a withholding basis. Vietnam’s tax regulations encompass the concept of tax deducted at the source, and legalize this by specifying certain employers are designated for tax collection purposes. Such entities are required to withhold PIT from employees’ salaries.
Overtime
Monthly withholdings
Employers are required to pay employees at increased rates for all overtime work completed each month. Not only does overtime pay stand to increase immediate payroll costs, but it can also have significant impacts on social insurance withholdings as well as income tax. Companies that understand when overtime is applied and at what cost it is applied will be able to plan effectively and ensure that calculations of individual income tax and social insurance contributions are made correctly.
Employers are required to collect taxes on employee income for both foreign and local employees, and ensure the timely submission of employees’ tax declarations. Employers must withhold the required percentage of their employees’ personal income, and deposit the monthly amount with the State Treasury no later than the 20th day of the following month.
Triggering overtime The normal working week in Vietnam is limited to no more than eight hours in one day and no more than 48 hours per week. Any work hours beyond these limits must be compensated at a rate beyond what is set forth within the employees’ labor contract. Overtime compensation Employees who work in excess of normal
Annual finalization Employers must also finalize PIT declarations on behalf of their employees at the end of the year, provided the employee only has income from the employer, and authorizes their employer to make this tax finalization on their behalf. Companies must submit an annual tax finalization on employees’ taxable income no later than 90 days from the last day of the tax year. Each employee is required to obtain a unique individual tax number (or “tax code”) and declares dependents that qualify for tax relief. Additionally, employees must complete
27 their own tax finalization returns where their tax liability at year-end is greater, or less, than the sum of tax paid during the year. Employees may authorize the company to complete this process on their behalf. Social insurance There are three types of mandatory social security in Vietnam that must be covered by foreign enterprises seeking to hire local staff:
Social insurance;
Health insurance; and,
Unemployment insurance.
Mandatory minimum contributions Mandatory minimum contributions are required of both employer and employee. All domestic and foreign companies operating in Vietnam are required to pay these social insurances for all employees under labor contracts with a definite term of over three months or labor contracts with indefinite terms. The total minimum employer social security contribution is 21.5 percent. Contributions are determined based on employees’ monthly salary or wage. Employers register and pay insurance contributions monthly on behalf of their employees at the provincial Department of Labor, Invalids and Social Affairs (DoLISA).
Social insurance contribution caps While payable amounts will differ depending on the compensation of an employee, it should be noted that a wage ceiling for calculation of contributions is imposed at 20 times the common minimum wage for social and health insurance – VND 26,000,000 (US$1,140) – and 20 times the regional minimum wage for unemployment insurance – VND 51,600,000 (US$2,269) to VND 75,000,000 (US$3,298) depending on the region. With effect from 1 July 2018, the minimum salary cap for SI/HI contributions will increase to VND 27,800,000 per month (US$ 1,220 per month). The minimum regional salary cap for UI contributions will range from VND 55,200,000 to VND 79,600,000 per month depending on each region (approximately US$ 2,430 –US$ 3,500 per month) from 1 January 2018. Domestic vs international staff Social and unemployment insurances are compulsory only for Vietnamese staff. Health insurance, on the other hand, applies to both Vietnamese and foreign staff employed in accordance with Vietnam’s Labor Code.
About us Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia and the Silk Road. Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throguhout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com
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FDI opportunities in Vietnam in 2018 By: Dezan Shira & Associates. Editor: Koushan Das
F
uelled by rapid growth and increased
percent,
FDI, 2017 emerged as one of the
and construction at
strongest years for Vietnam. With the
agriculture, forestry, and fisheries at 15.34
GDP growing at 6.81 percent, record high FDI,
followed 33.34
by
industry
percent,
and
percent.
and trade figures reaching an all-time high of FDI—10-year high US$400 billion, Vietnam will continue to remain FDI, driven by investments from Japan, South a priority for investors in 2018. Opportunities Korea, and Singapore, reached US$35.6 billion, not only exist in the traditional sectors such as highest since 2009. The disbursed capital hit garments, footwear, and electronics but also in US$17.5 billion, a 10-year high. The registered renewable energy projects, high-tech FDI capital and disbursed FDI grew by 44.4 agriculture, and other high-tech industries. percent and 10.8 percent respectively, GDP—six-year high compared with 2016. Vietnam witnessed a six-year high GDP growth rate at 6.81 percent in 2017, driven by the agriculture, industrial, and services sectors. The GDP grew exponentially from Q1 to Q4 at 5.15, 6.28, 7.46, and 7.65 percent respectively.
FDI sources Similar to previous years, Vietnam continues to attract the majority of its FDI from Asian countries. In 2017, there were 115 foreign investors in Vietnam, with Japan and South
The 2017 nominal GDP stood at VND5,008
Korea alone accounting for almost half of the
trillion ($221 billion), with GDP per capita
total FDI.
increasing by US$170 to US$2,385.
Japan’s investment capital stood at US$9.11
Sector contribution
billion, accounting for 25.4 percent of the total
In 2017, the services sector contributed the
FDI. Most of the investment was into two BOT
highest to the GDP, accounting for 41.32
thermopower projects in Thanh Hoa and Khanh
29 Hoa, accounting for US$ 5.37 billion. South Korea contribution stood at 23.7 percent with investments
reaching
billion, Singapore invested
US$8.49
US$5.3
billion,
accounting for 14.8%.
Industry and construction In the industrial and construction sector, the industry sector grew at 7.85 percent, higher than 2016â&#x20AC;&#x2122;s growth rate of 7.06 percent. Manufacturing, the major sector in the industry,
This year surprisingly China emerges as the
grew by 14.4 percent; its highest in seven years.
fourth largest investor in Vietnam. It committed
On the contrary, mining decreased by 7.1
investments worth US$ 2.17 billion.
percent, mainly due to a reduction in crude oil and coal output.
Industries in focus Manufacturing and processing continue to be a major attractor of FDI, with 2017 FDI reaching US$15.87 billion, accounting for 44.2 percent of the
total
FDI.
Power
production
and
distribution followed second with US$8.37 billion, accounting for 23.3 percent, followed by real estate at US$3.05 billion, or 8.5 percent. FDI destinations
One of the most attractive sectors for 2018 investors, the construction sector continued its growth in 2017 at 8.7 percent. Services Within the services sector, the accommodation and catering services grew the fastest at 8.98 percent, much higher when compared to its 6.7 percent growth in 2016. The wholesale and
Ho Chi Minh City continues to lead amongst all cities and provinces, followed by the northern province of Bac Ninh and the central province
retail sales grew by 8.36 percent in 2017 driven by a growing urban population and increase in income.
of Thanh Hoa. Other major FDI destinations
Other sectors such as the financial, banking,
include Nam Dinh, Binh Duong, Kien Giang, and
and insurance activities witnessed its highest
Hanoi.
growth in the last seven years, at 8.14 percent while real estate business, another attractive
Major sectors
sector for 2018 investors, grew by 4.07 percent,
The industry and construction sector grew the fastest at 8 percent, followed by services at 7.44 percent and agriculture, forestry and fishery at
its highest since 2011. Import-Export turnover - highest ever Vietnamâ&#x20AC;&#x2122;s total import-export turnover in 2017
2.90 percent.
reached a record high of US$400 billion, with a
Agriculture, forestry, and fishery
trade surplus of US$2.7 billion. FDI sector was
In this sector, the fishery sector grew the fastest
the major contributor to the countryâ&#x20AC;&#x2122;s trade
at
with a trade surplus of US$28.8 billion, while
5.54
percent,
and agriculture at
followed 5.14
percent respectively.
by
percent
forestry and
2.07
the domestic sector had a trade deficit of US$26.1 billion.
30 In 2017, exports and imports witnessed double
and 30 ranks against 2012. Similarly, as per the
-digit growths at 21.1 and 20.8 percent
World
respectively. Trade between Vietnam and
Competitiveness Report 2017-2018, Vietnam
Africa, Asia, and Oceania grew the fastest at
ranked 55th amongst 137 economies, a jump of
27.6, 25.7, and 24.5 percent respectively, while
5 places from the previous year.
trade with EU and Americas grew by 13.8 and 10.8 percent respectively.
Economic
Forum’s
(WEF)
Global
In the recent Global Innovation Index 2017, Vietnam jumped 12 places to 47th among 127
Import of goods
economies, its highest ranking in the last 10
Vietnam’s import turnover of goods in 2017 reached US$211.1 billion, with the FDI sector and domestic sector growing by 23.4 and 17 percent respectively. In numbers, the FDI sector was responsible for US$126.4 billion of import turnover, while the domestic sector accounted for US$84.7 billion.
years. Vietnam also led the group of 27 lowermiddle-income economies. 2018 Outlook For 2018, the government is targeting a growth of 6.7 percent, which based on 2017 figures seems achievable. In addition, 2017’s record high registered FDI is expected to lead to a high
Export of goods
disbursed FDI in 2018.
Vietnam’s export turnover of goods in 2017
Industries in focus
reached US$213.77 billion, with the FDI sector and domestic sector growing by 23 and 16.2 percent respectively. In numbers, the FDI sector was responsible for US$155.24 billion of export turnover, while the domestic sector accounted for US$58.53 billion.
Investors will continue to find traditional export-oriented sectors such as electronics, garments, and footwear to be attractive. In addition to the export-oriented sectors, the domestic market also provides an opportunity for investors. With growing urbanization and
Business environment
rising
In the last few years, Vietnam has implemented numerous reforms to improve its business environment for foreign investors. Although
incomes,
as education, real beverages,
industries estate,
e-commerce,
retail, food and
FMCG
such & will
continue to grow in 2018.
there is still scope for further reforms, the
The aforementioned industries will continue to
business
by
be a priority for the government in the short
numerous studies, improved substantially in
term. For the long-term, the government is
2017.
shifting
environment
as
reflected
According to the World Bank’s Doing Business 2018 report, Vietnam ranked 68th among 190 economies, a jump of 14 ranks against 2017
its
environmentally
focus
on
friendly
high-tech
and
investments
and
projects such as renewable energy and hightech agriculture. Recently, with the assistance
31 of the World Bank, Vietnam’s Ministry of
multilateral free trade agreements, which
Planning and Investment has drafted their FDI
expanded its market access and increased its
strategy for 2018-2023, focusing on priority
exports.
sectors and quality of investments, rather than quantity. The draft aims to incentivize and make it easier for investors to invest in hightech industries. The initial focus is on four major
sectors:
manufacturing,
services,
agriculture, and travel.
Partnership (TPP) in 2017, the remaining members reaffirmed their commitment to the agreement in November 2017, now called as the Comprehensive and Progressive TransPacific Partnership (CPTPP). CPTPP will not
Locations
only contribute to the country’s economy and
Regions such as Hanoi, Ho Chi Minh City, Haiphong, and Bac Ninh continue to remain as major FDI
With the US backing out of the Trans-Pacific
destinations,
mainly
due
to
developed infrastructure and connectivity. However, investors should take note of
trade but will also lead to numerous policy reforms, favorable for foreign investors. In addition, domestic firms will have access to new markets such as Canada, Mexico, and Peru with whom it does not have a trade agreement.
Vietnam’s SEZ– of which Industrial Zones (IZs)
In addition to CPTPP, Vietnam as an ASEAN
are the most common. In deciding which zone
member already has FTAs with the member
to locate operations in Vietnam, there are
states of ASEAN, China, Japan, South Korea,
several factors that must be considered;
India, Australia, New Zealand, and Hong Kong.
including geographic location, land, labor,
Bilateral FTAs include Chile, Japan, South
infrastructure, industry, business environment
Korea, and the Eurasia Economic Union (EAEU).
and incentives.
Also in the pipeline is an FTA with the
In addition, investors should also be on the lookout for the law on special administrative-
European Union (EU), which is currently under ratification.
economic zones, which is expected to be passed
In 2018, apart from its focus on the traditional
in 2018. In October 2017, the government had
sectors, Vietnam will also prioritize the quality
proposed
special
of investments rather than quantity to increase
administrative zones in Van Don (Quang Ninh
the investment efficiency and productivity. The
Province), North Van Phong (Khanh Hoa
overall outlook for Vietnam continues to
Province) and Phu Quoc Island (Kien Giang
remain positive, mostly due to a robust global
Province) to attract foreign investments.
economy, domestic reforms, trade, and a shift
new
incentives
for
Effect of FTAs Vietnam’s growth in the last decade has largely been attributed to its numerous bilateral and
towards high-tech industries.
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