Government Decree No 93/2005/ND-CP, dated July 13, 2005, limits hiring of foreign employees to a mere 3 per cent of the total employees in the enterprise. This applies to both domestic and foreign enterprises.

Only companies which operate in special fields (e.g., law firms), or certain enterprises when commencing initial operations, can exceed the rate mentioned, but the exception requires approval by the chairman of the provincial People’s Committee. The aim of this regulation is to ensure that the labour market won’t be flooded by foreign workers and to encourage foreign investors to transfer technology and professional skills to domestic workers.

In application, however, the regulation has triggered several complications. For instance, introducing new technology into an enterprise may, in the long run, mean that the enterprise will operate more efficiently and need fewer employees. But, in the short term, skilled foreign workers are needed to implement the new technology and pass knowledge on to domestic workers in the enterprise. It can take a while to train domestic staff to take up and control the new technology.

In such a case, restrictions on hiring of foreign workers can have a chilling effect on the technology transfer itself, placing an administrative roadblock in front of foreign investment into new technologies in Viet Nam.

It’s the same in the field of education and training. Regulations governing education and training provide that at least 30 per cent of instructors at wholly foreign-invested education and training centres must be foreign, while labour regulations limit foreign hires to 3 per cent.

The end result is that companies spend money seeking official permission to increase the number of foreigners lawfully working in their companies, while others simply employ foreign workers illegally. These sorts of issues lessen the country’s appeal as a destination for foreign direct investment, particularly in the fields in which foreign expertise is most in need.

The new Law on Investment goes some way to resolving these problems. Article 14 of the law, as well as Article 13 of Decree No 108/2006/ND-CP enacted on September, 22, 2006, stipulate that investors have the right to hire foreign staff to work as managers, experts or in technical positions as needed by the enterprise.

In Article 44 of the Investment Law, Viet Nam commits to granting multiple-entry visas with a duration of up to 5 years to foreign workers and their families. But, to put this into practice, relevant bodies, especially the Ministry of Labour, Invalids and Social Affairs and the Ministry of Planning and Investment, need to roll out specific instructions. — VNS