Minimum Wages in Vietnam to Increase from January 2013

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Dec. 13 – The Vietnamese government recently released Decree 103/2012/ND-CP, which stipulates the new regional minimum wages for employees working for all types of enterprises. This will replace the prior Decree 70/2011/ND-CP, which has been in effect since August 2011.

These minimum wages will form the basis from which enterprises and employees will agree on salaries. The minimum wages are set to increase by approximately 17 percent in all four regions, as follows:

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The description of each region is as follows:

  • Region I: Covers the rural and urban districts of Hanoi, Ho Chi Minh City, Hai Phong, Bien Hoa City, Thu Dau Mot City, Vung Tau City of Ba Ria-Vung Tau Province, and some rural districts of Dong Nai and Binh Duong Province.
  • Region II: Covers the remaining rural distracts of Hanoi, Hai Phong, Hai Duong City, Hung Yen City, and some rural districts of Hung Yen Province.
  • Region III: Covers the remaining provincial cities, Chi Linh town, and some rural districts of Hai Duong and Vinh Phuc Province.
  • Region IV: Covers the remaining localities.

Initial feedback from the business community has not been entirely positive. Quach Thi Nhung, who is head of South Korea’s K.J Vina Company’s Human Resources Section in southern Binh Duong Province, stated that “the new salaries are still high and will burden enterprises, because employers will have to raise not only salaries, but also payments for many other packages like insurance, labor union fees and allowances.”

In contrast, Deputy Prime Minister Vu Van Ninh has maintained that “this increase means that only 6.6 percent of enterprises will have to increase salaries. And enterprises’ additional cost from this hike will occupy less than 1 percent of their total operational cost. The government has seriously studied the minimum salary rise for factory workers. It will not significantly affect enterprises.”

The new decree will come into effect on January 20, 2013, while the new regional minimum salaries will be applicable from January 1, 2013.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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