Vietnam Regulatory Brief: Wages, Business Registration, and the Trans Pacific Partnership
Vietnam to Increase Minimum Wages from January
The Vietnamese government issued Decree 153 on November 14 to raise regional minimum wages to US$ 115-167 from January 2017 for workers with labor contracts. The wages will increase by around US$8-11 compared to existing levels. For Region 1, there will be a salary hike of US$166 (VND 3.75 million), US$147 (VND 3.32 million) for Region 2, US$128 (VND 2.9 million) for Region 3 and US$114 (VND 2.58 million) for Region 4. Businesses must also pay minimum wage workers in normal conditions at least 7 percent higher than skilled and trained workers.
Reducing extra payments for those working overtime or at night while doing hazardous work will not be allowed. Urban areas in Hanoi and Ho Chi Minh City come under Region 1, while Region 2 includes the Hanoi and Ho Chi Minh City’s rural areas and urban parts of Can Tho, Da Nang and Hai Phong cities. Region 3 includes provincial cities and districts in Bac Ninh, Bac Giang, Hai Duong and Vinh Phuc provinces. Region 4 consists of the remaining areas in the country.
Business Registrations Approvals Reduced to Two Days in Ho Chi Minh City
In a move that will significantly help business owners, the Ministry of Finance stated that business registration applications in Ho Chi Minh City that are not processed by the appropriate departments in two days will be automatically approved. Business registrations submitted to district administrations or the municipal Department of Planning and Investment should be sent to the relevant departments for review within one day. From there, the departments should approve or reject applications within two working days.
If no response is given, the registration will be considered approved; the district administrators will then be authorized to license the business. The departments will also be held responsible for approvals.
Vietnam Backs Off From Ratifying TPP
The Vietnamese government has backed off from joining the Trans-Pacific Partnership (TPP) after the uncertainty of the deal due to the recent US elections. Reports say that US is suspending submitting the TPP to parliament thus making Vietnam’s submission of its proposal for ratification futile. Nevertheless, Vietnamese Prime Minister Nguyen Xuan Phuc stated that the country has 12 free trade agreements and will continue to expand its economy. A trade minister further stated that the textiles, seafood and footwear sectors would continue to stay competitive on global markers even without the TPP.
Vietnam’s economy was supposed to benefit significantly with the ratification of the TPP. It expected to gain a percentage increase of 5.4 percent – equaling US$6.1 billion. Nevertheless, Vietnam wants to continue to maintain relations with the US.
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