2015 HKBAV PRESENTS Investing into Vietnam from Hong Konger Perspective

Transcription

1 2015 HKBAV PRESENTS Investing into Vietnam from Hong Konger Perspective Presented by : Winnie Lam HKBAV Board Member

2 Hong Kong Business Association Vietnam [HKBAV] : Non-profit Non-government Non-political voluntary Membership Association of Hong Kong business community in Vietnam Founded by a group of Hong Kong businesspeople investing and working in Vietnam who have been interested in creating and developing better business relationship between Hong Kong and Vietnam. Licensed in Hochiminh City in 1999 and Hanoi in 2012 Aiming to provide interaction among members and local business communities.

3 Join HKBAV Platform Association Federation Vietnam Business Forum Approach Hong Kong Business Community in Vietnam Access Worldwide Networking & Business Opportunities Update Vietnam Policy & Business Market Information

4 Objectives Raise the profile of the business community Complement the bilateral activities Support Hong Kong Provide assistance to business issues Facilitate the creation of strategic alliance Organize business & social functions

5 HKBAV Executive Committee Member Becomes a part of the global business Association sharing a membership database with 38 Hong Kong Business Associations in 27 countries with over 11,000 individual associates. In 2014, we accepted the applications from Malaysia & Taiwan to become Federation Members. Looking for Hong Kong communities in Cambodia, Myanmar etc. to establish the Chambers under Asia Region

6 HKBAV Consortium Associate Member Working Groups for Members participation : 1. Agribusiness 6. Governance & Transparency 2. Automotive 7. Infrastructure 3. Banking 8. Investment & Trade 4. Capital Market 9. Mining 5. Education & Training 10. Tourism VBF hosts the Annual Meetings twice per year in Hanoi In 2014 the VBF also hosted a major event in HCMC

7 Categories Dec Dec Honorary Corporate Individual & Associate TOTAL Membership - Demographics Membership increases 11.80% compared with same term last year

8 Membership - Demographics

9 Membership - Demographics

10 The Speaker Winnie Lam Director, TMF Group 8 year in Vietnam, worked in China, Canada and Thailand also, currently base in HK Was Country Director for KCS Vietnam until end of 2012 HR Committee Chair of AmCham HCMC Team leader of joint chambers committee as Advisor to VN Government on Labor Code revision President of CanCham Vietnam Board Member of HKBAV current

11 About TMF Group Supporting business growth in 80+ countries TMF Group is a leading global provider of high-value business services to clients operating and investing globally. We focus on providing specialised and business-critical financial and administrative services that enable our clients to operate their corporate structures, finance vehicles and investment funds in different geographical locations. Our core services can help companies of all sizes with HR and payroll, accounting and tax, corporate secretarial, international corporate structuring, fund administration and structured finance whether a company wants to globalise, or whether they need support to streamline existing operations. TMF Group is the global expert that understands local needs. Global reach, local knowledge: helping you do business seamlessly across borders.

12 Hong Kong ranks #6 of Foreign Countries Investment in Vietnam 869 Projects : Billion Excluding the projects invested from Hong Kong but registered through B.V.I and Luxembourg. In 2014, ranks #2 among 60 countries/territories: New investment: 99 projects : 2.80 billion Increase capital : 23 projects : near 200 million Source: Ministry of Planning and Investment - Foreign Investment Agency (FIA)

13 Top 10 FDI as of 15 Dec Million USD Source: Ministry of Planning and Investment - Foreign Investment Agency (FIA)

14 Vietnam for FDI VN's stable political situation, surging economic growth, competitive labour costs and growing domestic market size, makes it one of the most attractive emerging markets in ASEAN Political Situation Political Situation Very stable one party country with no foreign or local terrorist threat Surging Economic Growth Since BTA with US in 2001 and WTO accession began in 2007, FDI has increased significantly and so does VN export Competitive Labour Cost One of the lowest minimum wages in Asia Growing Domestic Market GDP growing exponentially and is estimated to experience the 2nd fastest income growth in Asia over next 10 years just behind China* Ease for export Coastal country, improved port infrastructure and availability *Source: Goldman Sachs / TNS Analysis

15 Vietnam business culture Important to understand why they are the way they are Won and recovered from every war involved in, serious national pride exhibited North vs South mentality still strong Current working generation either went through war or is raised by war marred parents thus planning was not a practical aspect of living and doing Exposure to the world was recent with limited experience BUT they are learning fast Many areas are still tightly controlled, e.g. media, education, travel abroad despite Internet penetration Relationship based in business dealings; Buying their way still common Procedures are generally cumbersome & redundant at times

16 Vietnam employment environment Very low urban unemployment rate ~ 2% 50% of population of age to work ~ 750K pp entered the workforce every year past 3 years and same projection for 2015 and is the 3rd biggest workforce in SE Asia 97% literate in Vietnamese, one of the highest literacy rate in the world Number of illegal strikes still high > 90% illegal Job hopper paradise, demand consistently outgrow supply in the last 5 years though the playing field is slowly leveling

17 Vietnam employment environment One of the most pro employee labor code in the world Cumbersome and sometimes redundant statutory requirement Legislature changing almost every other months but not necessarily with improvement Gaps exist btw implementation and the actual law and btw municipals Workforce not well educated about rights and obligations but improving New labor code released May 2013 only improving some

18 Vietnam employment environment Hiring Vietnamese Staff Generally young but very trainable Over-education and Under-experience very common for white collar General turnover rate for professional staff is declining but still high for production staff in some areas; senior management stabilizing* English/Chinese capable staff is more expensive Young and inexperienced workforce; job title and job ability not always align Skill shortage & immature management capability

19 Vietnam employment environment Hiring an expatriate 3% cap of total workforce has been removed Everyone will need a work permit as of 2013 Tightening up for illegal workers and will deport if caught, current estimate about 50% of expats in VN are illegal Work permit process can be daunting with lots of ad hoc improvement Personal Income Tax structure for expatriate experienced lots of changes in the past few years and will continue to revolutionize International Local Hire becoming more common

20 Regulatory Compliance important It is not easy to comply with but doable Suggestion: Work with the experts! Application can be inconsistent from municipal to municipal Interpretation is different even from one official to another official within the same office If in doubt, ask your question in writing and request a written answer May have to apply different standard in different municipal so you can comply Often can be negotiated to reach mutual agreement

21 2015 Highlights Inflation expected to be under control VN Dong looks to be stabilizing New Labor code sees little improvement overall with some upgrade of benefits Minimum wage increase yet again Region Minimum Monthly Salary (VND) *Simplest Duty Minimum 7% up (VND) *Technique I 3,100,000 3,317,000 II 2,750,000 2,942,500 III 2,400,000 2,568,000 IV 2,150,000 2,300,500

22 2015 HR Highlights Compulsory burden increasing till 2015 Social Security, Medical, Unemployment Insurance Entity (Monthly Payroll) Individual (Monthly Salary) Social Security 18% 8% Medical 3% 1.5% Unemployment 1% 1% Total 22% 10.5% Trade Union Fee is now 2% of total payroll for SI contribution Industrial relationship main focus of authorities going forward

23 2015 HR Highlights Working Days & Overtime 8 hours a day up to 6 days a week; max 48 hrs a week of regular hours Daily working regular hours cannot exceed 10 hours Break time is payable; 30 mins day shift; 45 mins night shift (can be counted towards meal time) Daily OT cannot exceed 50% of daily working time Monthly OT hours is limited to 30 per worker Annual OT hours allowed per worker is 200 Weekday OT 150%; Weekend OT 200%; Holiday OT 300%; night time OT additional 20% Night Shift Allowance 30% for work performed between 10pm & 6 am

24 2015 HR Highlights Leave 12 Annual leave days mandated up to 16 days for dangerous work (1 more day for Tet starting 2014) 1 extra day off for expat for home country national day Maternity leave increase from 4 to 6 months; paid by Social Insurance Fund Various sick leave and entitlement as per the law paid by Social Insurance fund

25 2015 HR Highlights Laid off & Termination New labor code provides better guidance for retrenchment but still needs approval from DOLISA & Union All efforts to be made to provide alternative work Compensation depends on tenure Termination needs to be for cause; no cause termination is not allowed and could carry stiff penalties Causes for termination according to Internal Labor Regulations as registered

26 From our experience 1. Learn the Language 2. Learn the Culture 3. Learn the Law and learn it well a. Labour b. Environmental c. Tax d. Anti-dumping 4. Be update & resourceful 5. Network to learn from others experience

27 Additional Tips It is ok to plead innocence if you were found out to be not in compliance, just show willingness to rectify ASAP Don t be afraid to ask for reasonable extension to rectify Your staff is not always the best nor most reliable resource The lawyer will always tell you what the law says The authorities are not always right! The structure of fine is very loose, ask for a reduction if sound too much & you may just get it Always send a Vietnamese national to deal with the local authority

28 Information Platform Weekly e-bulletin [Wed]

29 Market Information HKBAV provides info for the members regularly Daily Intellasia Vietnam Finance & Business News Daily Vietnam Tenders Daily Daily Chinese Economic News Biweekly Intellasia Vietnam Business Brief Weekly Emerging Textiles Alert Monthly Vietnam Statistical Data Other special news reserved for Member Only

30 If you plan to visit HCMC or Hanoi, you re welcome to join our Monthly Member Night Networking Events HCMC 2nd Wednesday 6:00 pm 8:00 pm HANOI 3rd Friday 6:00 pm 8:00 pm Venues will be advised on HKBAV Website

31 For support & assistance in Vietnam Head Office: Room 322, New World Saigon Hotel 76 Le Lai Street, District 1 Ho Chi Minh City, Vietnam T : 84 8_ F : 84 8_ E : hcmc@hkbav.org Branch Office: Hanoi Hotel Business Center D8 Giang Vo Street, Ba Dinh District Hanoi, Vietnam T : 84 4_ F : 84 4_ E : hanoi@hkbav.org Your support, Our Success!

32 For information relating to set up in Vietnam, contact Mr Louis Li, Senior Manager, Global Business Development To download the report on the Vietnam market & economy trends and New Labor Code survey findings - To review our latest Webinar on Doing Business in Vietnam -