Vietnam Regulatory Brief: Airports, Steel Tariffs, and Labor Law
This edition of Vietnam Regulatory Brief covers changes in investment in Vietnam’s airports, a new tariff on steel, and update labor regulations for female employees.
Foreign, private investments permitted in Vietnam airports
The Vietnam government recently passed a new decree to allow private and foreign investments at Vietnamese airports. The decree will come into effect on 12 December. Private investors will be permitted to buy airport management rights. In addition, investors will be able to provide services such as fuel supply, flight information, and airfield operations.
Currently only Vietnamese businesses are eligible to invest; however, foreign investors can collaborate on such ventures with them. The maximum stake for foreign investors is 30%. The government plans to hold a minimum 65% stake in any service providers that it deems important. The decree states that, private and foreign investors will not be able to invest in air traffic control, research and rescue services. Investors looking for business opportunities in the infrastructure sector in Vietnam welcome the regulation, which comes in the wake of a shortage of state capital for airport construction.
Vietnam contemplates import tariff on alloy steel
The Vietnamese Ministry of Finance is contemplating a change in tax regulations related to imported alloy steel. The ministry is mulling over the move, following allegations that Chinese exporters misused existent tariff laws. Currently, imported steel alloy with at least 0.3% chrome content is exempt from tariffs. Chinese exporters have claimed that their steel consisted of 0.3-0.4% chrome content, therefore getting import duty exemptions in Vietnam so far. The government consequently lost USD 1.89 million in taxes in the past two months. Therefore, the finance ministry wishes to introduce a 10% tax to offset the losses incurred by the absence of a tariff.
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The proposal for the tax is under review by the Ministry of Industry and Trade, the Ministry of Planning and Investment and other government departments. The new regulation, if passed, implies a higher cost of alloy steel for Vietnamese consumers. Local experts state that investors that rely on/use alloy steel in their manufacturing processes, should track the latest regulation. Investors, who undertake such tracking, will be better prepared to cope with the regulatory change and respond with shorter turnaround times.
Government issues decree on policies for female employees
Vietnam’s Ministry of Labor, Invalids and Social Affairs, on 1 October issued a decree, regarding policies for female employees. The decree, commonly known as Decree No 85, will come into effect on 15 November. The decree amends a few regulations of the Labour Code and grants several important rights to female employees. Employers, who employ females and grant such rights, also stand to gain under the new decree. The comprehensive details of the decree are on the Vietnamese Ministry of Labour, Invalids and Social Affairs website.
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The decree includes entitlements such as menstrual leave, hours off for new mothers and fee subsidies for children’s education for female employees. Meanwhile, employers who hire several female employees stand to get tax rebates. The decree also mandates employers to create a more conducive environment for female employees. Dezan Shira & Associates recommends that employers in Vietnam should carefully review the main provisions of Decree No 85 and change their labour and human resource policies accordingly. Companies, that change their policies according to the decree, mitigate their exposure to labour disputes in the future.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira 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 China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit www.dezshira.com.
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