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Labour outsourcing, which means the provision of labour force by a labour outsourcing service provider ("Labour Outsourcing Provider") to enterprises, is permitted under the new Labour Code No. 10/2012/QH13 ("Labour Code 2012"). In implementing labour outsourcing, the licenced Labour Outsourcing Provider will recruit employees and assign such employees to work for another employer in accordance with a labour outsourcing service contract.
A newly issued Decree 55 imposes certain restrictions on labour outsourcing. Under Decree 55, there are only 17 jobs in which labour outsourcing is allowed. Further, a Labour Outsourcing Provider is only allowed to allocate an employee to a client for a period of twelve months in aggregate; this period is not renewable. In order to be licenced, the Labour Outsourcing Provider shall satisfy certain conditions in terms of capital (i.e. VND 2 billion), facilities (i.e. 2-year leased office), and capable human resources (i.e. legal representative having at least 3 years of experience).
Although the Labour Code 2012 and Decree 55 serve to open doors for labour outsourcing, the provision and receipt of such labour outsourcing services is still under substantial limitation. Moreover, due to unclear regulations relating to labour outsourcing, more guidelines are still needed from the competent labour authorities for an efficient implementation of labour outsourcing.
The Ministry of Construction of Vietnam has recently issued the 4th draft amendment to the current Law on Residential Housing (the "Draft") for discussion before it is sent to the National Assembly for passing. In an effort to make the Vietnamese real estate market more attractive to foreigners, the Draft proposes to provide more opportunity for foreign organisations and individuals to purchase and own residential houses in Vietnam.
Under the Draft, the "foreigners" who are allowed to purchase and own residential houses in Vietnam will comprise both foreign organisations and foreign individuals. In addition, such foreign organisations and foreign individuals are also allowed to give, receive and inherit residential houses to/from other entities/individuals in accordance with the laws of Vietnam. Foreign organisations must be legally licensed to operate in Vietnam. As for foreign individuals, they must be permitted to enter into Vietnam by the competent authorities of Vietnam and are not entitled to the privileges and immunity of diplomatic representations and consulates.
Certain limitations on the purchase and ownership of real property under the current Law on Residential Housing are lifted by the Draft. Foreign organisations and foreign individuals will be allowed to purchase and own commercial residential houses for a leasehold period of up to 70 years, with the likely option to renew upon expiry of such period. In addition, there will also be no limitation on the number of commercial residential houses that can be purchased and owned by foreign organisations and foreign individuals. Lastly, foreign organisations and foreign individuals will be allowed to lease out commercial residential houses lawfully owned by themselves in accordance with the laws of Vietnam.
In September 2013, Singapore and Vietnam signed a Joint Statement on Strategic Partnership, further promoting cooperation in the legal and judicial spheres between the two nations, and improving the understanding of their respective laws, legal systems, and institutions. The Joint Statement also grants greater mutual access to both countries’ legal services industry, allowing both parties the opportunity to provide and engage in legal services in the other jurisdiction. This will in turn strengthen both legal and economic cooperation between Singapore and Vietnam.
Moreover, the Joint Statement also aids in the mutual enforcement of judgments. Traditionally, foreign judgments are mostly recognised on a reciprocal basis, which rarely occurs, leaving a vast majority of foreign judgments unenforceable in Vietnam courts. However, the signing of this Joint Statement could be seen as a first step in correcting this position. The Singapore-Vietnam Memorandum of Understanding on Legal and Judicial Cooperation (2008) provides mutual legal assistance between both countries. Coupled with the Joint Statement, the Memorandum could establish a concrete basis for further recognition and enforcement of Singapore judgments in Vietnam.
The Joint Statement is thus another progressive step for the mutual recognition and enforcement of Singapore and Vietnam's judgments in each other's national courts. However, it remains to be seen when and how this will be implemented in practice, and further legal guidance and provisions will be needed.
In May 2013, the Vietnam Asset Management Company ("VAMC") was launched following Decree No. 53/2013/ND-CP in order to tackle non-performing loans ("NPLs") - a burden on Vietnamese commercial banks and other credit institutions ("Vietnamese Credit Institutions"). It is a 100 percent state-owned one-member limited liability company established by the State Bank of Vietnam ("SBV") with the business purpose of purchasing NPLs from the Vietnamese Credit Institutions.
VAMC is given broad authority to deal with the NPLs in a number of aspects, such as the ability to restructure NPLs, the right to enforce security, and the power to sell the collateral through an auction. It is a mandatory requirement that the Vietnamese Credit Institutions with NPL ratios of 3 percent or more are required to sell them to VAMC in exchange for special bonds. Failure to do so will result in a reassessment of that Vietnamese Credit Institution, which may then result in an order for sale of the NPLs, or a restructuring plan approved by the SBV. Holders of special bonds may use them as collateral for re-financing from the SBV.
Although the establishment of VAMC is seen as a positive change in the banking sector, foreign-invested credit institutions (established and operating in Vietnam) fall outside the scope of this Decree. According to some estimates, the ratio of NPLs is so high that VAMC may not have sufficient funds to purchase all NPLs. This could require further government reforms which permit VAMC to partner with foreign investors as a funding source. Consequently, this might enable foreigners to purchase real property assets in Vietnam by way of participating in the security enforcement (together with VAMC).
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Ho Chi Minh City Office
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HCMC, Vietnam
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Hanoi, Vietnam
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Contacts: Lim Wee HannPartnerD +65 62320606wee.hann.lim@rajahtann.comBrian NgPartnerD +84 8 38212673F +84 8 38212685brian.ng@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
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