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The government has recently approved European - Vietnam Free Trade Agreements, which paves a wave for the foreign direct investment into Vietnam as well as a lot of Vietnamese SMEs. In the context of the globalized world, Vietnam always welcomes foreign tourists and foreign investors coming to the country. Hence, no matter how long you stay in Vietnam, it is advised that you apply for a Vietnamese visa. The article provides you with accurate procedures to apply for a visa in Vietnam. 

Apply for a Vietnamese Visa via the Vietnamese Embassy or Consulate 

Vietnam visa

To apply for a visa via the Vietnamese Embassy, foreigners need to prepare four required documents are:

- Vietnam Visa Application form (attached photo)

- Approval Letter issued by the Immigration Department - Ministry of Public Security of the Socialist Republic of Vietnam or Consular Department, Ho Chi Minh City Department of Foreign Affairs (Ministry of Foreign Affairs) allow you to enter and receive a visa at a Vietnamese Embassy or Consulate abroad (the dispatch must specify the name of the Vietnamese Embassy or Consulate abroad).

- Original passport: Must be valid for at least 6 months from the intended date of entry: If you request a loose-leaf visa, a copy of your passport is sufficient.

- Mail Service: Prepaid self-addressed return envelope is required if you want to have the passport returned by post (FedEx and USPS are recommended).

The procedure goes through five steps. First, fill in Vietnam Visa Application with an attached photo (online or offline). After that, a foreigner will receive an approval letter via email, then present the passport. Next, he/ she will make a copy of Vietnam Visa Application form and the approval letter. Then the last step is to pay visa fee at the Embassy or Consulate as prescribed. 

Document to apply Vietnam visa

When the procedure of visa application is completed, a foreigner will wait for a few days so that the Embassy issue the visa. Regarding NG1 and NG2 (these visa types are granted to members of official delegations invited to Vietnam as a governmental body and guests of equivalent ranks), the Embassy will issue within one working day from the date the Embassy received a complete and valid application and notification of approval from the Consular Department or the Department of Foreign Affairs of Ho Chi Minh City.

With regard to other types of visas, they are issued within 03 working days from the date when the Vietnamese representative missions abroad receive a complete and valid application and notification of approval from the Immigration Department, the Consular Department, or the Department of Foreign Affairs of Ho Chi Minh City. 

Apply for Visa on arrival

Who is eligible to apply for a visa in Vietnam according to this method? Under these circumstances are foreigners eligible to apply for visa on arrival: 

- Departing from a country where there is no competent Vietnamese visa-granting authority

- Traveling through many countries before entering Viet Nam

- Visiting Viet Nam on tours organized by an international travel agency operated in Viet Nam

- Foreign crewmembers onboard vessels anchored in Vietnam’s seaport wishing to exit through other border checkpoints

- Visiting Viet Nam to attending a relative’s funeral or visit a seriously ill family member

- Entering Viet Nam to engage in emergency response, search/rescue activities, disaster or epidemic control, or for other special purposes at the request of the competent authority in Viet Nam.

Foreigners should prepare in advance these following documents to apply for a visa on arrival:

- Passport valid for at least 06 months, not torn or blurred

- Approval letter issued by the Immigration Department - Ministry of Public Security of the Socialist Republic of Vietnam or Consular Department, Ho Chi Minh City Department of Foreign Affairs (Ministry of Foreign Affairs) that allows you to enter and get a visa at the international airport in Vietnam.

- Vietnam Visa Application form

- 2 passport photos size 4 × 6 cm

After preparing all mandatory documents, a foreigner follows this procedure to obtain a visa in Vietnam. First, you submit Vietnam Visa Application online. After your application is submitted successfully, you will receive a visa approval letter via email (attached with the Vietnam Visa Application form). Finally, you prepare all documents, photos, required stamping fees, board the plane to Vietnam, and get the visa stamped on passport upon arrival at Vietnam airport. 

Apply for a visa in Vietnam via E-Visa

So, who can apply for a visa in Vietnam via E-Visa? They can be foreigners who are citizens of countries eligible for pilot e-visa issuance according to the regulations of the Vietnamese Government. Besides, they can also be foreigners who hold passports and do not fall into the categories not yet permitted for entry as prescribed in Article 21 of the Law on entry, exit, transit, and residence of foreigners in Vietnam.

In the aspect of electronic visa application, foreigners follow form No.01 issued together with the Government’s Decree posted on the E-Visa information page. 

To apply E-Visa, first and foremost, foreigners access the E-visa information page of the Immigration Portal (Vietnamese domain name: https://www.xuatnhapcanh.gov.vn and English domain name: https://www.immigration.gov.vn) to enter information about e-visa application, download portrait photo and passport page.

After this step, foreigners will be granted a file code. When completing filling in the online form, you pay the visa issuance fee to the account provided at the E-visa information page. Finally, you get results. Foreigners who apply for e-visa use electronic document code to check the results at the e-visa information page, in case of successfully getting the e-visa, use the file code for e-visa printing.

Your visa will be issued within 3 working days from the date of receipt of all the electronic visa applications and visa insurance fees. 

All in all, applying for a visa in Vietnam is a must thing when you would like to travel to Vietnam or work in Vietnam in your long-term plan. The procedures of applying for a visa in Vietnam is fairly easy provided that you submit correct and invalid documents to the Embassy. Hope that you will find helpful information in our article. Viettonkin is willing to assist you in any situation so, don’t hesitate, contact us if you have any problems.  You can learn more about our HR service here.

Opening bank account- “The world is flat” - a famous book analyzing globalization in the 21st century as well as a typical metaphor illustrating the equal opportunities for all people around the world. People travel across countries nowadays not only to visit somewhere else but also to do business and even settle down in a foreign country.

Since the open policy, Vietnam gradually becomes a dragon of Southeast Asia attracting a lot of foreign investors in numerous economic development projects. Many foreign people have the intention of working or even settle down in Vietnam. If your long-term plan of life and work is in Vietnam, you should consider opening a bank account to help you have secure financial management.

This article provides you with procedures to open a bank account and some recommendations of banks that you should work with. The article will be written under Q&A form.

Can I open a bank account as a foreigner in Vietnam?

Answer: Definitely YES. The government provides ex-pats with opportunities to open an account while working and living in our country. No matter who you are, what your nationality is, following the regulation helps you have a bank account in Vietnam. 

What is the process of activating a personal bank account in Vietnam?

Answer: Opening a bank account in Vietnam, it can be said that, is pretty simpler than the process in other countries. First, you need to bring these documents to the bank that you want to open an account:

Furthermore, most banks in Vietnam allow you to create a bank account online provided that you submit correct and valid documents. International banks such as HSBC, Citibank, and ANZ have a strong presence in two major cities (Hanoi and Ho Chi Minh city). Hence, it is convenient for you to link your existing account with your account set up in Vietnam if you have already had one account in those banks.

Another option that foreigners can consider is to set up an international bank account at those banks before leaving the home country so that the account is already set up with the international bank upon arrival. 

How to set up a business bank account?

Actually, setting up a business bank account will help foreign businesses proceed with payment methods easier with their partners. Two types of accounts that foreign companies must register are: Investment capital account and transactional account. The former is used for receiving and sending investment amount and the latter is used for conducting daily transactions in Vietnam.

The process of opening a business account is more complicated than that of a personal account. Your business needs to prepare these following documents:

What banking fees are involved for opening bank account?

Banks in Vietnam will have their own set of fees that you have to pay through each transaction. Common fee types include:

ATM fees

When you use a different bank’s ATM to withdraw or transfer your money, the transaction will cost you a fee and that fee varies from banks to banks. The fee for foreign debit cards will range from VND 20,000 to VND 55,000. Besides, the maximum amount of money per withdrawal is not relatively low (VND 2,000,000) then the transaction fee of ATM may increase depending on how many times you do your transaction at the ATM.

Normal bank fees

You do not need to pay a fee when opening a new bank account as the Vietnamese banking system is on the large growth phase and Vietnamese banks are encouraging people to use their service. Nevertheless, you should have a minimum balance to maintain your account. The minimum balance can be VND 100,000.

Fees for international transfers

When you transfer your money internationally between banks, it will charge you a fee so, make sure that you understand the mid-market exchange rate. If you would like to transfer your money from your foreign to Vietnamese bank account, you had better use Transferwise,  Xoom, or SWIFT transfer to get the real exchange rate without adding a markup. 

fees for opening a bank account in Vietnam

Can you suggest some banks that foreigners should open a bank account in Vietnam?

There are more than 40 state-owned, private and international banks. You can choose to open an account in any bank in Vietnam providing that your transaction is done conveniently and you find it reasonable regarding bank relevant fees.

You can visit bank’s websites to search for information with regard to account for foreigners before deciding to open an account.

How to transfer money from Vietnamese to a foreign bank account?

In order to transfer money from Vietnam to a foreign account, you have to provide some documents to show the legality of your money source. If the money has already in your country, it is legal incomes and you have the right to decide about the transaction.

In case you would like to send in cash, it is required to provide relevant documents. For instance, that amount of money is from your salary, you need to submit your work permit, labour contracts, payslips and your passport. 

All in all, opening a bank account in Vietnam is fairly easy. For a personal account, you have to submit required documents to prove that you have rights of using bank services like Vietnamese residents. For a business account, the process is more complex and requires more legal documents. Furthermore, foreigners should be aware of transaction fees and some other elements for their decisions to a bank account activation. 

You can always contact us if you need any help for setting up you bank account whether it is for personal or business bank account.

Globalization and integration have created many opportunities for people travelling around the world, working in foreign countries, and even owning property in those countries. These days, overcoming difficulties from the post-war period, Vietnam is putting its name on the map as a great example of how to reform the economy.

The country is becoming a fertile land for many foreign investors and employees because of its strategic geography and its stable economic growth. With opener policies, foreigners can buy lands in Vietnam. This article will guide you through three main parts: policies of owning properties in Vietnam, the procedure, and steps to have a right of owning properties. 

Policies of owning property in Vietnam for foreigners

The information of this part is extracted from the Vietnam Law Housing published by the Ministry of Justice (MOJ). 

The right to owning lands belongs to the government and foreigners are not allowed to own lands. They can buy houses but not buy land. However, to create favorable conditions for investors, foreigners are able to lease the land from the State. 

Foreign entities eligible for the property owner in Vietnam

According to Clause 1 Article 159 Vietnam Law of Housing 2014, foreign entities eligible for property owner in Vietnam consists of:

- Foreign entities who invest in project-based housing construction in Vietnam as prescribed in this Law and corresponding regulations of law.

- Foreign-invested enterprises, branches, representatives offices of foreign enterprises, foreign-invested funds and branches of foreign banks in Vietnam.

- Foreign individuals who are allowed to enter Vietnam.

Forms of Property Ownership

According to Clause 2, Article 159 of the 2014 Law of Housing, the foreign entities eligible for the homeownership in Vietnam if they:

- Invest in project-based housing construction in Vietnam as prescribed in this Law and corresponding regulations of law

- Buy, rent and purchase, receive or inherit commercial housing including apartments and separate houses in the project for housing construction, except for areas under management relating to national defense and security as prescribed in regulations of the Government.

Requirements for foreigners to buy property

According to Clause 3, Article 160 of the 2014 Housing Law, foreigners are required to have permission to enter Vietnam and are not granted diplomatic immunity and privileges.

According to Clause 1, Article 74 of Decree 99/2015 / ND-CP, Foreigners must have a valid passport with a stamp of entry verification of the Vietnam Immigration Department.

According to Clause 2, Article 119 of the 2014 Housing Law, foreigners must have full civil capacity to enter into transactions in housing, qualify for the homeownership in Vietnam and are not required to register temporary or permanent residence in the place where the house under transactions is located.

According to Clause 2, Article 161 of the Law of Housing, foreign individuals may own houses as agreed upon in purchase and sale contract transactions, but for no more than 50 years from the date of being granted the certificate and can be extended if required. In case a foreign individual married to a Vietnamese citizen or a Vietnamese citizen residing overseas, he/she is entitled to own stable and long-term housing and the rights of the owner like Vietnamese citizens.

Moreover, the government also points out some regulations for foreigners in property ownership regarding the number of apartments that a foreigner can own or buy.

According to Clause 2 Article 161 of the 2014 Law on Housing, Foreigners are only allowed to buy, rent and purchase, receive, inherit and own less than 30% of apartments in an apartment building; or less than 250 houses regarding separate houses including villas, row houses in an area whose population is equivalent to a ward-administrative division.

According to Article 76 of Decree 99/2015 / ND-CP, in case population's area is equivalent to a ward-level administrative unit which has an investment project on construction of commercial houses, including separate houses for sale, foreigners may own a number of houses according to the following provisions:

- In case there is only one project with a number of separate houses of less than 2,500 houses, foreign organizations and individuals may own no more than 10% of the total number of houses in that project;

- In case there is only one project with the number of separate houses equivalent to 2,500 houses, foreign organizations and individuals may own no more than 250 apartments;

- In case there are two or more projects where the total number of separate houses in these projects is less than or equal to 2,500 units, foreign organizations and individuals may own no more than 10% of the dwelling houses of each project.

Procedures and steps of owning property in Vietnam

Necessary documents that foreigners should prepare to own property in Vietnam

Documents for foreigner to buy a property in Vietnam

Foreigners need to prepare a house purchase dossier and ownership certificate of property. These documents will provide the eligibility of owning property in Vietnam. 

First, a house purchase dossier. Foreign individuals must have passports or passport substitutes (hereinafter collectively referred to as passports) issued by competent foreign agencies together with one of the following papers which is suitable for each situation. 

-  In case of being a person who invests in Vietnam directly, foreigner's name must be stated in the Investment Certificate or in the papers corresponding to the investment activities issued by the competent authority of Vietnam with a term of one year or more or a paper proving that the foreigner is a member of the Board of Directors or the Management Board of the enterprise operating in Vietnam.

-  In case the person is hired by enterprises operating in Vietnam under the law of the enterprise to hold the positions of general director, director and deputy of the enterprise or the chief or deputy of units attached to the enterprise; there must be a contract for hiring a manager position or an appointment decision made in Vietnamese.

- In case of being a person is deserved well of the country, there must be a medal or decoration awarded by the President of the Socialist Republic of Vietnam.

- In case of being the person with a special contribution to the country, the foreigners must have a certification of the ministry-level agency in charge of the foreign individual's field of contribution and send it to the Ministry of Construction for consideration and submission to the Prime Minister.

- In case of entering Vietnam to work in the fields of economics, science, technology, environment, education-training, culture, information, physical training, sports, health, social affairs, and lawyers, the foreigners need documents proving of having bachelor's degree or higher degree issued by a competent Vietnamese or foreign agency, enclosed with one of the following papers: a work permit issued by a Vietnamese competent agency; and a professional practicing certificate in Vietnam issued by a Vietnamese competent agency.

Besides relevant documents to submit for a house purchase dossier, it is suggested that foreigners prepare permanent residence card or temporary residence card or residence certificate in Vietnam for one year or more issued by the immigration agency of the Ministry of Public Security.

Second, ownership certificate of property. Five kinds of documents that foreigners should prepare are:

- Passport

- A personal income tax receipt

- Registration fee receipt

- Permanent residence card or temporary residence card or proof of not eligible for privileges and immunities.

- Request for ownership certificates of property (Form 04 / DK Circular 23/2014 / TT-BTNMT)

Steps of owning property for foreigners in Vietnam

In order to own property in Vietnam, a foreigner has to go through a five-step procedure:

- Step 1: Prepare all necessary documents proving eligibility for housing ownership in Vietnam.

- Step 2: Sign house purchase contract, the contract must contain the contents as prescribed in Article 121 of the 2014 Housing Law, and be notarized or authenticated.

- Step 3: Register Ownership Certificates of Property: The file will be submitted at Land and House Registration Authority. After receiving the dossier, the authority will examine the dossier. In case the dossier is not valid or incomplete as prescribed by law, after 3 days from the date of receipt, the authority will notify to resend and guide the submitter to supply and complete as prescribed by law.

- Step 4: Complete financial obligations: pay tax, fee in the notice of financial obligations when buying property.

- Step 5: Receive the Ownership Certificates of Property.

To reduplicate, the article introduces policies of owning property in Vietnam regarding foreign entities eligible for the property owners, forms of property ownership, and requirements to buy a property. Additionally, necessary documents and steps of owning property are also presented in this article to help readers understand clearly the procedure of property ownership in Vietnam.

If you are foreigners and have the intention of owning property in Vietnam, hope that the article is helpful to you. Viettonkin is always by your side to offer you professional services in terms of law consultant. Please contact us if you have any problems, we will try our best to help you because your concern is our concern. 

When travelling overseas, besides inevitable documents such as passport, visa, criminal record, foreigners are advised to know some regulations related to their benefits. A tax refund is a term that foreigners should keep in mind. So what is a tax refund? What should you know about tax refund in Vietnam?

This article will provide you with useful information about tax refunds in Vietnam regarding locations of paying tax, procedures of a tax refund, and necessary documents.

What is a tax refund for foreigners?

Tax refund for tourists permits travellers (foreign passport holders) to claim back Value Added Tax (VAT) on items purchased in any stores registered as a “Tax Refund for tourists” participants. 

Who will follow the VAT refund?

According to Article 1 of the Circular No 72/2014/ TT-BTC issued on 30 May 2014, two subjects of VAT refund are “foreigners and overseas Vietnamese, except for members of the flight crew in accordance with the Aviation Law, member of sailor crew in accordance with the Maritime Law (hereinafter referred to as foreigners) whose passports or entry/exit documents are issued by foreign authorities and valid for entering and exiting Vietnam, purchasing and bringing goods overseas through ports of entry/exit where VAT refund is available”. 

Locations of tax refund declaration

Two locations that tourists should keep in mind are locations for physical inspection of goods, checking VAT refund declaration, and location for VAT refund payment. 

When foreign travelers arrive at Noi Bai or Tan Son Nhat airport, the location for physical inspection of goods, checking VAT refund declaration is located at the baggage check-in counters and/ or boarding-pass checking areas in order for physical inspection of refunded goods sent by luggage; at the isolated areas in order for physical inspection of refunded portable goods. 

Besides, to receive the tax refund, VAT refund counters at international seaports, which have separate counters (kiosks) and are qualified for cash management and accounting documents in accordance with laws. 

Process of VAT refund

The process of VAT refund goes through three stages.  

Stage 1: Foreigners purchasing goods at enterprises selected for selling VAT refund goods (as published on the website of General Department of Tax www.gdt.gov.vn) shall be noticed to check the information in invoice cum tax refund declaration (date of issuing invoice; full name, passport number of buyers…).

If the information is not correct and completed, foreigners shall request for correction; but if it is correct and complete, they shall sign in the invoice cum tax refund declaration.

Stage 2: Foreigners shall be requested to submit invoice cum tax refund declaration and present refunded goods to the customs authority. In Noi Bai and Tan Son Nhat International Airport, foreigners shall submit invoice cum tax refund declaration and present goods to the customs authority at invoice cum tax refund declaration checking counters outside of the restricted areas in order for customs officers to check before conducting procedures for sending baggage.

After customs authority checks invoice cum tax refund declaration and goods, foreigners shall continue to conduct procedures for sending goods and take their boarding-pass.

In case foreigners request for refund payment to their hand luggage, after coming into the restricted areas, they shall submit invoice cum tax refund declaration and present refunded goods as requested. Customs Authority shall check invoice cum tax refund declaration and goods (if necessary) and calculate the VAT amount refunded to foreigners.

In the other places of a tax refund, refunded hand goods or baggage shall be subjected to customs inspection outside the restricted areas (in international airports) and in the refund areas (in international seaports).

Stage 3: Foreigners shall present their boarding-pass card and invoice cum tax refund declaration checked by Customs Authority in terms of identifying kinds of goods and calculating VAT amount refunded to foreigners, and stamp at tax refund counters in restricted areas.

Necessary documents for tax refund

In order to fulfill the procedure of checking and submitting VAT refund, foreign tourists should pay attention to two kinds of documents consisting of documents for checking invoice cum tax refund declaration and goods and documents for VAT refund payments to the foreigner on exit. 

In terms of necessary documents for checking invoice cum tax refund declaration and goods, foreigners shall present to the customs officials at the invoices cum tax refund declaration and goods checking counter the following documents: passports or exit and entry permits; invoice cum tax refund declaration and goods. 

Necessary document for tax refund

With regard to necessary documents for VAT refund payments to the foreigner on exit, foreigners should prepare boarding pass and invoices cum VAT refund declaration. After the customs inspection on invoices cum VAT refund declaration and goods has been completed, foreign passengers shall present to the commercial banks at the refunding counter with the documents mentioned previously. 

Goods subjected to VAT refund

According to Article 11 of Circular No 72/2014/TT-BTC dated 30 May 2014, VAT refund is applied to objects that meet the following requirements: 

“ - Goods are not included in the list of goods prohibited from exportation; the list of export goods under permits of the Ministry of Trade (now the Ministry of Industry and Trade) or export list subject to specialized management according to the Decree No 187/2013/NĐ-CP dated 20/11/2013 of the Government and the guidelines thereof.

- Goods are subjected to VAT as stipulated in Article 3 of the VAT Tax Law No 13/2008/QH12 dated 3/6/2008 and the guidelines thereof.

- Goods are not in the list of goods prohibited in airplanes as stipulated in Article 12 of the Vietnam Civil Aviation Law dated 29/6/2006 and the guidelines thereof.

- Goods are not subjected to VAT refund of foreigners according to Circular 08/2003/TT-BTC dated 15/1/2003 of the Ministry of Finance which guides VAT refund for diplomatic missions, consular posts, and representative offices of international organizations in Vietnam.

- Goods purchased in Vietnam with invoice cum tax refund declaration which is issued within a maximum 60 days before the date of departure of foreign passengers from Vietnam.

- The minimum value of goods in the invoice cum tax refund declaration purchased at the same seller on the same day (including accumulation of many same-day invoices from the same seller) is at least 02 million VND.”

Some difficulties about tax refund system for foreigners in Vietnam

Currently, the procedure of inspecting VAT refund still depends much on paperwork. The customs agencies, established by the General Development of Vietnam Customs, check invoices by paper presented by passengers without electronic invoices. Besides, the process also faces some limitations when tourists have to make the declaration with hand-writing paper. 

According to the Hanoi Custome Department, the Noi Bai Customs Brach reported that some cases caused difficulties for the Customs office to calculate the VAT refund such as clothes with general brands, missing labels, badges, missing red marks on invoices or inaccurate contact number. 

Meanwhile, the Da Nang Customs Department, through the implementation VAT refund of goods for overseas tourists and Vietnamese expat on exit, reported that the office had difficulties in determining the sales companies’ tax refunds when checking invoices and VAT declaration. Therefore, it takes much time for the office to collect the refunded VAT with invoices made by these sales companies. 

Solutions to improve the quality of the VAT refund system

This part is adapted from the article published on Customs News. With a view to building a more efficient system, authorities and organizations should coordinate with each other. It is advised that VAT refunding businesses work with the General Department of Taxation so, the management is tight and more convenient.

Furthermore, enterprises involving in sales tax refund should have clearly defined rights and obligations as well as sanctions for cases where enterprises do not update the information to the Customs office to handle in advance.

The Hanoi Customs Office suggested that tighter regulations on VAT refund conditions should also be applied for new or second-hand goods. The actual inspection of goods which are of great value from high-end brands namely Rolex Watches, Cartier, Hermes, Chanel is difficult to determine whether they are real or fake goods. 

The application of technology in the VAT refund system should be implemented. It will create higher productivity and ensure transparent information between the Customs, banks, and VAT refund businesses. 

All in all, a VAT refund is significant for foreign tourists entering and exiting Vietnam to ensure their benefits when traveling overseas. Foreigners should prepare in advance necessary documents to declare their VAT refund and follow the instruction of the Customs Office. The VAT refund system in Vietnam still has difficulties in creating a smooth workflow between relevant enterprises.

Therefore, it is an important point for the authority to upgrade the procedure of VAT refund. Hope that the article is helpful to you and if you have any problems relating to law, please contact Viettonkin, we will support you by our hearts. 

In the previous article, you have known about the procedure of applying and necessary documents for getting work permit for foreigner in Vietnam. In the second part of this article which assists foreigners in having profound knowledge about the Vietnamese working environment, you are provided with salary standards, allowances, and benefits if you are members of any Vietnamese enterprises.

Vietnam certainly creates a fair and dynamic business environment, hence you will be supported allowances like Vietnamese employees. 

Salary standard and work permit for foreigner in Vietnam

Work permit for foreigners in Vietnam

The minimum wage for foreign workers is the same as the minimum wage for Vietnamese workers. From January 2020, minimum salaries will be increased as follows:

- Region I: VND 4,420,000 (increase of 5.7% from VND 4,180,000)

- Region II: VND 3,920,000 (increase of 5.7% from VND 3,710,000)

- Region III: VND 3,430,000 (increase of 5.5% from VND 3,250,000)

- Region IV: VND 3,070,000 (increase of 5.1% from VND 2,920,000)

Besides, overtime payment is also applied for foreigners. According to Article 98 of the Labour Code, an employee who works overtime will be paid an amount based on the piece rate or actual salary as follows:

- On normal days: at least 150%;

- On weekly days off: at least 200%;

- During public holidays, paid leave, at least 300%, not including the daily salary during the public holidays or paid leave for employees receiving daily salaries.

READ FURTHER: Payroll Guideline in Vietnam 2020.

Allowances and benefits for foreigners after getting the work permit

Work permit for foreigner in Vietnam

The government has issued labor regulations for foreigners while working in Vietnam with a view to ensuring benefits for overseas employees.

Insurance for foreigners after getting the work permit

Foreigners are eligible for health insurance and social insurance. Foreigners are required to participate in social insurance when they obtain work permits, practising licenses issued by the authorities in Vietnam, indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam. Social insurance for foreign workers includes sickness, maternity, occupational accident, disease, retirement, and funeral allowance benefits.  

Tax exemptions

The tax paid by foreign workers can be reduced under circumstances:

- One-off relocation allowance for foreigners to relocate to Vietnam;

- Round-trip airfares paid once a year by employers for foreign employees who are on annual leave; and

- General education school fees or tuition paid by the employer for the expatriates’ children studying in Vietnam.

- Employee housing costs exceeding 15 percent of the total taxable income (excluding housing benefit from employers);

- Expenses for means of transportation for a group of employees to and from work;

- Training fee for employees relevant to employees’ profession and/or in accordance with the employers’ plan;

- Mid-shift meal allowances if the employers directly cater such meals for their employees;

- Presumptive expenditures for telephone, stationery, per diem, working outfit, etc. are not subject to tax if the amounts are within the levels set out under relevant regulations.

Severance Allowance

In case an employment contract is terminated as prescribed in Clauses 1, 2, 3, 4, 6, 7, 9  and 10, Article 34 of the Labor Code, the employer is responsible for paying severance allowance to the employee who has worked on a regular basis for a period of at least 12 months. Each year of work will be worth half a month’s salary, except for the cases in which the employee is entitled to receive a retirement pension.

Job-loss Allowance

According to Article 49 of the Labor Code 2012, the employer is responsible to give the redundancy pay to the dismissed regular employees that have worked for 12 months or more as prescribed in Article 44 and 45 of this Code. 1-month salary is paid for each working year but must not be lower than the salary of 02 months.

Work permit, allowances and benefit that foreigners have when working in Vietnam

Work permit: Salary allowance (applied for State-owned company)

Allowance for workers in harmful or dangerous environments

According to Article 11 Circular 17/2015 / TT-BLĐTBXH, this allowance is applicable to employees working in jobs that involve heavy, hazardous, dangerous or extremely heavy, toxic or dangerous labor conditions. The company reviews and classifies working conditions as prescribed in Article 6 of this Circular, comparing the severity, severity and danger of occupations and jobs with normal working conditions to determine the allowance level.

This allowance is calculated at the same time as the monthly salary paid according to the actual time of doing heavy, hazardous and dangerous jobs. Working less than 4 hours a day is counted as 1/2 day, working from 4 hours or more, it is calculated all day.

Responsibility allowance

Responsibility allowance is applied to employees who do some work under management (such as team leader, deputy leader and similar title) or the job requires a higher responsibility than the responsibility calculated in the salary payroll (such as treasurer, storekeeper, cashier and similar titles). It is calculated in the same period of the monthly salary. When the job is not performed for more than 1 month, the responsibility allowance is not applied.

Traveling allowance

Mobile allowances are applicable to workers who have to frequently change working places and places of residence, such as constructing construction works; prospecting, searching and drilling minerals; topographic survey and measurement, cadastral survey, specialized construction survey, repair and maintenance of road and railway; dredging waterways works and jobs with similar conditions. Allowance is calculated at the same time as the monthly salary payment based on the actual number of working days.

Attraction allowance

Attracting allowances are applicable to workers who come to work in new economic zones, areas with exceptionally difficult living conditions, and works that need to be speeded up. Attraction allowance is calculated in the same period of monthly salary. The duration of implementation is from 3 to 5 years, depending on the conditions of the working area or the job and job applied.

Region allowance

Region allowance is applicable to employees working in areas where the State stipulates that officials and public employees working in this area are entitled to regional allowances. The list of geographical areas enjoying regional allowances is made in the Appendix attached to Joint Circular No. 11/2005 / TTLT-BNV-BLDTBXH-BTC-UBDT. It is determined by the employee's workplace and calculated to be paid in the same period of the monthly salary. When not working at a region-based allowance for 1 month or more, no regional allowance is payable.

Position allowance

Position allowances are applied to the Head, Deputy Head in case the company prescribes the Head, Deputy Headto receive the professional salary, plus position allowance. It is paid in the same period of monthly salary payment. When the employee does not hold the position from 01 month or more, no position allowance is payable.

Other allowance with the work permit

The company can provide additional allowances, such as incentive allowances for employees to ensure time and labor norms, improve job performance skills, and long-term working with. company and other allowances in accordance with the characteristics, labor nature and actual requirements of the company after agreement with the owner.

Holiday leave

An employee shall be entitled to have days off fully paid on the following public holidays:

- Calendar New Year Holiday: one day (the first day of January of each calendar year);

- Lunar New Year Holidays: Five days

- Victory Day: 01 day (the 30th of April of each calendar year);

- International Labor Day: one day (the first day of May of each calendar year);

- National Day: 01 day (the second day of September of each calendar year).

- Hung Kings Commemoration Day (the 10th of March of each Lunar year)

In conclusion, this article provides you with the insight of salary standards and allowances and getting the work permit foreigner in Vietnam. If you have the intention of contributing your talent to our country, this article will help you be clear about your concern regarding your procedure, your salary, and your allowances. Hope that you will find helpful information in these two articles.

In the context of globalization, people have plenty of opportunities to collaborate with many other colleagues around the world. The integration has created such a big chance for people coming from different nations to learn and grow together as well as contribute to the development of organizations. Vietnamese businesses are always willing to cooperate with foreign partners and welcome them to come to Vietnam. If you are living in a foreign country and would like to work in Vietnam, this article will provide you with essential pieces of information to assist you in getting a work permit for foreigner in Vietnam.

Regulations to get the work permit for foreigner in Vietnam  

Visa

In order to enter Vietnam, a foreigner needs a visa issued by the Vietnamese Embassy or Consulate. A Vietnamese visa can be granted while in a third-party country or from within Vietnam. There are several types that foreigners should know to apply for the correct type.

If a foreigner would like to work in Vietnam, it is advised that he/she apply for a longer-term three-month single or multiple entry visa. 

Vietnam Visa types to get the work permit

Visa-free entry

Since March 2020, regular passport holders from 14 countries do not need a tourist visa to enter Vietnam. So what are these 14 countries? Please refer to the table in this link. Furthermore, according to The Amended Law on Immigration for foreigners No. 51/2019/QH14 dated 25 November 2019, for foreign nationals coming from countries which Vietnam unilaterally granted visa-free entry, it is no longer required that the entry date must be at least 30 days from the previous exit. This will come into effect from July 1, 2020. 

Work permits

This part will provide you with the necessary documents, the application procedure, the cost, and some other important information that you need to complete the process to work in Vietnam. Vietnam work permit is an official certificate issued by the Department of Labor, Invalid and Society to allow its holder to work in Vietnam. According to the Amended Law No. 51/2019/QH14 (come into effect from July 1, 2020), the term for a work permit is up to two years and can only be renewed once for a further two-year term.

Requirements of the work permit for foreigner in vietnam

The applicants have to meet these following requirements: 

- At least 18 years of age

- Have a good health condition that satisfies the job’s specific demands and requirements.

- Free of any criminal record in their country or a national security offense, not currently facing criminal prosecution, or not serving a criminal sentence by the Vietnamese and foreign policemen during the assignment.

- Have a high degree of specialized knowledge, technology, and qualification; being experienced in business, management, and other professions that Vietnamese laborers are currently unable to conduct efficiently.

Cases of work permit exemption

- Working in Vietnam for shorter than 03 months. Those foreigners can work in Vietnam under a business visa;

- Being the members of a limited liability company with two members or more;

- Owning a limited liability company with a member (except an authorized representative);

- Being the Board of Directors members of the joint-stock company;

- Entering Vietnam to provide services;

- Entering Vietnam for 03 months to handle emergency problems such as incidents, technical situations, arising complex technologies that affect or likely to affect production, a business that Vietnamese experts or foreign experts currently in Vietnam cannot handle. If the time for the said matters is more than 03 months, they have to apply for a work permit.

- Being internally transferred within an enterprise operating in the 11 service sectors in the list of Vietnam’s commitments on services to the World Trade Organization, including business, communication, construction, distribution, education, environment, finance, healthcare, tourism, cultural entertainment, and transport;

- Entering Vietnam to provide advisory services and technical expertise or perform other tasks serving research, construction, appraisal, monitoring and evaluation, management and implementation of programs/projects funded with official development assistance (ODA) as specified and agreed in international agreements on ODA between competent authorities of Vietnam and other countries;

- Being issued with a license for the practice of journalism in Vietnam by the Ministry of Foreign Affairs in accordance with the law;

- Being teachers of foreign organizations that are sent to Vietnam by such organizations to teach and research in international schools under the management of foreign diplomatic missions or international organizations in Vietnam or permitted by the Ministry of Education and Training to teach and research in Vietnam’s education and training institutions;

- Being volunteers certified by foreign diplomatic missions or international organizations in Vietnam;

- Coming to Vietnam to work as experts, managers, executive directors or technical employees within a period of fewer than 30 days and no more than 90 cumulative days in 01 years;

- Entering Vietnam to implement international agreements to which central and local state agencies are signatories as prescribed by the law;

- Being students studying in foreign schools and institutions having agreements on an internship in agencies, organizations, and enterprises in Vietnam;

- Being family members of diplomatic agents of foreign diplomatic missions in Vietnam permitted for working by the Ministry of Foreign Affairs, except where international treaties to which the Socialist Republic of Vietnam is a signatory that contains provisions different from this;

- Having official passports to work for state agencies, social organizations and socio-political organizations;

- Other cases decided by the Prime Minister at the proposal of the Ministry of Labor – Invalids and Social Affairs.

The policy of work permit exemption has been amended according to the Amended Law No. 51/2019/QH14(come into the effect of 1 July 2020). People in the following circumstances will also be except for the work permit: 

- A foreign national married to a Vietnamese citizen is now exempt from a work permit. Therefore, the immediate sponsor for visa/temporary resident cards for the foreign national could be changed from the Vietnam organization to the Vietnamese husband/wife of the foreign national.  Regulations to be issued in due course should give guidance on this matter.

- Foreign national owners or shareholding members of limited liability companies and shareholders being members of the board of directors of joint-stock companies with a certain threshold of capital contributions are entitled to a work permit exemption.  The government will provide further guidance on the threshold requirements in due course.

When applying for a work permit for foreigner in Vietnam

According to the Circular No. 23/2017/TT-BLDTBXH guiding the online grant of work permits to foreign workers in Vietnam, the foreigner’s employer or his agent shall, at least 13 working days before the date the foreigner is expected to start working, fill in the request form and required documents to the Department of Labor – Invalids and Social Affairs to apply for the work permit.  

Mandatory documents to apply for the work permit

It is required that foreigners need to prepare these documents to apply for the work permit in Vietnam. 

1. Request form for Vietnam work permit (Form No. 7 issued together with the Circular No. 40/2016/TT-BLDTBXH);

2. Health check certificate;

3. Criminal records (issued within 180 days), if applicants have stayed more than 6 months in Vietnam, they will have to provide both Vietnamese criminal records and the criminal record from their home countries;

4. Certified copy of your certificate/degree;

5. Working experience confirmation document from former employers;

6. Passport and valid visa (Copy);

7. Approval certificate allows the employer to use foreign workers from the Ministry of Labor, Invalids, and Social Affairs or the People’s Committee where the employer resides. This certificate should be applied for at least 20 days before the expected date of recruitment of foreign workers by the employer;

8. Certified copy of the Employer’s Business Registration Certificate;

9. 02 4*6cm photos;

10. Employment contract.

Required document to get work permit in Vietnam

The application process

The process of application goes through five steps:
1. Prepare the required documents mentioned above, and their scans as well;

2. Access to http://dvc.vieclamvietnam.gov.vn/, register an account and fill in a declaration form and submit a dossier of the work permit application to the work permit-granting agency.

3. Get informed via email of whether the declaration and dossier are legally satisfactory and the work permit will be granted or not within 5 working days after the work permit-granting agency receives the submission.

4. Submit the prepared documents (in papers) directly or by post to the work permit licensing agency after receiving the positive reply via email from this agency checking, comparison, and storage according to regulations.

5. Wait and get the Vietnam work permit as it will be delivered to the employer/his agent directly or by post to his registered address within 8 working days after receiving full required documents.

After that, the application process will be approved in 20 days including 12 working days for online approval and 8 working days for granting the work permit. Therefore, foreigners are advised to apply for the work permit at least 20 days before the expected working date.

Moreover, during the process, foreigners have to pay the work permit cost and the cost for Vietnam work permit varies by the province/city where the application form is submitted. 

Work permit termination

A work permit may be terminated under the following circumstances: 

- The work permit has expired.

- The Labor contract has been terminated.

- The content of the labor contract is not consistent with the granted work permit.

-  The contracts of business, trade, finance, banking, insurance, science and technology, culture, sports, education, or medicine have expired or terminated.

-  The foreign employer announced the termination of the foreign employee working in Vietnam.

-  Work permits launched by authorized state agencies have been withdrawn.

-  The operation of the company, organization, and partners in Vietnam has been terminated.

In case a foreigner wants to return his/ her home country or move to another country for work, before leaving Vietnam, his/ her Work Permit needs to be canceled with the assistance of the Department of Labor, Invalids and Foreign Affairs. Foreign employees should return the permit to their employer within 15 days from the date that their employment ends. It is the employer’s responsibility to submit the permit with a notification letter to the local office of the Labor Department.

To sum up, this article provides foreigners with essential information about the work permit for foreigner in Vietnam. The very first thing that foreigners should prepare is the visa, yet people coming from 14 countries mentioned above do not need to have a visa to come to Vietnam. The blog also introduces clearly about the procedure of application and required documents.

Some special cases of the work permit for foreigner in Vietnam are also mentioned regarding the work permit exemption and the work permit termination. The next part of this article will guide you about the standard salary and benefits for foreign workers while working in Vietnam. Please follow Viettonkin’s blog to keep track of accurate information. Viettonkin Consulting is always willing to help you in any cases so, don’t hesitate to contact us and you can see our HR service to help you for getting the work permit in Vietnam. 

As we know, Indonesia is one of the largest countries in the world that has various important roles among countries in Southeast Asia. The country has its potential for the development of the manufacturing industry.

This sector contributes to the economic increase of 20.27% by shifting the role of Commodity-Based to Manufacture Based for the nationwide. As a result, Indonesia became the largest manufacturing base in Southeast Asia.

To complete your observation about manufacturing investment in Indonesia, we should take a look at the details below!

Introduction to Manufacturing in Indonesia

Manufacturing in Indonesia

The main areas of production that most investors have been seeking out are textiles and garments, food and beverages (F&B), electronics, automotive, and chemicals. The majority of manufacturers in the sector are comprising of micro, small, and medium-sized enterprises.

In the first quarter of 2020, the manufacturing industry reported a decline, with the Bank Indonesia (BI) and Prompt Manufacturing index (PMI) slipping into a contractionary phase at 45.64%. It used to be at 51.50% in the first quarter of 2019. However, all sectors nearly recorded a contraction in the first quarter of 2020, excluding F&B and Tobacco.

The most significant production volume decreased due to compressed demand and supply disruptions due to the COVID-19 pandemic.

Moreover, in the second quarter of 2020, survey respondents predicted a slight improvement in the manufacturing industry. It increased 48.79% from the first quarter of 2020 which was 45.64%. The production volume and labour utilisation were expected to improve, despite the remaining in contractionary territory.

In the last few years, most Foreign Direct Investments (FDI) have been channeled to non-manufacturing sectors. The top five destinations of FDI in Indonesia are energy, mining, chemical, real estate, and metals. Other sectors were services, such as hotels, information technology, and finance.

The average annual growth forecast from 2016-2020 is estimated at 7%, and Indonesia's proportion of GDP in the industry is higher than the rest of ASIAN, even overtaking China in 2015. Meanwhile, total manufacturing FDI from 2011-2015 is more than 76 billion dollars.

The largest manufacturing sector in Indonesia is the machinery and equipment sector. It is forecast to grow at 8% per year driven by demand from the agribusiness, energy, mining, and construction sectors.

Tin, nickel, ignite, copper, and coal, is the world’s largest production in Mining. More than half of the total demand for heavy equipment in the country comes from the mining sector. Sales of construction and mining equipment could go up to 5000 units in 2016.

Chemicals and Pharmaceuticals is the second largest manufacturing sector for FDI into Indonesia with nearly US$15 billion from 2011 to 2016, just behind the machinery and related sector.

Indonesia’s construction sector is going up 7% to 8% per year. The international tourism receipts are estimated by EIU to grow from US$9.5 billion in 2015 to US$13.7 billion in 2020. Some 50 locations in Indonesia are available for tourism development. The FDI in Indonesia’s sector from 2011 to 2015 has been over US$8 billion. As a result, it will lead to growing demand for all related machinery and equipment.

According to President Jokowi, it’s more complicated for foreign businesses to invest in Indonesia’s power sector. It is prior to a presidential directive calling for a simpler licensing process. A foreign investor would need to secure over 250 licenses, and it could take as long as 3 years to complete.

Location for Manufacturing Setup in Indonesia

Manufacturing worker

Moreover, infrastructure is one of the salient variables for investments, with significant profit implications. Indonesia has underinvested in public infrastructure, and it’s leading to a growing infrastructure deficit.

The Government of Indonesia (GoI) recognized that the infrastructure deficit as a national priority with the National Medium Term Development Plan (RPJMN) estimates IDR 5.4 trillion (USD 415 billion) is an additional investment in infrastructure from 2015 to 2019.

Despite the infrastructure deficit, Indonesia currently has 11 Special Economic Zone (SEZ) across the country with investment opportunities available in agriculture, manufacturing, tourism, and natural resources.

In 2019, three SEZs were created, while in 2020 another seven in the development phase. These newly launched SEZ aim to bring at least US$50 billion over the next 10 years. Until October 2019, the total investments SEZ of Indonesia have achieved over US$6 billion.

Most SEZs are planned as industrial zones to promote manufacturing activities and attract foreign investment. 8 of SEZs have been established by the government regulation, and they are eligible for special economic incentives. 

6 of the locations including, Sei Mangkei, Tanjung Api-api, Maloy, Palu, Bitung, and Morotai, focus on a mix of natural resource processing industries, mining and agricultural industries. Meanwhile, the 2 others, Tanjung Lesung and Mandalika, focus on tourism and ecotourism activities.

To support more of the manufacturing activities, the government plans to provide the tax holidays rules on facilities constructions on SEZs, as well as to offer more tax incentives.

After knowing the location of manufacturing setups in Indonesia, you might be curious how to establish a company in the country. Let’s follow the details below!

Corporate Establishment in Indonesia

There are two investment options for foreigners to establish a corporation in Indonesia.

PMAs can operate as a limited liability company, and the most well-known form of foreign investment. PMA licenses acquired through the Indonesian Investment Coordinating Board (BKPM), yet require a huge capital investment and take more time to process. PMA also gives investors full authority over the course of the organization and decreases the dangers of finding an appropriate partner.

A representative office has no capital requirements and sets aside less effort to set up as it cannot take part in business exercises. The role of the representative office is limited to liaison and representative of the interest of the parent company.

After knowing the investment options, then you need to know the steps to establish the corporation.

Steps To Manufacturing The Corporate Establishment

Steps to create manufacturing incorporation in Indonesia

Step 1: Deed of Establishment

The initial step is to decide the level of the permitted remote responsibility for arranged business exercises. Then, you need to pick a name for your PT PMA, the name needs to include at least 3 words and cannot be misleading or similar to some other existing organization or government establishment’s name.

The corporate’s activities and purpose must be determined in its Articles of Association within the Deed of Establishment, which must be made before a notary. The Deed of Establishment should be approved by the Ministry of Law and Human Rights. This also implies your organization is legitimately set up under Indonesian Law.

Step 2: Domicile and Tax Registration

After the Ministry of Law and Human Rights has approved your Deed of Establishment, the next stage is to get a Domicile Letter (Surat Keterangan Domisili) from the regional government and acquire a Tax Identification Number (NPWP - Nomor Pokok Wajib Pajak) from the local tax office.

Step 3: Identification Number to Operate (NIB-Nomor Induk Berusaha) and Operational License/Commercial License

A unique identification number, NIB, will identify your company profile in Indonesia and it will also serve as your import license (previously API-U), customs identification number (previously NIK), and business registry (previously TDP).

Registration of your legal entity to OSS also automatically registers your PT PMA under the Indonesian Health and Social Security System (BPJS Kesehatan, BPJS Ketenagakerjaan).

Step 4: Operational License/Commercial License

The business’s operational license/commercial license is usually issued on the same day as NIB. In cases like this, it can take months before the government grants your business a license.

Step 5: Application For Permanent Business License

Once you are issued the above principal license, you are expected to start constructing the factory. Once at least 80% of the machinery is installed, the company is required to apply for a permanent business license. But, it shouldn’t be more than 3 years after the principal license is issued.

Step 6: Open a Bank Account

The process of opening a corporate bank account in Indonesia varies slightly from bank to bank. You need to present the documents after your PT PMA registration is complete in order to set up an account. The documents are:

Step 7: Register to the Ministry of Manpower

Hiring team for factory installation, including foreign workers who can be granted working visas. Remember that the working visa can only be issued to foreign workers whose competence is needed to assist the installation of the factory. Only specific job titles are allowed by the Ministry of Manpower.

Step 8: Application for API-P (import identification number)

As a manufacturing company, you get a special import license API-P which allows you to import any products that are required to set up your factory. This makes API-P different from API-U which would only allow you to import products from one category. 

You are not allowed to import products for selling them in Indonesia with this license. API-P will be accompanied by NIK (custom identification number).

Step 9: Masterlist Application

As a manufacturing company, you are entitled to apply for an exemption of import tax for the machinery you need for production. Such exemptions are given based on the presentation in front of BKPM by the Board of Directors of the company.

These are all the details about guides to manufacturing investment in Indonesia. Hopefully, with this article, you will be attracted to establish foreign companies in the country. However, if you need more information about this, you can contact us. Remember, Viettonkin will always be ready to assist you!

Nowadays, Indonesia becomes more popular with foreign direct investment players who want to enter the Asia market, as the country marks the 16th largest economy in the world in 2019. It causes many foreign investors to set their eyes to expand their businesses to Indonesia. Entering Indonesia’s market somehow will offer significant results for foreign direct investment players.

Before getting into deep about how and why foreigners should expand their businesses to Indonesia. It’s better to take a look at Indonesia’s economy first.

Overview of Indonesia’s Economy in General

Foreign direct investment in Indonesia

As stated by the World Bank and projections from Trading Economics, Indonesia’s GDP was US$1126 billion back in 2019. Indonesia’s GDP accounts for 0.93% of the world economy. In fact, Indonesia’s GDP has continuously grown since 2015.

Furthermore, according to the new Asian Development Bank (ADB) report, Indonesia’s economy is expected to grow by only 2.5% this year, and it’s a four-year low of 5.02% in 2019. The COVID 19 outbreak situation gave an impact to this country’s economy. However, it is expected to gradually improve in 2021.

The ADB report also says the domestic demand is expected to weaken, as business and consumer sentiment decreases. As the global economy will recover next year, Indonesia’s growth also hopes to gain momentum, with recently introduced investment reforms providing an additional stimulus.

The report says, the inflation which averaged 2.8% last year, is forecast to increase to 3% in 2020, before it might be declining to 2.8% in 2021. The inflationary pressure from tight food supplies and currency devaluation is expected to be partially counterbalanced by lower prices for non-subsidized fuel, as well as subsidies for electricity and food.

According to the World Economic Forum’s Global Competitive Index in 2019, Indonesia is in the 4th place within ASEAN region, behind Singapore, Malaysia, and Thailand. The Indonesian economy has been climbing steadily higher in the ranks of the moderately free, and it makes Indonesia a promising country for the foreigner entrepreneurs to expand their businesses here.

Indonesia’s government is expected to continue efforts to encourage more private investment in infrastructure and manufacturing. The government can achieve that goal by modernizing and simplifying investment regulations, and they also need to ensure the labor market controls, such as minimum wages, which will give an effect to employment growth.

The World Bank report says, Foreign Direct Investment (FDI) net inflows in Indonesia in 2019 was US$24.4 billion. It increased by 29% compared to the previous year. However, the FDI net outflows in 2019 was US$4.392 billion.

In the March quarter of 2020, due to ongoing COVID-19 pandemic, FDI to Indonesia slumped 9.2% year-on-year to US$6.4 billion (IDR 98 trillion), it is the lowest amount in 6 months to 1 year, if it compared with a 6.4% growth in the previous period. It all happened as the investors delayed business decisions due to the outbreak.

The leading sectors for FDI projects in Indonesia are trade and reparation, such as hotel and restaurant, chemical and pharmaceutical, Hosing, Industrial Estate, and office building. Meanwhile, the leading locations are Special Territory of Jakarta, West Java, and East Java.

There is a lot of potentials to grow the business and join the market here before the competitors enter. You might ask yourself why you should expand, or what are the opportunities for growing the business. Moreover, let’s check the details for the foreign direct investment in Indonesia below.

The Opportunities For Foreign Direct Investment in Indonesia

Foreign direct investment in Indonesia

Indonesia renewed its Investment One-Stop Service (OSS) Centre on 26 January 2015, in which investors can now process their investment licenses and other related licenses in one office.

The centre is integrated with 22 ministries and agencies, and it covers the licensing processes for most of the business fields. Investors can also monitor the progress of their business license application online, and ensure that the deadline complies with Standard Operating Procedures (SOP).

By looking at how Indonesia has a lot of potential for more FDI projects, President Joko Widodo is expected to continue driving forward with large-scale developments, while the country is also attracting financial support from China for major infrastructure works under the Belt and Road Initiative (BRI).

The government plans to spend US$40 billion (IDR571 trillion) on the development of transport infrastructure in Jakarta by 2029. Announced in March 2019, the government aims to build a 120km light transit railway corridor in the capital city. In addition, in May 2019, the government announced plans to invest US$412 billion (IDR6 quadrillion) to develop Indonesia’s overall infrastructure during the period of 2020-2024. It includes the construction of 25 new airports, highways, affordable houses and power plants. 

A study by Polling Indonesia had cooperated with the Indonesian Internet Providers Association (APJII) reported that, there are 171 million people, or 64.8% of the total population of 264 million Indonesians, were already connected to the internet in 2018. It represents an increase from 54.86% in 2017. It makes Indonesia become one of the top ten most improved countries in the Mobile Connectivity Index. This improvement has been broad and driven by better performance across all four enablers: infrastructure, affordability, consumer readiness, content and services.

With all of these opportunities, it can attract more FDI projects to Indonesia. But, in fact, there are some challenges that foreigners need to know as well.

The Challenges For Foreign Direct Investment in Indonesia

According to Transparency International’s Corruption Perception Index 2019, Indonesia ranks 85th out of 183 countries. However, that would mean foreign investors might have a few obstacles in building an investment climate in Indonesia, such as conflicting regulations, rigid labor laws, legal unpredictability, the rising cost of credit, and contract issues. 

The World Bank reports and findings of Transparency International suggest corruption and inflexible domestic regulations have significantly affected both domestic and foreign investment in Indonesia.

Despite the challenges, Indonesia still has more opportunities and potential for foreigners to take and build a business here. As the country's infrastructure is growing, it will continue attracting more FDI projects to bring in Indonesia.

Additionally, you might be curious if it’s easy or complicated to expand the business here, but you should not be worried about that. As long as you meet the requirements, you will be fine. 

The Requirements To Expand Businesses in Indonesia

Indonesia has several types of companies, which sometimes confuse foreign investors when choosing the most suitable for their business activities. See the details where we describe the differences in the type of company setup options in Indonesia!

1. The Indonesian Limited Liability Company (PT)

2. PT PMA (Penanaman Modal Asing) or Foreign Investment Company

3. Representative Office (KPPA)

These are all information about entering the market in Indonesia. You should pay attention to details, and complete all the requirements once you choose the legal entities for your business activities. If you are unsure about all these things, you can contact us anytime. Viettonkin will always be ready to assist you!

Obviously, the EU-Vietnam Free Trade Agreement has brought a lot of opportunities to Vietnam. The approval of the agreement is such a huge endeavor and evidence of our attempts in boosting economic development and joining in the integration. The EVFTA helps to diversify the market and leading export goods such as agriculture products.

This article introduces you about an overview of the EVFTA and EVIPA, then provides you with key points in these agreements regarding commercial and economy.

Overview of EVFTA and EVIPA

Vietnam EVFTA with European countries

What is EVFTA? 

European Union (EU) - Vietnam Free Trade Agreement, in other words, EVFTA is a new free trade between Vietnam and the member countries of European Union which was announced in 2016. Two years later, on June 26, 2018, a new direction of EVFTA was agreed upon. Accordingly, the EVFTA was separated into two agreements: an agreement on free trade (EVFTA) and an agreement on investment protection (EVIPA).

  - EVFTA includes all of the current content of the EVFTA; however, the investment section only includes the liberalization of foreign direct investment. With this agreement, EU has the right to approve and implement it temporarily.

 - IPA includes investment protection and the mechanism of investor-state dispute settlement (ISDS). IPA needs ratification from both the European Parliaments and parliaments of member countries of the EU in order to come into effect.

Why does Vietnam initiate FTA?

There are three main advantages that FTA brings to Vietnam. First, EVFTA will propel the export sectors in Vietnam. It will help diversify the market and goods that are exported abroad, especially agricultural products, seafood, and other goods of Vietnam that have comparative advantages.

Second, as EVFTA commits to protect all investment deals and investors in a fair, complete, and safe manner, it makes the investment environment and legal system in Vietnam more transparent, thus helping Vietnam attract investors from EU and other countries.

Last but not least, in terms of strategy, negotiating and implementing these agreements show Vietnam's commitment to integrating itself into the global economy in the context of uncertain and complex geopolitics.

Timeline of the approval process between EVFTA 

- October 2010: Prime Minister of Vietnam and the President of the European Commission agreed to start negotiations on the EVFTA.

- June 2012: The Vietnamese Minister of Industry and Trade and the European Commissioner for Trade officially announced the negotiations on EVFTA.

- December 2015: Negotiations on the agreement concluded and legal review began to prepare for the signing of the agreement.

- June 2017: The legal review process for the EVFTA at the technical level completed.

- September 2017: The EU requested Vietnam to split the investment protection content and the mechanism of investor-state dispute settlement (ISDS) from the EVFTA to form a separate agreement due to the ascent of new issues related to the EU competence to ratify FTAs. Under this proposal, EVFTA will be split into two separate agreements, including the EVFTA and IPA.

- June 2018: Vietnam and EU officially agreed to separate EVFTA into two agreements including EVFTA and IPA, completed the entire legal review process of EVFTA and agreed on all contents of the IPA.

- August 2018: The legal review of the IPA completed.

- October 17, 2018: The European Commission officially adopted the EVFTA and IPA.

- June 25, 2019: The European Council approved the signing of the agreements.

- June 30, 2019: The EVFTA and IPA were officially signed by Vietnam and EU.

- January 21, 2020: The International Trade Committee (INTA) endorsed the EVFTA.

- March 30, 2020: The European Council passed the EVFTA.

- June 8, 2020: Vietnam's National Assembly (NA) ratifies the EVFTA and IPA.

Latest news of the Free Trade Agreement between EU and Vietnam

At the 9th session of the 14th National Assembly, the National Assembly of the Socialist Republic of Vietnam officially approved the Free Trade Agreement (EVFTA) and the Investment Protection Agreement (IPA) between EU and Vietnam, with up to 100% positive votes.

After the National Assembly completes all the required procedures for the EVFTA and IPA approvals, the EU-VN Free Trade Agreement is expected to be valid in this summer.

As being valid, the EVFTA is expected to immediately bring positive effects to businesses in both Europe and Vietnam. Since the first effective date, the tariff reduction will be applied to 66% of exports from EU to Vietnam and 71% of EU imports from Vietnam.

Key points of EVFTA and EVIPA which are approved by the Vietnamese government

Key points of EVFTA and EVIPA which are approved by the Vietnamese government

This part’s reference comes from the EU - Vietnam Free Trade Agreement introduced by the Ministry of Industry and Trade.

Trade in goods

For Vietnamese exports, as soon as the Agreement comes into effect, the EU will eliminate import duties on about 85.6% of tariff lines, equivalent to 70.3% of Vietnam's exports to the EU. After 07 years from the date of entry into force of the Agreement, the EU will eliminate import duties on 99.2% of tariff lines, equivalent to 99.7% of Vietnam's exports. For the remaining 0.3% of exports, the EU commits to giving Vietnam a tariff quota with an import duty of 0%.

Thus, it can be said that nearly 100% of Vietnam's exports to the EU will be eliminated import tax after a short journey. So far, this is the highest level of commitment a partner gives us in the signed FTAs. This benefit is especially meaningful when the EU is continuously one of the two largest export markets of our country today.

Trade in services and investment

Commitment of Vietnam and EU on trade in investment services to create an open and favorable investment environment for businesses of the two sides. Vietnam's commitments go beyond the commitments in the WTO. The EU commitment is higher than the WTO commitment and is equivalent to the highest EU commitment under the recent EU FTAs.

The sectors that Vietnam committed to facilitate EU investors include a number of specialized services, financial services, telecommunications services, transport services, distribution services. The two sides also made commitments on national treatment in the field of investment, and discussed the content of dispute resolution between investors and the state.

Some service sectors are mentioned consisting of banking services, insurance services, telecommunications services, distribution services.  

Government Procurement

Vietnam and the EU have agreed on the contents similar to the Government's Procurement Agreement (GPA) of the WTO. With some obligations such as online bidding, setting up an electronic portal to post bidding information, etc., Vietnam has a roadmap to perform. The EU also pledges to provide technical assistance to Vietnam to fulfill these obligations.

In terms of commitments, we commit to open the procurement of ministries, central branches and a number of units under the Ministry of Defense (for goods and services normally purchased for non-security purposes - national defense), Hanoi, Ho Chi Minh City, Vietnam Electricity, Vietnam Railway Corporation, 34 hospitals under the Ministry of Health, Hanoi National University, and Thanh National University.

Ho Chi Minh City and a number of central institutes. Regarding the threshold of market opening, we have a 15-year roadmap to gradually open up shopping activities.

Vietnam reserves the right to reserve a certain proportion of the value of bidding packages for domestic contractors, goods, services and labor within 18 years from the date of entry into force of the Agreement.

Regarding pharmaceutical products, Vietnam has committed to allowing EU businesses to participate in bidding for pharmaceutical procurement of the Ministry of Health and public hospitals under the Ministry of Health with certain conditions and roadmaps.

Intellectual Property

Commitments on intellectual property include commitments on copyright, inventions, inventions, commitments related to pharmaceuticals and geographical indications, etc. Basically, Vietnam's commitments on intellectual property are in accordance with current law. Some key features of intellectual property commitment are mentioned as follow:

- Regarding geographical indications, when the Agreement comes into effect, Vietnam will protect over 160 EU geographical indications (including 28 members) and the EU will protect 39 geographical indications of Vietnam. Vietnam's geographical indications are related to agricultural products and foodstuffs, creating conditions for a number of Vietnam's agricultural products to build and assert their brands in the EU market.

- Regarding trademarks: The two sides pledged to apply a convenient and transparent registration procedure, including having an electronic database on the published trademark application and the registered trademark to the public. access to, and allow the invalidation of, registered trademarks but not actually used within 5 years.

- Regarding implementation: The agreement provides for border control measures for exports suspected of infringing upon intellectual property rights.

- Most-favored nation treatment (MFN): The most-favored nation principle in this Agreement ensures that EU organizations and individuals enjoy the benefits of high protection standards not only with intellectual property rights under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) but also other objects of intellectual property rights in trade agreements. Free Trade that Vietnam participates (such as CPTPP Agreement).

State-owned enterprises (SOEs) 

Provisions of SOEs in EVFTA Agreement to create an environment of fair competition between economic sectors. The commitment also takes into account the important role of SOEs in implementing public policy goals, macroeconomic stability and security - defense. Therefore, the EVFTA Agreement only governs commercial activities of state-owned or controlled enterprises and monopoly enterprises whose commercial activities are large enough to make sense in competition.

The main obligations of the SOE Chapter are: (i) operating under a market mechanism, which means that the enterprise has the right to make its own decisions in business activities and without any State administrative intervention, except in the case of achievement of public policy objectives; (ii) there is no discrimination in the sale and purchase of goods and services to the sectors and fields which have been opened; (iii) transparency of the basic information of the business in accordance with the law on enterprises.

Ecommerce

To develop e-commerce between Vietnam and the EU, the two sides pledged not to impose import taxes on electronic transactions. The two sides also pledged to cooperate through the maintenance of a dialogue on the management issues posed in e-commerce, including:

- The responsibility of intermediary service providers for transmitting or storing information;

- Conducting with electronic communications in commerce without the permission of the recipient (such as electronic mailing, advertising ...);

- Protect consumers when participating in electronic transactions.

The two sides will also cooperate to exchange information on domestic laws and related enforcement issues.

Transparency

Originating from the practice of the domestic legal environment having a great influence on trade, EVFTA Agreement sets aside a chapter on transparency with the most common requirements to ensure an effective and predictable legal environment. predictable for economic entities, especially small and medium enterprises. 

Trade and sustainable development

The two sides affirmed their commitment to pursuing sustainable development, including economic development, social development and environmental protection. Regarding labor issues, as members of the International Labor Organization (ILO), the two sides pledged to respect, promote and implement the ILO 1998 Declaration on the basic principles and rights of TB. and action, including promoting the effective ratification and implementation of ILO Basic Conventions.

In addition, the two sides also agreed to enhance cooperation through information and experience sharing mechanisms to promote ratification and implementation of labor and environmental conventions in a number of areas such as gas change. climate, biodiversity, sustainable management of forests and trade in forest products.

To understand clearly about the EVFTA and IPA, you can visit the website of the Ministry of Industry and Trade.

In conclusion, EVFTA creates many great opportunities for Vietnamese import and export. The agreement has brought huge advantages for the Vietnamese economy as well as competitive advantages compared to other countries in Southeast Asia. The article helps you have profound knowledge about the EU-Vietnam Free Trade Agreement. Hope that you can gain some insights about the big achievement of the Vietnamese economy this year. In the meantime, you can read our other articles here.

It should come to no surprise that due to the coronavirus has spread rapidly across the country have taken swift action to mitigate the development of a full-blown pandemic, including an education system around the world.

Since the virus started a couple of months ago, it already has changed how students are educated around the world, including Indonesia. Those changes give a glimpse at how education could change for the better and the worse in the long term.

In last March, there have been multiple announcements suspending attendance at schools and universities. It is not only in Jakarta, but also in other cities, such as Solo, Yogyakarta, Semarang, and many more.

These decisions have led students into temporary ‘home-schooling’ situations. These changes have certainly caused inconvenience, as not many schools have good facilitation to provide the School From Home situations. However, they have also prompted new examples of educational innovation.

Although it is too early to judge how the reaction to COVID-19 will affect education systems in Indonesia, there are signs suggesting that it could have an effect on the direction of learning innovation and digitization.

The Outbreak Could Lead To Surprising Innovation in Education System

Innovation in education system after Covid-19

The slow pace of change in academic institutions is lamentable, with centuries-old, lecture-based approaches to teaching, the rooted institutional biases, and outmoded classrooms. However, the COVID-19 situations have pushed the education systems to search for innovative solutions in a relatively short period of time.

Furthermore, according to local news, since the schools and universities closure, Minister of Education and Culture (Mendikbud) Nadiem Anwar Makarim very supports and appreciates proactive steps and prepares all the scenarios, including the application of working together for online learning (in networks for students).

 Mendikbud develops a distance learning application on Android and also on the website, it is called Rumah Belajar. The sites can be accessed at https://belajar.kemdikbud.go.id/

Some great features that can be accessed by students and teachers during this School-From-Home are the Learning Resources, Digital Classes, Virtual Laboratories, and exam practice module. Rumah Belajar can be utilized by students and teachers of Early Childhood Education (PAUD), Elementary Schools (SD), Junior High Schools (SMP), Senior High Schools / Vocational Schools (SMA / SMK) or equivalent.

The Supports From Technology Companies

The Minister of Education and Culture also appreciated the support of some companies of educational technology in helping students to continue learning at their homes. They hope it will be a solution as the Local Government’s policy temporarily stops learning activities in schools to prevent the spread of COVID-19.

The online learning is now carried out by the various companies. Some of them that focus on developing online education systems are Google Indonesia, Smart Class, Microsoft, Quipper, Ruangguru, Sekolahmu, and Zenius.

Supporting the statement of Mendikbud, several partners expressed their willingness to contribute to implementing an online learning system. Each platform will provide facilities that are publicly accessible and free.

  1. Google Indonesia

With the situation, Google is enabling students and teachers in Indonesia to continue learning at home through G Suite for Education. It is a collaborative learning tool between teachers and students available free of charge from Google.

Schools can use Hangouts Meet, a video conferencing tool for G Suite users, and also Google Classroom, it is to attend classes and continue distance learning from home.

Until July 1, 2020, Google provided the most complete Hangouts Meet and free of charge which includes live streaming up to 100.000 viewers in a domain and large gathering up to 250 participants per class, which can be recorded and stored on Google Drive for being accessed later.

  1. Kelas Pintar

Founder of Kelas Pintar, Fernando Uffie, supports the action of Mendikbud to minimize the spread of COVID-19 by applying the School From Home policy. Fernando said that the temporary suspension of teaching and learning activities in schools does not necessarily make the learning process stalled.

The students can keep learning online, while teachers can continue providing assistance in the learning process. Parents also can monitor their children’s learning progress. These can be done with technology-based education, such as Kelas Pintar.

To support the policy, Kelas Pintar offers free of charge for teachers and students all over in Indonesia to use online learning. In hope, the learning process between students and teachers can continue whenever and wherever.

  1. Microsoft Indonesia

Benny Kusuma, Education Lead PT. Microsoft Indonesia explained, it provides Office 365 access for education. To use this facility, schools only need to provide an institutional domain as a digital identity of teachers and students.

With the feature of Teams in Office 365, the teaching and learning process can still take place digitally and the teachers can meet face to face with students through video conference when needed. Teachers also can send text, sound and video-based teaching materials through Team Class to their students. Likewise, students can discuss with teachers and other students in the Team Class.

  1. Ruangguru

Belva Devara, Chief Executive Officer (CEO) and Founder of Ruangguru announced the opening of Ruangguru Online School for free. Through this program, students can take distance learning online (live teaching) every Monday to Friday, like they do at schools.

Started from last March 2020, students can take part in Ruangguru Free Online School lessons from 08.00 - 12.00 WIB, where 15 live teaching channels will be available and covering all subjects based on the national curriculum, starting from grade 1 (elementary school) to grade 12 (high school, for IPA & IPS).

Teachers in Indonesia can also take part in free Online Teacher Training for one month. There are 250 teacher training videos covering basic competency materials in the pedagogical and professional fields.

The rapid spread of coronavirus has demonstrated the importance of building resilience to face various problems, from pandemic disease to rapid technology changes. But, it also gives us an opportunity to remind ourselves that the skills students need in this unpredictable situation, such as decision making, creative problem solving, and perhaps adaptability.

Those skills remain a priority for all students, but the resilience must be built into our education systems as well.

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