With a 350% GDP per capita growth since 1991, second only to China, Vietnam stands as a prime investment destination for many looking to expand into international markets. According to Trading Economics, foreign direct investment increased by 6.3% in 2018.
Despite the growing trend of investing into Vietnam, this growing economy continues to pose as a challenge for businesses who are interested in the area. With a line of rigorous procedures required in order to start a business in the country, and ranked 99th place by The World Bank and International Finance Corporation (IFC) when looking at the ease of doing business, Vietnam has one of the most complex start-up environments in the world.
Start Your Business into Vietnam the Easy Way!
Want to make Vietnam a part of your global strategy and expand your business into the market but without the hassle? PEO/ EoR secondment solution is one of the most flexible and cost effective ways to expand your business into the Vietnam market. PEO/ EoR secondment solutions are used to take on headcount for a company, cutting down on some of the tedious procedures tides to expanding a business. As such, PEO/ EoR secondment is the perfect solution for companies expanding into Vietnam and who:
- Are looking to test out the international market but wanting to avoid the relatively large commitment of minimum capital
- Does not already have a legal entity set up in Vietnam
- Are unfamiliar or have little knowledge of Vietnam labour law and payroll rules
- Are keen on avoiding corruption related incidents
How Does PEO/ EoR Secondment Work?
In a secondment arrangement, the Vietnam EoR service provider will legally employ staff in Vietnam on behalf of the client’s business and second the employees back to the business under a service agreement. With the EoR service provider acting as the Employer of Record for your employees in Vietnam, secondment makes expansion into Vietnam much simpler.
With secondment, businesses can more effectively hire people in a short time frame to help perform key duties without the need to incur extra costs. PEO/ EoR also helps minimise time delays and commitments associated with setting up a business in a foreign country.
Benefits of Expanding your Business Through PEO/ EoR Secondment
When companies enter the Vietnam market, they choose to use a PEO arrangement to employ staff for the following reasons:
1. Reduced Cost
Setting up a foreign owned legal entity in Vietnam from scratch will generally require an upwards of $50K USD. This can be a significant amount for businesses still considering the viability of the market. On the other hand, EoR Secondment is at least 60% cheaper than setting up a legal entity in Vietnam, will allow you to scale up your business with ease, making expansion much simpler.
2. Overall Flexibility
With EoR Secondment, businesses have the option of hiring as many or as little people under the agreement. This is especially good for those looking to test the market. With secondment arrangements, businesses can quickly start hiring key talent and running their business without waiting through the business set up process.
PEO/ EoR Secondment allows you to easily scale both up and down. Say if three month in and you want to put a pause on the Vietnam expansion and focus on another market? Simply cease the Vietnam PEO arrangement and turn it back on again once you are ready. If you try to do this with a legal entity, you’re going to be $50K USD in the hole, as well as having to bear the ongoing administration costs, any wind down costs and the inevitable questions from finance about how they recover the cost
3. Quick Launch to Market
Receiving approval from your HQ for the set-up of a legal entity, obtaining the relevant sign offs and completing set-up of a company in Vietnam can be a slow and frustrating process. EoR secondment greatly accelerates your time to market, bypassing these issues by removing the need to set up a legal entity – enabling you to go to market in a short time frame (as short as a day!)
Learning More About the Vietnamese Market
Links International is partnering with HKIHRM to produce a seminar in September. The seminar, “Is your Payroll Ready to Venture into Vietnam Labour Market?” will take place on the 23rd September, 2019.
Venue: HKIHRM, Suite 1503, 15/F, 68 Yee Wo Street, Causeway Bay, Hong Kong
Time: 9:30 am – 12:30 pm
Speaker : Ms Tu Nguyen
Hot button issues in Vietnam:
- Update payroll obligations
- Employment regulation and rules
- Employment contract
- Employment tax
- Compensation and Benefits
Intended to provide attendees with a fuller understanding of the Vietnamese market, the seminar will detail on Vietnamese labour law, contracts and permits, including minimum wage and legal working hours to how to calculate social security contributions. It provides a holistic guide for HR and Compliance leaders interested in the Vietnamese market.
To sign up, please go to the official HKIHRM events page: http://www.hkihrm.org/index.php/ld/upcoming-programmes/event/4536
Get acquainted with the latest regulations
Labour laws in Vietnam is especially employee friendly. As such, it is important for businesses looking to make Vietnam a part of their global strategy to get familiar with the latest regulations.
Find a trustworthy service provider
Employment under a Vietnam PEO service provider is becoming increasingly popular in Vietnam, as multinational companies look for more cost effective and flexible ways to set up an office in Vietnam without having to commit to a legal entity in Vietnam. To secure your business, it’s important that you research your service provider to make sure that they meet your HR needs.
Carefully review the service agreement
When entering a secondment agreement, make sure to properly review the terms of who bears responsibility for employees. Depending on your term of service, the responsibility may lay on different sides of the party.
- What Level of Payroll Risk do you have in Vietnam?
- The rise of women in leadership positions in Asia
- HR Leaders Should Know the Difference Between PEO & EOR
- Secondment FAQs: How to Use PEO/ EOR to Your Advantage
- Doing Business in Vietnam: Simple Legislation Guide
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.