Looking to Expand into Vietnam Quickly? Here’s the Fastest Way to Do It

Vietnam’s business environment has been improving and is becoming an increasingly attractive place for business. With an apparent recovery over the last few years, Vietnam has seen an increase in foreign direct investment (FDI). In the first 10 months of 2023, there was a 54% surge in FDI into Vietnam. VinaCapital’s Macroeconomic Analysis and Market Research Department also shows that the 2024 outlook on Vietnam’s FDI attraction remains positive. To add to that, 31% of the European Chamber of Commerce (EuroCham) members rank Vietnam among their top three global investment destinations.

The country has joined many new free trade agreements like the European Union Vietnam Free Trade Agreement (EVFTA), the Regional Comprehensive Economic Partnership (RCEP), and The Free Trade Agreement between Vietnam and Israel (VIFTA). Vietnam is also part of Double Tax Avoidance Agreements (DTAAs) with more than 80 countries, which eliminates the worry of global investors being taxed double.

However, even though Vietnam has made leaps in its ease for business and attractiveness for international companies, there remain challenges that leaders can face when setting up shop. Read more to learn how to overcome those challenges with a breeze!

Common Challenges When Expanding into Vietnam:

1. Language Barrier

One of the most common problems overseas businesses faces is the language barrier.

While English is becoming more widely spoken, proficiency levels vary between regions. Foreigners who set up businesses in Vietnam often need the help of translators during business conversations. Secondly, much of the official paperwork needs to be conducted in Vietnamese, and all foreign paperwork must also have the Vietnamese translation certified.

2. Employee Orientated Labour Laws

An area which international investors may not know about Vietnam is that local labour laws grant strong protection for employees and in the case of labour disputes it is largely orientated in favour of the employee. For example, when unilaterally terminating a labour contract, an employer can only do so providing it is supported by a legitimate reason and the minimum notice period is served.

The rapid development of Vietnam also means the business environment is continually reforming. Vietnam has been introducing new measures and legislation to accommodate its growing workforce. Q1 of 2024 alone saw the announcement of regional minimum wage increases, as well as adjustments to pensions, social insurance benefits, monthly benefits, preferential benefits for meritorious . For someone unfamiliar with Vietnam’s HR and labour law scene, they would need the expertise of an HR advisory services provider throughout the course of running the business.

Join our upcoming Vietnam labour law webinar to learn more on the latest labour law updates!

Read also: APAC Labour Law Updates

3. Taxes

The corporate tax system is complicated with multiple payments needed to be made each year. Although there have been reforms to the system, companies can find themselves spending hours on paperwork to complete the process. It was learnt that the multi-layered taxation system became a lot more difficult to navigate after changes were made to the Law on Tax Administration in 2020. Since then, Vietnam has only seen more developments to its tax system – in mid-2022, the government approved a  new system reform strategy through 2030 under Decision 508/QD-TTg. These are welcome changes, but they may pose further challenges to companies that are unfamiliar with the basics itself. Expats who must navigate unchartered waters such as this would have to fork out extra cash and hire a separate taxation specialist, which can be an added burden.

Want to expand into Vietnam but find these potential challenges and paperwork off-putting?

PEO/EOR services are a great way to bypass all these issues, as the service provider will be the ones doing all the work. PEO/EOR  vendors will legally employ staff in Vietnam on your behalf making hiring overseas a simpler procedure. Businesses will not have to set up a legal entity in the country, meaning the complexities and risks associated will not be an issue.

For example, by using PEO/EOR services you will not need to worry about the probation agreements or termination rules introduced in the Labour Code 2019, as a good service provider will ensure that you are compliant with all the latest labour law updates. In-country specialists will communicate easily with locals and ensure your tax and payroll are within protocols. Having a team of specialists deal with your payroll and labour law is especially settling for businesses that are unfamiliar with local rules.

Read also: All your Frequently Asked Questions on PEO and EOR Answered!

PEO/EOR is the most flexible and efficient way to launch your business into a new market. Hire employees and have a workforce on the ground in under 48 hours!

To learn more about how Links can help you expand into Vietnam or another country in Asia, contact us now!

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Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcingvisa applicationPEO/EOR Secondmentoutplacementrecruitment and more! Contact us for more information on how we can help leverage your HR function.