Asia Times: Vietnam: Trading on more investment


	September 9, 2000	atimes.com

Special Reports

Vietnam: Trading on more investment
CHAPTER 6: LABOR AND CUSTOMS/IMPORT ISSUES

Labor issues
In October 1999 the government introduced a five-day working week. If a holiday coincides with a Saturday or Sunday, administrative employees have the following day off. Beneficiaries are cadres, civil servants and people working in the administrative offices and socio-political organisations of the State.

The Ministry of Labor, War Invalids and Social Affairs provide State-owned businesses with guidelines on how to implement the five-day working week system. Working and leisure time in line with the labor Code of businesses of other economic sectors is decided by their owners. However, the state encourages these businesses to implement a 40-hour working week. The official monthly minimum wage for foreign-investment joint ventures is US$40.

Worker rights
Unions are controlled by the party, and have only nominal independence. However, union leaders influence some key decisions, such as on health and safety issues, and on minimum wage standards.

Workers are not free to join or form unions of their choosing, such action requires approval from the local office of the party-controlled Vietnam General Confederation of Labor (VGCL).

The VGCL is the umbrella organization under which all local trade unions must operate, and it claims four million members in branches in each of the major cities and provinces. VGCL officers report that the VGCL represents 95 percent of public sector workers, 90 percent of workers in state-owned enterprises, and 50 percent of private sector workers.

The Labor Law requires provincial trade union organizations to establish unions within six months at all new enterprises with more than 10 employees as well as at existing enterprises that operate without trade unions. Management of those companies is required by law to accept and cooperate with those unions.

The Labor Law provides for the right to strike under certain circumstances. The law requires that management and labor resolve labor disputes through the enterprise's own labor conciliation council. If that fails, the matter goes to the provincial labor arbitration council. Labor courts, which were established in 1996 within the people's court system, have heard a small number of cases but still are in the early stages of development and lack sufficient personnel because of government budget constraints.

The government-controlled labor unions stipulate written procedures for managing labor disputes that permit unresolved disputes to be arbitrated before a court. Unions have the right to appeal a council decision to the provincial people's court and to strike.

However, the law prohibits strikes at enterprises that serve the public and those that are important to the national economy or national security and defense. These functions are defined by the government and include electrical production, posts and telecommunications, railway, maritime and air transportation, banking, public works, and the oil and gas industry.

The law also grants the government the right to suspend a strike considered detrimental to the national economy or public safety. Strikes are prohibited in 54 occupational sectors and businesses, including public services, businesses producing "essential" goods, and businesses serving national defense under the Ministries of Public Security and National Defense.

Collective bargaining
Workers must have the approval of the provincial or metropolitan branch of the VGCL to organize unions in their enterprises, but they also can bargain collectively through the party-approved unions at their enterprises. In the past, the State generally set wages, since most employees worked for state companies. With the growth of the private sector and the increased autonomy of state firms, a growing percentage of companies are setting wages through collective bargaining with the relevant unions.

Customs and trade procedures

Tariff code: Import and export duties are based on the Law on Export and Import Duties, issued in December 1991, with subsequent amendments. In 1994, the Ministry of Trade assumed the responsibility to initiate changes in tariffs, which are then considered by the Ministry of Finance as to whether proposed changes should be submitted for the Prime Minister's approval. As the government reviews revenue sources on a quarterly basis, tariff rates are often adjusted to accommodate the current balance of payments situation.

Formal tariffs: Import duties are levied on most items. Rates are specified in the "Export and Import Tariff for Commercial Goods," which is subject to frequent revisions. In January 1996, rates on a list of goods under the Common Effective Preferential Tariffs (CEPT) scheme were lowered to below 60 percent. The highest rates are levied on consumer goods, especially products considered as luxury items (e.g. liquor, cigarettes, cars). Capital goods and materials are granted low or zero duties. Tariffs on 857 imports from ASEAN are five percent or below, of which over half are commodities, machinery and equipment.

Exemptions are granted for certain goods, including non-refundable aid, goods in transit and temporary imports and re-exports for exhibitions. Goods brought in for foreign-invested projects may qualify for exemption if they fall under three categories: 1) Goods and technology transfer considered as capital contribution by the foreign partner; 2) Goods and materials for use in export production; and 3) Goods used for capital construction or as fixed assets for business cooperation contracts.

Excise taxes
Import quotas: The Ministry of Trade (MOT), in consultation with the Government Price Board (GPB) and the relevant ministries (e.g. Ministry of Agriculture and Food industry and Ministry of Construction), set formal import quotas on cement, fertilizers, petroleum products, steel, sugar, and various other materials and commodities.

Also, some products are subject to less formal and temporary "quantitative targets" that the MOT regulates to complement economic goals. For example, import quotas on motorcycles and automobiles (finished and CKD kits) in an effort to encourage a long-term strategy for the "localization" of automobile parts production. Import quotas are often administered through the import licensing system managed by MOT and are mainly granted to state-owned enterprises.

Trade developments: Streamlining the tariff structure is one remaining key trade liberalization issue. However, some of the overnment's major obstacles stem from pressures to protect domestic industries and the potential loss of significant tax revenues. Nevertheless, Vietnam is committed to reducing or eliminating tariffs and other trade restrictions, since it is a requirement of its membership in the ASEAN Free Trade Area (AFTA) and if it is to realize its hopes for membership in the World Trade Organization (WTO).

General Customs Department: The General Customs Department with local offices throughout the provinces is responsible for inspecting and supervising goods and collecting export and import taxes.

Basis of customs valuation: Customs valuation of imported products may be based on the CIF prices declared by the importers or on reference prices established by the administration authorities. In practice, customs valuation is often non-transparent and discretionary. Although in principle, reference prices are used to counteract the practice of under-invoicing, the system is not responsive to world market price fluctuations.

Customs procedures: The formal rules on customs declaration require that an application be lodged at the local office of the General Department of Customs for each permitted consignment of imported or exported goods. For imports, i a declaration must be made within 30 days upon the arrival of the goods in Vietnam. Customs is required to respond within one day, and any duty must be paid within 30 days of receiving the custom's notification. In the case of exports, duty must be paid within 15 days of receiving notification.

Import licenses Authorized importers: The Ministry of Trade issues import licenses, which are required for all imports. However, only certain enterprises are authorized by the MOT to engage in direct import and export activities. Although once reserved for a small number of state-owned enterprises, direct import rights are now accessible to a larger number of companies. As part of the foreign investment license, joint ventures and 100 percent foreign owned enterprises are granted import rights for materials or goods as specified in their licenses.

Import licensing system: In general, authorized enterprises will have an import allocation, which is typically valid for a period of six to 12 months, and an import license, which may cover several shipments. For those companies, including foreign firms, that do not have import or export rights, they must do so through an authorized import-export company. The average transaction costs for the service is about 2-3 percent of the value of the consignment of goods.

Export controls Permits and licenses: Companies with prospects for receiving an export order will be granted the permits or licenses to export the goods as well as import the inputs required for export production.

Taxes: Export duties are levied on mostly natural resources and commodities, with a maximum rate of 45 percent. Manufactured goods for exports are exempt from export duty. Quotas and restrictions: Prohibited exports include antiques of high value, logs, timber, rattan canes, and precious or rare plants and animals. Three commodities - rice, oil and wood products -are subject to government imposed quantitative restrictions or targets and are administered through export quotas.

Import/export documentation: Generally, the Vietnamese importer (agent, distributor, import-export company or joint-venture partner) handles the preparation of the documentation and licenses. Shipping documents include commercial invoices, pro forma invoice, bills of lading, packing lists, certificate of origin, insurance certificate, and import licenses.

Temporary entry: Goods which are exported or imported as samples or for the purpose of advertising are subject to export or import duty. Exemption from duty is granted to goods which are permitted to be temporarily exported or imported for exhibitions. At the end of the exhibition, they must be re-imported into Vietnam in the case of temporary exports, or re-exported from Vietnam in the case of temporary imports. Documents required for exemption for exhibitions include a notification of or invitation to the exhibition and an export or import license from the Ministry of Trade.

Labeling, marking requirements: Effective January 1, 1997, all products distributed in Vietnam had to have labels with the following information on the name of product, name and addresses of manufacturer, quantity, composition, quality, instructions for use or maintenance, date of manufacture and expiration dates.

Prohibited imports: The import of firearms, ammunition, explosives and military equipment; drugs and toxic chemicals, dangerous and unhealthy cultural products; materials for making cigarettes; second-hand consumer goods (except motorcycles and cars under 12 seats); and used equipment are prohibited, with certain exceptions. As certain products are often placed on temporary bans, current advice should be sought.

Standards: Specific information by product or by standard may be provided by the importing organization or sought from the relevant ministry or the government's management body with overall responsibility, General Department of Standards, Weights, Measures and Quality (STAMEQ) of the Ministry of Science, Technology and Environment (MOSTE).

Bonded warehouses: The operation of customs warehouses was approved in 1994. Entities permitted to lease customs bonded warehouses are foreign enterprises, individuals and overseas Vietnamese; Vietnamese import-export licenses companies; and foreign invested enterprises licensed to carry import-export activities. Most goods pending import and domestic goods pending export can be deposited in bonded warehouse under the supervision of the provincial customs office. The exceptions are goods prohibited from import or export, Vietnamese made goods with fraudulent trademarks or labels or goods of unknown origin; and goods dangerous or harmful to the public or environment.

The lease contract must be registered with the customs bond unit at least 24 hours prior to the arrival of the goods at the port. Documents required are a notarized copy of authorization of the holder to receive the goods; a notarized copy of the warehouse lease contract; the bill of lading; a certificate of origin; a packing list; and customs declaration forms. Owners of the goods pay import or export tax when the goods are removed from bonded warehouse.

(Special to Asia Times Online)

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