Vietnam is at a crucial stage of economic development, progressing from a being a low income to middle-income country. To continue this very positive trend, the country must be ever more internationally competitive. This can be achievedby observing what is happening within Vietnam and by learning from neighbouring countries. The World Bank and the Vietnam Business Forum (VBF) are assisting the government with ideas on how this can be accomplished.
At the VBF recently, I made a suggestion to the Prime Minister about how flexible overtime, strategically controlled wage increases, better administration on foreign work permits and reviewing the labour code could all support Vietnam in becoming a more competitive internationally. The government has indicated that they are progressing on each of these issues, which is excellent news for everyone.
The Prime Minister himself has indicated that these HR matters are one of his top priorities. He has given a timetable regarding how the government will be working towards reaching these goals. The VBF sees this as an extremely positive development and they will contribute with their technical expertise and their knowledge on these topics in order to help in any way possible.
Currently, Vietnam has one of the lowest overtime caps in the world. This makes it challenging for manufacturers to meet flexible export demands. I proposed to increase the overtime cap so it is closer to international standards, bringing Vietnam closer to the practices of regional peers such as China, Thailand, and Cambodia among others. This will make Vietnam more attractive to foreign export manufacturing investors and speed up industrialization.
Another factor for foreign manufacturers to consider when entering the Vietnamese market is long-term employment cost. In China, there has been rapid wage inflation and the country already seems unattractive to international investors, because the country is no longer as cost-competitive. The government in Vietnam is planning to give clear controls and forward guidance on wage inflation, making the Vietnamese market more attractive to overseas manufactures, creating jobs to everyone’s benefit.
For Vietnam to reach international standards, they need to transfer knowledge from other countries. The easiest way to do this is to have global experts come here to help businesses. The efficient administration of foreign work permits is an easy way to improve this vital knowledge flow.
The Prime Minister correctly identified that reforming the Labour Code will benefit Vietnamese workers, the business community and the country. I organized recommendations from many chambers of commerce and we all look forward to developments in this regard.
There are already some outstandingly good companies and human resources in Vietnam, with some of these already better than almost any other country in the world. Vietnam I believe has the potential to be one of the most successful countries in the world. The VBF and World Bank will do everything they can to share their knowledge to benefit Vietnam.The resulting strong domestic private business sector reduces the country’s dependency on foreigners, which is more economically sustainable in the long term.
Vietnam has had the highest and fairest growth rate in the world over the last 20 years, so the business community and the World Bank are the first to praise the government for this achievement. A communist system is actually far more responsive and accountable than most foreigners would guess. The VBF put forward the business community’s case and the government has worked with us to get a really positive result. I am from England and cannot imagine being able to achieve such a good result with my own government – Vietnam is better in that regard.
It is wonderful to see the World Bank, the VBF and the government all agreeing and working in the same direction. The Prime Minister has started a process which I have every confidence will bring Vietnam successfully to its next level of development. We thank the government for their leadership and achievements.
Text & photo: Colin Blackwell,
Chairman of HR Committee of the Vietnam Business Forum
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