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Published on July 28, 2007

At a seminar held yesterday by the Board of Investment and Bangkok Bank, Santi Sakkamjon, deputy MD of Srithai Superware, which opened its factory in Vietnam in 1997, urged businesses to study local laws thoroughly.

He suggested it would be better for rookies to visit Vietnam to plot their course carefully, before even asking fundamental questions such as whether the business they plan to open has any special advantage over myriad others.

Santi said that while many have been paying close attention to investment and excise laws, a large number failed to understand local labour laws.

Vietnamese workers are very well protected, he said, citing the following:

lLabour law limits work to eight hours a day and 48 hours a week.

lWages vary according to the designated zones.

lThe minimum age for workers is 18.

lEmployers are obliged to provide for social security, at 15 per cent of wages, plus another 2 per cent for healthcare.

lWomen are allowed four months unpaid maternal leave.

Santi said Vietnamese workers were also known for their diligence and work ethics, adding that the country's low labour costs and large workforce have been a magnet for foreign direct investment.

But not all the roads are paved with gold, he said, and Vietnam has its own set of problems. He mentioned the following:

lOffice rental costs have been skyrocketing in downtown areas.

lIntellectual-property theft is rampant.

lCorruption among excise and customs officers can be a major obstacle.

He also warned that unexpected infrastructure costs, such as road building or laying new electricity lines, could be a nasty surprise for the unprepared.

Santi suggested that Thai investors avoid joint ventures with local investors. He said that since Srithai bought out its Vietnamese partner, operations had been running more smoothly. But Thais face competition from other nationals, too. Among 77 nations, Thais are the 12th-largest foreign investors in Vietnam. The biggest investors are South Koreans, Singaporeans, Taiwanese and Japanese, respectively. Dzung Nguyen from the Business Promotion Department of the Planning and Investment Ministry, cited a Jetro report that Vietnam now lagged only China and India as the most attractive investment destination.

He said the country's stability - no terrorist or insurgent attacks, for example - positioned it as Southeast Asia's logistics hub. Its membership in the World Trade Organisation, the Asia-Pacific Economic Cooperation forum and Asean will also boost investor confidence, he added.

Vietnam is aiming for 8-per-cent economic growth for the years 2006 to 2010. Some 43 to 44 per cent of its GDP is from the industrial and construction sectors, with the services industry making up another 40 to 41 per cent.

Withaya Supathanakul, international business adviser to Bangkok Bank, said Vietnam had been flourishing on the back of the strengthening baht.

The dong has been appreciating at only one per cent a year, compared to the baht's 19 per cent. This has boosted Vietnam's exports of rice, coffee, peppers and rubber, he said. Newcomers advised to study VN's laws before diving in

n Watcharapong    Thongrung

 The Nation

Although foreign investment has been flowing into Vietnam unabated, Thai business veterans who have been doing business there for more than 10 years warn newcomers to study local rules and regulations carefully before taking the plunge.

At a seminar held yesterday by the Board of Investment and Bangkok Bank, Santi Sakkamjon, deputy MD of Srithai Superware, which opened its factory in Vietnam in 1997, urged businesses to study local laws thoroughly.

He suggested it would be better for rookies to visit Vietnam to plot their course carefully, before even asking fundamental questions such as whether the business they plan to open has any special advantage over myriad others.

Santi said that while many have been paying close attention to investment and excise laws, a large number failed to understand local labour laws.

Vietnamese workers are very well protected, he said, citing the following:

lLabour law limits work to eight hours a day and 48 hours a week.

lWages vary according to the designated zones.

lThe minimum age for workers is 18.

lEmployers are obliged to provide for social security, at 15 per cent of wages, plus another 2 per cent for healthcare.

lWomen are allowed four months unpaid maternal leave.

Santi said Vietnamese workers were also known for their diligence and work ethics, adding that the country's low labour costs and large workforce have been a magnet for foreign direct investment.

But not all the roads are paved with gold, he said, and Vietnam has its own set of problems. He mentioned the following:

lOffice rental costs have been skyrocketing in downtown areas.

lIntellectual-property theft is rampant.

lCorruption among excise and customs officers can be a major obstacle.

He also warned that unexpected infrastructure costs, such as road building or laying new electricity lines, could be a nasty surprise for the unprepared.

Santi suggested that Thai investors avoid joint ventures with local investors. He said that since Srithai bought out its Vietnamese partner, operations had been running more smoothly. But Thais face competition from other nationals, too. Among 77 nations, Thais are the 12th-largest foreign investors in Vietnam. The biggest investors are South Koreans, Singaporeans, Taiwanese and Japanese, respectively. Dzung Nguyen from the Business Promotion Department of the Planning and Investment Ministry, cited a Jetro report that Vietnam now lagged only China and India as the most attractive investment destination.

He said the country's stability - no terrorist or insurgent attacks, for example - positioned it as Southeast Asia's logistics hub. Its membership in the World Trade Organisation, the Asia-Pacific Economic Cooperation forum and Asean will also boost investor confidence, he added.

Vietnam is aiming for 8-per-cent economic growth for the years 2006 to 2010. Some 43 to 44 per cent of its GDP is from the industrial and construction sectors, with the services industry making up another 40 to 41 per cent.

Withaya Supathanakul, international business adviser to Bangkok Bank, said Vietnam had been flourishing on the back of the strengthening baht.

The dong has been appreciating at only one per cent a year, compared to the baht's 19 per cent. This has boosted Vietnam's exports of rice, coffee, peppers and rubber, he said.

Watcharapong  Thongrung

The Nation