Temporary residence card for investors
In July 2020; The Law amending and supplementing a number of articles of the Law on entry, exit, transit and residence of foreigners in Vietnam officially takes effect. Accordingly, the policy of granting temporary residence cards to foreign investors in Vietnam has been changed. Now, foreign investors are no longer automatically granted temporary residence cards when they have an investment project in Vietnam, instead, the law of Vietnam requires the investor to meet one of the following conditions to be available to obtain a temporary residence card:
- Foreign investors with contributed capital with a value of between VND 03 billion and under VND 50 billion will be issued a temporary residence card valid for no more than 03 years
- Foreign investors with contributed capital with a value of between VND 50 billion and less than 100 billion will be issued a temporary residence card valid for no more than 5 years.
- Foreign investors with contributed capital with a value of 100 billion VND or more will be issued a temporary residence card valid for no more than 10 years.
Thus, according to the new regulation, foreign investors can be granted temporary residence cards for up to 10 years, which is a relatively large change compared to the previous regulation. This can be seen as a great advantage for foreign investors.
However, in addition to increasing the maximum duration of the temporary residence card, the new regulations also set the minimum investment capital that an investor must achieve to be granted a temporary residence card is 3 billion VND. In case an investor with an investment capital of less than VND 3 billion, he / she will not be able to apply for a temporary residence card as previously prescribed, but only be granted a visa with a maximum term of 12 months. This regulation actually aims to limit the use of investment by foreign individuals to gain long-term residency in Vietnam as well as to ensure that foreign investors are serious when investing in Vietnam. However, this leads to investors who previously invested in Vietnam for a long time but with an investment capital of less than 3 billion VND will not be allowed to continue to receive temporary residence cards. In this case, if an investor wants to be granted a temporary residence card, he/she is required to increase the investment capital in Vietnam to 3 billion or more. This inadvertently creates additional administrative costs as well as causes some difficulties for investors when doing business in Vietnam.
Exemption of work permits for investors
In addition to the revised Law on entry, exit, transit, and residence of foreigners in Vietnam; Decree 152/2020/ND-CP regulating foreign workers working in Vietnam and recruiting and managing Vietnamese employees working for foreign organizations and individuals in Vietnam also comes into effect from February 15, 2021, completely replacing Decree 11/2016/ND-CP.
According to Decree 152/2020/ND-CP, foreign investors are exempt from work permits for the following cases:
- Be the owner or equity member of a limited liability company with a capital contribution of 3 billion VND or more;
- Be the Chairman of the Board of Directors or member of the Board of Directors of a joint-stock company with capital contribution of 3 billion VND or more.
For the above cases, as stipulated in Decree 152/2020/ND-CP, enterprises will not need to perform the procedures for determining the demand for foreign workers. This can be considered as a big advantage for foreign investors since the procedures for determining the demand for foreign workers may take a lot of time to complete.
However, not all cases of foreign investors are exempt from work permits. Foreign investors with a capital contribution of less than VND 3 billion will not be eligible for a work permit exemption and must apply for a work permit if they participate in operating the business in Vietnam. This can be seen as a big difference between Decree 152/2020/ND-CP and Decree 11/2016/ND-CP, according to the previous regulations, foreign investors are exempt from work permits to differentiate the value of the capital contribution. This may cause many difficulties for foreign investors investing in Vietnam whose registered investment capital is less than 3 billion VND because when they are not exempt from work permits if investors want to work in Vietnam, they are required to make the application for a work permit much more complicated.
It can be seen that Vietnamese policies on visas and labour for foreign investors have changed significantly. Therefore, foreign investors, especially those with an investment value of less than 3 billion VND, will need to pay attention to carry out the procedures for applying for work permits and temporary residence cards in accordance with new regulations.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.
