Vietnam's Minimum Wages to Increase in 2016 - Vietnam Briefing News
Vietnam’s National Wage Council has voted for a 12.4 percent minimum wage increase in 2016. According to the Ministry of Labour, Invalids and Social Affairs (MOLISA)’s Vice Minister, increases will also take place in 2017.
In 2015, the minimum wage across Vietnam was increased by 13-15 percent to VND 2.15 million-VND 3.1 million (US$96-138).
MOLISA’s “Minimum Wage Adjustment Road Map” to 2020 suggests that the minimum wage in 2020 will be around VND 4.8 million (US$213) in Region One and VND 3.4 million (US$151) in Region Four.
Vietnam has a four-tiered minimum wage scheme based on location. Region One, which includes Hanoi, Hai Phong and Ho Chi Minh City, has the highest minimum wage. Region Four, including the least developed parts of Vietnam, has the lowest.
RELATED: Dezan Shira & Associates’ Payroll and Human Resources Services
MOLISA has suggested that the act of increasing minimum wage will “lift up the wages of Vietnamese workers and bring them on par with regional levels”.
Vietnam’s current monthly minimum wage of US$96-138 compares to minimums of US$121.90 in Cambodia, US$135.43- 296.96 in China and US$265.68 in Thailand. Considering these figures, it is apparent that Vietnam will remain wage-competitive.
However, costs in Vietnam are not all wage-related; according to the American Chamber of Commerce Vietnam, if minimum wages were to increase by 15 percent, actual labor costs would be expected to increase by 20-25 percent.
These changes will heavily effect retail companies, where labor cost accounts for 25% or more of total costs. The increases will have minimal effect on electronics manufacturers, whose workers are usually paid above minimum wage.
RELATED: Vietnam’s Minimum Wage Increases
These expected increases are lower than in previous years, considering that the minimum wage increased by 17.5 percent in 2013 and 15 percent in 2014. However, a projected low inflation rate of three percent in 2015 will make the real increases as pronounced as previously.
Further Support for Your Business
Dezan Shira & Associates provides accounting and tax compliance services to companies investing in and trading with Vietnam. The firm can help companies establish an online presence and direct office in the country and can guide them through the affiliated accounting, tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact us at: [email protected]
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Investing in Vietnam: Corporate Entities, Governance and VAT
In this issue of Vietnam Briefing Magazine, we provide readers with an understanding of the impact of Vietnam’s new Laws on Enterprises and Investment. We begin by discussing the various forms of corporate entities which foreign investors may establish in Vietnam. We then explain the corporate governance framework under the new Law on Enterprises, before showing you how Vietnam’s VAT invoice system works in practice.
E-Commerce in Vietnam: Trends, Tax Policies & Regulatory Framework
In this issue of Vietnam Briefing Magazine, we provide readers with a complete understanding of Vietnam’s e-commerce industry. We begin by highlighting existing trends in the market, paying special attention to scope for foreign investment. We look at means for online sellers to receive payment in Vietnam, examine the industry’s tax and regulatory framework, and discuss how a foreign retailer can actually establish an online company in Vietnam.
Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam.