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Thailand

Executive Summary

Thailand is an upper middle-income country with a half-trillion-dollar economy, generally pro-investment policies, and well-developed infrastructure. General Prayut Chan-o-cha was elected by Parliament as Prime Minister on June 5, 2019. Thailand celebrated the coronation of King Maha Vajiralongkorn May 4-6, 2019, formally returning a King to the Head of State of Thailand’s constitutional monarchy. Despite some political uncertainty, Thailand continues to encourage foreign direct investment as a means of promoting economic development, employment, and technology transfer. In recent decades, Thailand has been a major destination for foreign direct investment, and hundreds of U.S. companies have invested in Thailand successfully. Thailand continues to encourage investment from all countries and seeks to avoid dependence on any one country as a source of investment.

The Foreign Business Act (FBA) of 1999 governs most investment activity by non-Thai nationals. Many U.S. businesses also enjoy investment benefits through the U.S.-Thai Treaty of Amity and Economic Relations, signed in 1833 and updated in 1966. The Treaty allows U.S. citizens and U.S. majority-owned businesses incorporated in the United States or Thailand to maintain a majority shareholding or to wholly own a company or branch office located in Thailand, and engage in business on the same basis as Thai companies (national treatment). The Treaty exempts such U.S.-owned businesses from most FBA restrictions on foreign investment, although the Treaty excludes some types of businesses. Notwithstanding their Treaty rights, many U.S. investors choose to form joint ventures with Thai partners who hold a majority stake in the company, leveraging their partner’s knowledge of the Thai economy and local regulations.

The Thai government maintains a regulatory framework that broadly encourages investment. Some investors have nonetheless expressed views that the framework is overly restrictive, with a lack of consistency and transparency in rulemaking and interpretation of law and regulations.

The Board of Investment (BOI), Thailand’s principal investment promotion authority, acts as a primary conduit for investors. BOI offers businesses assistance in navigating Thai regulations and provides investment incentives to qualified domestic and foreign investors through straightforward application procedures. Investment incentives include both tax and non-tax privileges.

The Thai government is actively pursuing foreign investment related to clean energy, electric vehicles, and related industries. Thailand is currently developing a National Energy Plan that will supersede the current Alternative Energy Development Plan that sets a 20 percent target for renewable energy by 2037. Revised plans are expected to increase clean energy targets in line with the Prime Minister’s November 2021 announcement during COP26 that Thailand will increase its climate change targets, as well as domestic policies focused on sustainability, including the “Bio-Circular Green Economy” model.

The government passed laws on cybersecurity and personal data protection in 2019; as of March 2022, the cybersecurity law has been enforced while the personal data protection law is still in the process of drafting implementing regulations. The government unveiled in January 2021 a Made in Thailand (MiT) initiative that will set aside 60 percent of state procurement budget for locally made products. As of March 2022, Federation of Thai Industry registered 31,131 products that should benefits from the MiT initiative.

The government launched its Eastern Economic Corridor (EEC) development plan in 2017. The EEC is a part of the “Thailand 4.0” economic development strategy introduced in 2016. Many planned infrastructure projects, including a high-speed train linking three airports, U-Tapao Airport commercialization, and Laem Chabang and Mab Ta Phut Port expansion, could provide opportunities for investments and sales of U.S. goods and services. In support of its “Thailand 4.0” strategy, the government offers incentives for investments in twelve targeted industries: next-generation automotive; intelligent electronics; advanced agriculture and biotechnology; food processing; tourism; advanced robotics and automation; digital technology; integrated aviation; medical hub and total healthcare services; biofuels/biochemical; defense manufacturing; and human resource development.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 110 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 43 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 17,450 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 7,040 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

Thailand’s 52 state-owned enterprises (SOEs) have total assets of USD 448 billion and a combined gross income of USD 131 billion (end of 2021 figures, latest available). In 2021, they employed 255,397 people, or 0.65 percent of the Thai labor force. Thailand’s SOEs operate primarily in service delivery, in particular in the energy, telecommunications, transportation, and financial sectors. More information about SOEs is available at the website of the State Enterprise Policy Office (SEPO) under the Ministry of Finance at www.sepo.go.th .

A 15-member State Enterprises Policy Commission, or “superboard,” oversees operations of the country’s 52 SOEs. In May 2019, the Development of Supervision and Management of State-Owned Enterprise Act (2019) went into effect with the goal to reform SOEs and ensure transparent management decisions. The Thai government generally defines SOEs as special agencies established by law for a particular purpose that are 100 percent owned by the government (through the Ministry of Finance as a primary shareholder). The government recognizes a second category of “limited liability companies/public companies” in which the government owns 50 percent or more of the shares. Of the 52 total SOEs, 42 are wholly-owned and 10 are majority-owned. Three SOEs are publicly listed on the Stock Exchange of Thailand: Airports of Thailand Public Company Limited, PTT Public Company Limited, and MCOT Public Company Limited. By regulation, at least one-third of SOE boards must be comprised of independent directors.

Private enterprises can compete with SOEs under the same terms and conditions with respect to market share, products/services, and incentives in most sectors, but there are some exceptions, such as fixed-line operations in the telecommunications sector.

While SEPO officials aspire to adhere to the OECD Guidelines on Corporate Governance for SOEs, there is not a level playing field between SOEs and private sector enterprises, which are often disadvantaged in competing with Thai SOEs for contracts.

Generally, SOE senior management reports directly to a cabinet minister and to SEPO. Corporate board seats are typically allocated to senior government officials or politically affiliated individuals.

8. Responsible Business Conduct

Department of State

Department of the Treasury

Department of Labor

9. Corruption

Transparency International’s Corruption Perceptions Index ranked Thailand 110th out of 180 countries with a score of 35 out of 100 in 2021 (zero is highly corrupt). Bribery and corruption are still problematic. Despite increased usage of electronic systems, government officers still wield discretion in the granting of licenses and other government approvals, which creates opportunities for corruption. U.S. executives with experience in Thailand often advise new-to-market companies to avoid corrupt transactions from the beginning rather than to stop such practices once a company has been identified as willing to operate in this fashion. American firms that comply with the strict guidelines of the Foreign Corrupt Practices Act (FCPA) are able to compete successfully in Thailand. U.S. businesses say that publicly affirming the need to comply with the FCPA helps to shield their companies from pressure to pay bribes.

Thailand has a legal framework and a range of institutions to counter corruption. The Organic Law to Counter Corruption criminalizes corrupt practices of public officials and corporations, including active and passive bribery of public officials. The anti-corruption laws extend to family members of officials and to political parties.

As of February 2022, the Thai government is working on an Anti-SLAPP law (strategic lawsuit against public participation) proposed by the Thai National Anti-Corruption Commission. The new law provides a legal definition of SLAPP lawsuits as cases where the plaintiff intends to “suppress public participation in defense of the public interest in good faith” or has the purposed of intimidation, suppressing information, negotiating, or ending litigation” and empowers law enforcement to file Anti-SLAPP charges in court.

Thai procurement regulations prohibit collusion among bidders. If an examination confirms allegations or suspicions of collusion among bidders, the names of those applicants must be removed from the list of competitors.

Thailand adopted its first national government procurement law in December 2016. Based on UNCITRAL model laws and the WTO Agreement on Government Procurement, the law applies to all government agencies, local authorities, and state-owned enterprises, and aims to improve transparency. Officials who violate the law are subject to 1-10 years imprisonment and/or a fine from Thai baht 20,000 (approximately USD 615) to Thai baht 200,000 (approximately USD 6,150).

Since 2010, the Thai Institute of Directors has built an anti-corruption coalition of Thailand’s largest businesses. Coalition members sign a Collective Action Against Corruption Declaration and pledge to take tangible, measurable steps to reduce corruption-related risks identified by third party certification. The Center for International Private Enterprise equipped the Thai Institute of Directors and its coalition partners with an array of tools for training and collective action.

Established in 2011, the Anti-Corruption Organization of Thailand (ACT) aims to encourage the government to create laws to combat corruption. ACT has 54 member organizations drawn from the private, public, and academic sectors. ACT’s signature program is the “Integrity Pact,” run in cooperation with the Comptroller General Department of the Ministry of Finance and based on a tool promoted by Transparency International. The program forbids bribes from signatory members in bidding for government contacts and assigns independent ACT observers to monitor public infrastructure projects for signs of collusion. Member agencies and companies must adhere to strict transparency rules by disclosing and making easily available to the public all relevant bidding information, such as the terms of reference and the cost of the project.

Thailand is a party to the UN Anti-Corruption Convention, but not the OECD Anti-Bribery Convention.

Thailand’s Witness Protection Act offers protection (to include police protection) to witnesses, including NGO employees, who are eligible for special protection measures in anti-corruption cases.

10. Political and Security Environment

Street clashes between anti-government protesters and police occurred regularly in a major Bangkok intersection in the early months of 2021. Several protesters were injured by rubber bullets, two of whom later died.

Violence related to an ongoing ethno-nationalist insurgency in Thailand’s southernmost provinces has claimed more than 7,000 lives since 2004. Although the number of deaths and violent incidents has decreased in recent years, efforts to end the insurgency have so far been unsuccessful. The government is currently engaged in preliminary talks with the leading insurgent group. Almost all attacks have occurred in the three southernmost provinces of the country.

11. Labor Policies and Practices

In 2021, 38.6 million people were in Thailand’s formal labor pool, comprising 66 percent of the total population. Thailand’s official unemployment rate stood at 1.6 percent at the end of 2021, interestingly, workers with university degrees have the highest unemployment rate compared with other groups. The working hours in the private sector are still below the pre-Covid era with the average working hours of 45.6 hours per week.

The Thai government is actively seeking to address shortages of both skilled and unskilled workers through education reform and various worker-training incentive programs. Low birth rates, an aging population, and skill mismatch, are exacerbating labor shortage problems in many sectors. Despite provision of 15 years of free education for every child in Thailand, Thailand continues to suffer from a skills mismatch that impedes innovation and economic growth. Thailand also has a shortage of high-skill workers such as researchers, engineers, and managers, as well as technicians and vocational workers. The statistics from the Office of the National Economic and Social Development Board show that 49.3 percent of new graduates are in the fields of business and social science.  

Regional income inequality and labor shortages, particularly in labor-intensive manufacturing, construction, hospitality, and service sectors, have attracted millions of migrant workers, mostly from neighboring Burma, Cambodia, and Laos. At the end of 2021, there were more than two million migrant workers registered with the Ministry of Labor.

Employers may dismiss workers provided the employer pays severance. When an employer temporarily suspends business, in part or in whole, the employer must pay the employee at least 75 percent of his or her daily wages throughout the suspension period.

At the end of 2021, there were a total of 1,432 labor unions in Thailand with 364 of them located in Bangkok. Thai law allows private-sector workers to form and join trade unions of their choosing without prior authorization, to bargain collectively, and to conduct legal strikes, although these rights come with some restrictions. Noncitizen migrant workers, whether registered or undocumented, do not have the right to form unions or serve as union officials. Migrants can join unions organized and led by Thai citizens.

In 2020, the Department of Labor Protection and Welfare issued a ministerial regulation on occupational safety, health and working environment for diving work; the regulation sets a minimum age of 18. In March 2022, the Ministry of Labor issued a regulation regarding the Protection of Fishery Workers to provide additional protection for the workers’ rights in this industry. Additional information on migrant workers issues and rights can be found in the U.S. Trafficking in Persons Report, as well as the Labor Rights chapter of the U.S. Human Rights report.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $490,297 2020 $501,644 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $18,499 2020 $17,450 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $8,724 2020 $1,810 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2020 59.3% 2019 46.8% UNCTAD data available at

https://stats.unctad.org/handbook/EconomicTrends/Fdi.html

* Source for Host Country Data: Bank of Thailand (http://bot.or.th/)

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $290,774 100% Total Outward $173,437 100%
Japan $94,929 32.7% China, P.R.: Hong Kong $31,836 18.4%
Singapore $53,612 18.4% Singapore $20,910 12.1%
China, P.R.: Hong Kong $35,141  12.1% The Netherlands $12,711   7.3%
United States $18,499   6.4% Indonesia $10,757   6.2%
The Netherlands $13,849   4.8% Vietnam   $9,545   5.5%
“0” reflects amounts rounded to +/- USD 500,000.

14. Contact for More Information

U.S. Embassy Bangkok
Economic Section
BangkokEconSection@state.gov 

Vietnam

Executive Summary

Foreign direct investment (FDI) continues to be of vital importance to Vietnam, as a means to support post-COVID economic recovery and drive the government’s aspirations to achieve middle-income status by 2045. As a result, the government has policies in place that are broadly conducive to U.S. investment. Factors that attract foreign investment include government commitments to fight climate change issues, free trade agreements, political stability, ongoing economic reforms, a young and increasingly urbanized and educated population, and competitive labor costs. According to the Ministry of Planning and Investment (MPI), which oversees investment activities, at the end of December 2021 Vietnam had cumulatively received $241.6 billion in FDI.

In 2021, Vietnam’s once successful “Zero COVID” approach was overwhelmed by an April outbreak that led to lengthy shutdowns, especially in manufacturing, and steep economic costs. However, the government reacted quickly to launch a successful national vaccination campaign, which enabled the country to switch from strict lockdowns to a “living with COVID” policy by the end of the year. The Government of Vietnam’s fiscal stimulus, combined with global supply chain shifts, resulted in Vietnam receiving $19.74 billion in FDI in 2021 – a 1.2 percent decrease over the same period in 2020. Of the 2021 investments, 59 percent went into manufacturing – especially in electronics, textiles, footwear, and automobile parts industries; 8 percent in utilities and energy; 15 percent in real estate; and smaller percentages in other industries. The government approved the following major FDI projects in 2021: Long An I and II LNG Power Plant Project ($3.1 billion); LG Display Project in Hai Phong ($2.15 billion); O Mon II Thermal Power Plant Factory in Can Tho ($1.31 billion); Kraft Vina Paper Factory in Vinh Phuc ($611.4 million); Polytex Far Eastern Vietnam Co., Ltd Factory Project ($610 million).

At the 26th United Nations Climate Change Conference (COP26) Vietnam’s Prime Minister Pham Minh Chinh made an ambitious pledge to reach net zero emissions by 2050, by increasing use of clean energy and phasing out coal-fueled power generation. In January 2022 Vietnam introduced new regulations that place responsibility on producers and importers to manage waste associated with the full life cycle of their products. The Government also issued a decree on greenhouse gas mitigation, ozone layer protection, and carbon market development in Vietnam.

Vietnam’s recent moves forward on free trade agreements make it easier to attract FDI by providing better market access for Vietnamese exports and encouraging investor-friendly reforms. The EU-Vietnam Free Trade Agreement (EVFTA) entered into force August 1, 2020. Vietnam signed the UK-Vietnam Free Trade Agreement entered into force May 1, 2021. The Regional Comprehensive Economic Partnership (RCEP) entered into force January 1, 2022 for ten countries, including Vietnam. These agreements may benefit U.S. companies operating in Vietnam by reducing barriers to inputs from and exports to participating countries, but also make it more challenging for U.S. exports to Vietnam to compete against competitors benefiting from preferential treatment.

In February 2021, the 13th Party Congress of the Communist Party approved a ten-year economic strategy that calls for shifting foreign investments to high-tech industries and ensuring those investments include provisions relating to environmental protection. On January 1, 2021, Vietnam’s Securities Law and new Labor Code Law, which the National Assembly originally approved in 2019, came into force. The Securities Law formally states the government’s intention to remove foreign ownership limits for investments in most industries. The new Labor Code includes several updated provisions including greater contract flexibility, formal recognition of a greater part of the workforce, and allowing workers to join independent workers’ rights organizations, though key implementing decrees remain pending. On June 17, 2020, Vietnam passed a revised Law of Investment and a new Public Private Partnership Law, both designed to encourage foreign investment into large infrastructure projects, reduce the burden on the government to finance such projects, and increase linkages between foreign investors and the Vietnamese private sector.

Despite a comparatively high level of FDI inflow as a percentage of GDP – 7.3 percent in 2020 – significant challenges remain in Vietnam’s investment climate. These include widespread corruption, entrenched State Owned Enterprises (SOE), regulatory uncertainty in key sectors like digital economy and energy, weak legal infrastructure, poor enforcement of intellectual property rights (IPR), a shortage of skilled labor, restrictive labor practices, and the government’s slow decision-making process.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 87 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 44 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 2,820 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 2,650 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

The 2020 Enterprises Law, which came into effect January 1, 2021, defines an SOE as an enterprise that is more than 50 percent owned by the government. Vietnam does not officially publish a list of SOEs.

In 2018, the government created the Commission for State Capital Management at Enterprises (CMSC) to manage SOEs with increased transparency and accountability. The CMSC’s goals include accelerating privatization in a transparent manner, promoting public listings of SOEs, and transparency in overall financial management of SOEs.

SOEs do not operate on a level playing field with domestic or foreign enterprises and continue to benefit from preferential access to resources such as land, capital, and political largesse. Third-party market analysts note that a significant number of SOEs have extensive liabilities, including pensions owed, real estate holdings in areas not related to the SOE’s ostensible remit, and a lack of transparency with respect to operations and financing.

8. Responsible Business Conduct

Companies are required to publish their corporate social responsibility activities, corporate governance work, information of related parties and transactions, and compensation of management. Companies must also announce extraordinary circumstances, such as changes to management, dissolution, or establishment of subsidiaries, within 36 hours of the event.

Most multinational companies implement Corporate Social Responsibility (CSR) programs that contribute to improving the business environment in Vietnam, and awareness of CSR programs is increasing among large domestic companies. The VCCI conducts CSR training and highlights corporate engagement on a dedicated website  in partnership with the UN.

AmCham also has a CSR group that organizes events and activities to raise awareness of social issues. Non-governmental organizations collaborate with government bodies, such as VCCI and the Ministry of Labor, Invalids, and Social Affairs (MOLISA), to promote business practices in Vietnam in line with international norms and standards.

The Extractive Industries Transparency Initiative was introduced to Vietnam many years ago but the government has not officially participated in it. Overall, the government has not defined responsible business conduct (RBC), nor has it established a national plan or agenda for RBC. The government has yet to establish a national point of contact or ombudsman for stakeholders to get information or raise concerns regarding RBC. The new Labor Code, which came into effect January 1, 2021, recognizes the right of employees to establish their own representative organizations, allows employees to unilaterally terminate labor contracts without reason, and extends legal protection to non-written contract employees. For a detailed description of regulations on worker/labor rights in Vietnam, see the Department of State’s 2020 Human Rights Report.

Vietnam participates in the OECD Southeast Asia Regional Program since its launch in 2014 and has cooperated in several policy reviews with the OECD, notably Investment Policy Reviews (2009 and 2018), Clean Energy Finance (2021), and the Vietnam Economic Review (forthcoming). Vietnam also participates in the OECD-Southeast Asia Corporate Governance Initiative. Engagement with businesses will include activities in the agriculture (with a focus on seafood), garment and footwear sectors, and building resilient supply chains. Vietnam doesn’t have any domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas.

Vietnam’s Law on Consumer Protection is largely ineffective, according to industry experts. A consumer who has a complaint on a product or service can petition the Association for Consumer Protection (ACP) or district governments. ACP is a non-governmental, volunteer organization that lacks law enforcement or legal power, and local governments are typically unresponsive to consumer complaints. The Vietnamese government has not focused on consumer protection over the last several years.

Vietnam allows foreign companies to work in private security. Vietnam has not ratified the Montreux Documents, is not a supporter of the International Code of Conduct or Private Security Service Providers and is not a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).

Vietnamese legislation clearly specifies businesses’ responsibilities regarding environmental protection. The revised 2020 Environmental Protection Law, which came into effect on January 1, 2022, states that environmental protection is the responsibility and obligation of all organizations, institutions, communities, households, and individuals. The law also specifies that manufacturers bear two responsibilities, including responsibility for waste recycling and responsibility for waste treatment.

The Penal Code, revised in 2017, includes a chapter with 12 articles regulating different types of environmental crimes. In accordance with the Penal Code, penalties for infractions carry a maximum of 15 years in prison and a fine equivalent to $650,000. However, enforcement remains a problem. To date, no complaint or request for compensation due to damages caused by pollution or other environmental violations has ever been successfully resolved in court due to difficulties in identifying the level of damages and proving the relationship between violators and damages.

In the past several years, there have been high-profile, controversial instances of impacts on human rights by commercial activities – particularly over the revocation of land for real estate development projects. Government suppression of these protests ranged from intimidation and harassment via the media (including social media) to imprisonment. There are numerous examples of government-supported forces beating protestors, journalists, and activists covering land issues. Victims have reported they are unable to press claims against their attackers.

9. Corruption

Vietnam has laws to combat corruption by public officials, and they extend to all citizens. Communist Party of Vietnam General Secretary Nguyen Phu Trong has made fighting corruption a key focus of his administration, and the CPV regularly issues lists of Party and other government officials that have been disciplined or prosecuted. Trong recently expanded the campaign to include “anti-negativity,” described loosely as acts that can cause public anger or reputational harm to the CPV. Nevertheless, corruption remains rife. Corruption is due, in large part, to low levels of transparency, accountability, and media freedom, as well as poor remuneration for government officials and inadequate systems for holding officials accountable. Competition among agencies for control over businesses and investments has created overlapping jurisdictions and bureaucratic procedures that, in turn, create opportunities for corruption.

The government has tasked various agencies to deal with corruption, including the Central Steering Committee for Anti-Corruption (chaired by the General Secretary Trong), the Government Inspectorate, and line ministries and agencies. Formed in 2007, the Central Steering Committee for Anti-Corruption has been under the purview of the CPV Central Commission of Internal Affairs since February 2013. The National Assembly provides oversight on the operations of government ministries. Civil society organizations have encouraged the government to establish a single independent agency with oversight and enforcement authority to ensure enforcement of anti-corruption laws.

10. Political and Security Environment

Vietnam is a unitary single-party state, and its political and security environment is largely stable. Protests and civil unrest are rare, though there are occasional demonstrations against perceived or real social, environmental, labor, and political injustices.

In August 2019, online commentators expressed outrage over the slow government response to an industrial fire in Hanoi that released unknown amounts of mercury. Other localized protests in 2019 and early 2020 broke out over alleged illegal dumping in waterways and on public land, and the perceived government attempts to cover up potential risks to local communities.

Citizens sometimes protest actions of the People’s Republic of China (PRC), usually online. For example, in June 2019, when PRC Coast Guard vessels harassed the operations of Russian oil company Rosneft in Block 06-01, Vietnam’s highest-producing natural gas field, Vietnamese citizens protested via Facebook and, in a few instances, in public.

In April 2016, after the Formosa Steel plant discharged toxic pollutants into the ocean and killed a large number of fish, affected fishermen and residents in central Vietnam began a series of regular protests against the company and the government’s lack of response to the disaster. Protests continued into 2017 in multiple cities until security forces largely suppressed the unrest. Many activists who helped organize or document these protests were subsequently arrested and imprisoned.

11. Labor Policies and Practices

Although Vietnam has made some progress on labor issues in recent years, including, in theory, allowing the formation of independent unions, the sole union that has any real authority is the state-controlled Vietnam General Confederation of Labor (VGCL). Workers will not be able to form independent unions legally until the Ministry of Labor, Invalids, and Social Affairs (MOLISA) issues guidance on implementation of the 2019 Labor Code, including decrees on procedures to establish and join independent unions, and to determine the level of autonomy independent unions will have in administering their affairs. MOLISA expects to issue this guidance in 2022.

Vietnam has been a member of the International Labor Organization (ILO) since 1992 and has ratified seven of the core ILO labor conventions (Conventions 100 and 111 on discrimination, Conventions 138 and 182 on child labor, Conventions 29 and 105 on forced labor, and Convention 98 on rights to organize and collective bargaining). In June 2020 Vietnam ratified ILO Convention 105 – on the abolition of forced labor – which came into force July 14, 2021. The EVFTA also requires Vietnam to ratify Convention 87, on freedom of association and protection of the right to organize, by 2023.

Labor dispute resolution mechanisms vary depending on situations. Individual labor disputes and rights-based collective labor disputes must go through a defined process that includes labor conciliation, labor arbitration, and a court hearing. Only interest-based collective labor disputes may legally be pursued via demonstration, and only after undergoing through conciliation and arbitration. However, in practice strikes organized by ad hoc groups at individual facilities are not uncommon, and are usually resolved through negotiation with management. In 2021 there were 105 strikes nationwide, 20 fewer than in 2020 as reported by VGCL.

According to Vietnam’s General Statistics Office (GSO), in 2021 there were 50.7 million people participating in the formal labor force in Vietnam out of over 74.9 million people aged 15 and above, around 1.4 million lower than 2020. The labor force is relatively young, with workers 15-39 years of age accounting for half of the total labor force. 61.6 percent of women in the working age participate to the labor force in comparison to 74.3 percent of men in the working age while 65.3 percent of people in the working age in the urban areas participate in the labor force in comparison to 69.3 percent in the rural areas.

Estimates on the size of the informal economy differ widely. The IMF states 40 percent of Vietnam’s laborers work on the informal economy; the World Bank puts the figure at 55 percent; the ILO puts the figure as high as 79 percent if agricultural households are included. Vietnam’s GSO stated that among 53.4 million employed people, 20.3 million people worked in the informal economy.

An employer is permitted to dismiss employees due to technological changes, organizational changes (in cases of a merger, consolidation, or cessation of operation of one or more departments), when the employer faces economic difficulties, or for disruptive behavior in the workplace. There are no waivers on labor requirements to attract foreign investment.

14. Contact for More Information

Economic Section
U.S. Embassy
7 Lang Ha, Ba Dinh, Hanoi, Vietnam
+84-24-3850-5000
InvestmentClimateVN@state.gov 

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