Jury out on the outcome of changes

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Báo Đầu Tư English - 35 month(s) ago 51 readings

Jury out on the outcome of changes

There are many reasons why foreign investors come to Vietnam. So it is difficult to predict the impact of such change at the aggregate, but we can learn from how such restrictions have worked when they were put in place by other governments in similar circumstances.

For instance, a similar measure was adopted by the Philippines, but it learned quickly enough that it could not be enforced. The reasons are two-fold.

First, because there is just no method to determine if the “managerial or technical jobs” at issue are specified and described accurately so that you can tell if a local applicant fits the job. Employers after all are the ones who decide on who qualifies, so they can always make the qualifications such that no one else would qualify other than their chosen ones. Japanese companies, for example, say that they need Japanese accountants because they have to follow parent company practices. Even if there are many great cooks in Vietnam, five-star hotels always want to bring in chefs from abroad because they help the image.

Secondly, even if the jobs are accurately specified, how can government bureaus supervise the required “apprenticeship” programs in so many different companies? How long is a reasonable period of apprenticeship? How many understudies should there be for each expatriate worker? Disputes are bound to arise which are difficult for an outside agent to resolve.

I think one should keep in mind that private multinational companies are profit-motivated and they would seek to get the best value for their money. They will naturally want to hire Vietnamese workers if they find them because bringing expatriate labour from abroad is a 100 times more expensive. Expatriates demand higher salaries, perks, housing, support for education of children, expensive home leaves, cars and drivers. Moreover, there are other advantages to hiring local people. Multinationals also want to have people who know how things work in the country and have good connections - hence they have every reason, in addition to reducing costs, to want to hire Vietnamese executives if companies can find qualified ones. This is borne out of experience in all the emerging economies in Asia.

Over time you find “localisation” of management taking place. Thailand, Malaysia, and Singapore have not restricted the employment of expatriate managers but today you find most of the executives of multinationals in these countries are local.

One other reason why they hire expats is simply because they may not be sure about the paper qualifications of local applicants. Language puts an additional barrier to discovering local talents.

A better approach could be to promote private sector participation in training young Vietnamese people to work in industry. Rather than supervised apprenticeship schemes, the government might try offering incentives for firms to support the establishment or expansion of more private management schools. Chambers of industry can also contribute with grants to schools able to take on the challenge.

In a short order of time, the multinationals will surely recruit Vietnamese for management positions, as mentioned before, it always pays off for them to invest in local people. For many years, I recall that Citibank had its regional training centre in Manila, serving subsidiaries all over the region. The programme led in no time to filling top posts of Citibanks in the region under the management of native executives.

(*) Labour Economist, ILO Country Office for Vietnam

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