Monthly Legal Update - November, 2011

• Representative offices for trade promotion agencies

The Government issued Decree No 110/2011/ND-CP on October 28, regulating the establishment and operation of representative offices of trade promotion agencies. Under the decree, a foreign trade promotion agency is entitled to establish no more than one representative office in one province or centrally-administered city. A representative office, as a dependent agency of the trade promotion agency, must register with a competent registrar.

A foreign trade promotion agency will be licensed if it meets two conditions: it is a legally established organisation under foreign law and it has a charter and operating principles that comply with Vietnamese law.

A representative office can function as a contact agency and promote the activities of a foreign company, including assisting the foreign enterprise in exploring the domestic market, performing market research and providing economic, trade and market information to foreign companies and organisations.
However, a representative office cannot directly conduct profit-making operations in Viet Nam.

The decree will take effect on December 15. Any representative office constituted before that time will be allowed to continue in operation and conduct registration procedures for the issuance of an establishment certificate in accordance with this decree within six months.

• Employer fines for failing to provide health insurance

The Government issued Decree No 92/2011/ND-CP on October 17, regulating fines for administrative violations in the field of health insurance. Enterprises and organisations which do not pay insurance premiums on behalf of for the whole number of applicable employee, shall be fined at least VND500,000 for up to 10 employees, VND1-5 million (US$50-250) if the number of applicable employee is from 11 to 50, and no more than VND30 million ($1,600) if the number of applicable employees is over 1,000.

The violating enterprises and organisations will also be required to pay the back premiums for the entire number of applicable employees, plus interest, into the social insurance fund, as well as pay the costs of examination or treatment incurred by employees who were unable to enjoy insurance benefits to which they were entitled.

The decree takes effect on December 1.

• Trade promotion representative offices

The Government issued Decree No 100/2011/ND-CP on October 28, regulating the establishment and operation of representative offices by foreign trade promotion organisations. Under the decree, the representative office of a foreign trade promotion organisation may: (i) perform the function of a liaison office; (ii) carry out trade promotion activities originating from abroad and support foreign enterprises to access and operate in the Vietnamese market, collect and provide economic, trade and market information to foreign organisations and enterprises, as well as by promoting foreign cross-border trade with Viet Nam and other commercial connections between foreign and domestic enterprises; (iii) co-ordinate with other agencies and organisations in conducting trade promotion; (iv) and perform other trade and commercial promotion activities under Vietnamese law. Representative offices are not permitted to directly conduct profit-generating activities in Viet Nam. Decree No 100 takes effect on December 15.

• NGOs exempt from work permit rules

The Ministry of Labour, Invalids and Social Affairs issued Circular No 31/2011/TT-BLDTBXH on November 3, implementing Government Decree No 34/2008/ND-CP of March 2008 and Government Decree No 46/2011/ND-CP of June 2011 on recruitment and management of foreigners working in Viet Nam. Under Circular No 31, after obtaining a work permit, an employer and foreign employee must sign a labor contract before the employee starts working. Foreign employees who are exempt from the work permit requirement include foreigners specified in licenses for the establishment of representative offices, project offices and non-governmental organizations. This circular takes effect on December 18.